AccountingBasics英語(yǔ)會(huì)計(jì)基礎(chǔ)教學(xué)課件6

1、Chapter 9Accounting for ReceivablesWEEK 7Autumn 2012ACCY901Learning ObjectivesIdentify the different types of receivablesExplain how accounts receivable are initially recognised and measured Explain how accounts receivable are subsequently measured Explain how note receivables are recognised and cal

2、culate the interest on notes receivableDescribe how receivables are reported in financial statementsTYPES OF RECEIVABLESReceivables (debtors) refers to amounts due from individuals and other entities that are expected to be collected in cashTypes of receivables:Accounts receivable are amounts owed b

3、y customers on accountNotes receivable are claims for which formal instruments of credit are issued evidencing the debtOther receivables include non-trade receivables such as interest receivable, loans, advances and GST receivablePowerPoint presentation by Dr Anne Abraham, University of Western Sydn

4、ey3LO1TYPES OF RECEIVABLES contdNotes and accounts receivable that result from sales transactions are often called trade receivablesThree primary accounting issues associated with accounts receivable are:Recognising accounts receivableValuing accounts receivableSelling accounts receivablesPowerPoint

5、 presentation by Dr Anne Abraham, University of Western Sydney4Initial recognition and measurement of accounts receivableThe effect of sales of inventory on accounts receivableExampleOn 1 July, Lauren Ltd sells inventory to Polo Ltd on account for $1000 terms 2/10, n/30PowerPoint presentation by Dr

6、Anne Abraham, University of Western Sydney5LO2Initial recognition and measurement of accounts receivable contdOn 5 July, Polo Ltd returns inventory worth $100On 5 July, Lauren Ltd receives payment from Polo Ltd for balance duePowerPoint presentation by Dr Anne Abraham, University of Western Sydney6P

7、owerPoint presentation by Dr Anne Abraham, University of Western Sydney7Question 1On 3 May ABC Ltd sells inventory on account to XYZ Ltd for $2000, terms 2/10, n/30. XYZ returns inventory worth $600 on 8 May. On 12 May ABC receives the balance due of $1400$1960 $1372None of the above LO2Subsequent m

8、easurement of accounts receivableReceivables are initially recognised at fair value (i.e. invoice amount)At each reporting date, entities are required to assess whether there is objective evidence that receivables are impaired (i.e. unlikely to be received) well overdue, bankruptcy, financial diffic

9、ultyPowerPoint presentation by Dr Anne Abraham, University of Western Sydney8LO3Subsequent measurement ofaccounts receivable contdImpairment loss is recognised by comparing carrying amount of receivable with present value of estimated cash flows from receivableEntities must assess impairment for all

10、 receivablesThe impairment loss must be recognised in the income statement as a lossPowerPoint presentation by Dr Anne Abraham, University of Western Sydney9Subsequent measurement ofaccounts receivable contdThere are two methods to reduce carrying amount of receivables1. Reduced directly (direct wri

11、te-off method)2. Reduced through use of allowance account (allowance method)PowerPoint presentation by Dr Anne Abraham, University of Western Sydney101. Direct write-off methodBad debt losses are not anticipated and no allowance account is usedNo entries are made for bad debts until an account is de

12、termined to be uncollectable at which time the loss is charged to Bad Debts ExpenseCarrying amount of accounts receivable is reduced in statement of financial positionPowerPoint presentation by Dr Anne Abraham, University of Western Sydney11Subsequent measurement ofaccounts receivable contdSubsequen

13、t measurement ofaccounts receivable contdExampleBennett Ltd writes off Jackie Ltds $920 balance as impaired on 12 DecemberPowerPoint presentation by Dr Anne Abraham, University of Western Sydney12Dec 12 Bad Debts Expense 920 Accounts Receivable Jackie Ltd 920(To record write-off of Jackie Ltd accoun

14、t) Subsequent measurement ofaccounts receivable contd2. Allowance methodImpaired accounts receivable are estimatedTreated as an expense and charged against revenueAllowance for Impairment is a contra asset account As part of adjusting entry at end of each periodPowerPoint presentation by Dr Anne Abr

15、aham, University of Western Sydney13Date Bad Debts Expense Debit Allowance for Impairment Credit(To record estimate of impaired receivables) Subsequent measurement ofaccounts receivable contd2. Allowance method contdWhen a specific amount is written off, actual uncollectable is debited to Allowance

16、for Impairment and credited to Accounts ReceivablePowerPoint presentation by Dr Anne Abraham, University of Western Sydney14Date Allowance for Impairment Debit Accounts ReceivableCredit(To record estimate of impaired receivables) Recovery of an uncollectable account2 journal entriesPowerPoint presen

17、tation by Dr Anne Abraham, University of Western Sydney15Dec 1 Accounts Receivable Debit Allowance for Impairment Credit (To reverse write-off ) Dec 1 Cash Debit Accounts Receivable Credit (To record collection) Subsequent measurement ofaccounts receivable contdQuestion 2Earthcare reported the follo

18、wing information at 30 June 2010: Accounts receivable $ 1 020 000Allowance for impairment 60 000During 2010-11, the business had the following transactions related to receivables 16LO3Write-offs of accounts receivable $ 65 000deemed uncollectable 2. Estimated impaired receivables 95 000based on obje

19、ctive evidence 3. Recovery of impaired receivables20 000 previously written off as uncollectable17Question 2 contdInstructions:Prepare the journal entries to record each of the 3 transactions.18Question 2 contd19Question 2 contdAssessing impairmentRequires detailed calculation of estimated of cash t

20、o be receivedFormula-based methods can only be used for determining impairment losses if they produce an estimate close to what would be produced by comparing carrying amount with estimated cash receivedPowerPoint presentation by Dr Anne Abraham, University of Western Sydney20Assessing impairment co

21、ntdTwo common methodsPercentage of salesPercentage of receivables (or ageing of accounts receivable)PowerPoint presentation by Dr Anne Abraham, University of Western Sydney21Assessing impairment contd1. Percentage of salesEstimates % of credit sales will be uncollectableBased on past experience and

22、anticipated credit policyEmphasises income statement relationshipsPowerPoint presentation by Dr Anne Abraham, University of Western Sydney22Jun 30 Bad Debts Expenses 8 000 Allowance for Impairment 8 000 (To record estimated impairment loss for year) Assessing impairment contd1. Percentage of salesIm

23、portant: under the percentage of net credit sales method, any existing balance in the allowance for impairment account is ignored. The allowance for impairment account is simply adjusted each year by the percentage estimate.23Question 3At 31 Dec 2010 Friends had a balance in its allowance for impair

24、ment account of $1,250. The net sales balance at 31 December 2010 was $35,000. Management estimated that 5% of net sales were likely to be uncollectable. Prepare the adjusting entry at the end of the period to record impaired receivables24LO3Question 3 contdEstimated impairment loss:252. Percentage

25、of receivables Focuses on cash realisable value and reducing receivables by allowanceEmphasis on statement of financial position relationshipsPowerPoint presentation by Dr Anne Abraham, University of Western Sydney26Jun 30 Bad Debts Expenses 1 700 Allowance for Impairment 1 700 (To adjust allowance

26、account to total estimated uncollectable) Assessing impairment contd2. Percentage of receivables Important: under this method, any existing balance (can be either Credit or Debit balance) in the allowance for impairment account is taken into consideration when determining the amount of the adjustmen

27、t27Assessing impairment contdAssume now that Friends Ltd uses the ageing of accounts receivable method.Again, at 31 Dec 2010 the balance of the Allowance for impairment account was $1,250.An ageing schedule for Friends Ltd is Shown on the next slide28Question 4LO32. Percentage of receivables-Example

28、PowerPoint presentation by Dr Anne Abraham, University of Western Sydney29Question 4 contdAgeing of Accounts ReceivableTotal estimated impairment lossTotal estimated impairment loss is equal tobased on the ageing schedule This is the amount needed in the Allowance for impairment account at the end o

29、f the period.Remember that the beginning balance wasSo, we need an adjusting entry to arrive at the new balance.30Question 4 contdAt the end of the period, there was already in the Allowance for impairment account. So, the adjusting entry is31Question 4 contdNOTES RECEIVABLEA promissory note is a wr

30、itten promise to pay a specified amount of money on demand or at a definite timeMay be used When money is borrowed or lentWhen amount of transaction and credit period exceed normal limitsTo settle accounts receivableTwo partiesPayee (party to whom payment is to be made)Issuer (party making promise)P

31、owerPoint presentation by Dr Anne Abraham, University of Western Sydney32LO4Accounting issuesDetermining maturity dates Computing interestRecognising notes receivableValuing notes receivableSelling notes receivablePowerPoint presentation by Dr Anne Abraham, University of Western Sydney33NOTES RECEIV

32、ABLE contdDetermining the maturity dateThe life of the note may be expressed in terms ofmonthsdays1. Life of note expressed in monthsThe due date is found by counting the months from the date of issuee.g., Maturity date of a 3 month note dated 1 May is PowerPoint presentation by Dr Anne Abraham, Uni

33、versity of Western Sydney34(b) Life of note expressed in daysNeed to count the exact number of daysDate of issue is omitted but due date is includede.g., Maturity date of a 60-day note dated 17 July isPowerPoint presentation by Dr Anne Abraham, University of Western Sydney35Term of note60 daysDeterm

34、ining the maturity date contdCalculating interestThe interest rate specified on the note is an annual rate of interestBasic formulaPowerPoint presentation by Dr Anne Abraham, University of Western Sydney36AnnualinterestrateFace valueof notex Time interms of1 yearInterestx = The fraction of a year th

35、at the note is outstandingCalculating interest contdExamplesPowerPoint presentation by Dr Anne Abraham, University of Western Sydney37 Terms of NoteInterest Computation face x rate x time = interest$ 730, 18%, 120 days$1000, 15%, 6 months$2000, 12%, 1 year PowerPoint presentation by Dr Anne Abraham,

36、 University of Western Sydney38Question 5A note for $4118 was issued at 8.8% for 240 days. Calculate the interest amount. $241.59 $24 158.93 $86 972.16 $238.28 LO4Recognising notes receivableThe note receivable is recorded at its face valueNo interest revenue is reported when the note is accepted be

37、cause the income recognition principle does not recognise income until earnedPowerPoint presentation by Dr Anne Abraham, University of Western Sydney39May 1 Notes ReceivableDebit Accounts Receivable /cash/sales Credit (To record acceptance of note receivable)FINANCIAL STATEMENT PRESENTATION AND ANAL

38、YSISPresentationIn the statement of financial position, short-term receivables are reported in the current assets section below short-term investmentsPresentation must include report of both the gross value and allowance for any impairmentPowerPoint presentation by Dr Anne Abraham, University of Wes

39、tern Sydney40LO5Statement of financial positionPowerPoint presentation by Dr Anne Abraham, University of Western Sydney41Current assetsCash $ 14 800Accounts receivable $200 000Less: Allowance for doubtful debts 12 000 188 000Inventory 310 000Prepaid expenses 25 000Total current assets$537 800FITTING

40、 FURNITUREStatement of Financial Position (partial)Subsequent measurement ofaccounts receivable contdstatement of financial positionPowerPoint presentation by Dr Anne Abraham, University of Western Sydney42 Before write-off After write-offAccounts receivable$200 000 $199 500Allowance for impairment

41、12 000 11 500Cash realisable value$188 000 $188 000Subsequent measurement ofaccounts receivable contdChapter 11Current Liabilities & Payroll accounting (465)WEEK 7Autumn 2012ACCY901Learning ObjectivesExplain a current liability, and identify the major types of current liabilitiesDescribe the account

42、ing for notes payablesExplain the accounting for other current liabilitiesExplain the financial statement presentation of current liabilitiesDescribe the accounting and disclosure requirements for provisions and contingent liabilitiesACCOUNTING FOR CURRENT LIABILITIESA current liability is a debt wi

43、th two key features: Expected to be paid from existing currents assets or through the creation of other current liabilitiesWill be paid within 1 year or the operating cycle, whichever is longerPowerPoint presentation by Dr Anne Abraham, University of Western Sydney45LO1ACCOUNTING FOR CURRENT LIABILI

44、TIESCurrent liabilities include: Notes payableAccounts payable Unearned revenueAccrued liabilitiesPowerPoint presentation by Dr Anne Abraham, University of Western Sydney46Notes payableNotes payable record obligations in the form of written notesUsually require borrower to pay interest or borrowing

45、costs which accrues over life of noteFrequently issued to meet short-term financing needsIssued for varying periods of timeThose notes due for payment within 1 year of the end of the financial year are usually classified as current liabilitiesPowerPoint presentation by Dr Anne Abraham, University of

46、 Western Sydney47LO2Question 6On 1 January 2010, Yumcha Software Ltd Borrowed $15 000 in cash from Amsterdam Bank on a 4-month, 8%, $15 000 note.Requirement:Prepare the journal entry on 1 January, Prepare the adjusting entry as at 31 MarchPrepare the journal entry at maturity48LO2Calculation of inte

47、rest49Interest = Face value x Annual x Time in terms of note interest rate of 1 year Question 6 contdQuestion 6 contdJournal entry when note issuedAdjusting entry50Journal entry to settle liabilitiesPowerPoint presentation by Dr Anne Abraham, University of Western Sydney51Question 6 contdGoods and s

48、ervices tax (GST) payableThe GST is expressed as 10% of the total sales price of the good or service being purchasedRetailer collects tax from customer when the sale occurs and remits it to the ATO on monthly, quarterly or annual basisSeparate accounts for GST collected (current liability) and GST P

49、aid (current asset)PowerPoint presentation by Dr Anne Abraham, University of Western Sydney52LO3Unearned revenueUnearned revenue is revenue that is received before goods are delivered or services are rendered e.g., Purchase of plane ticketsMagazine subscriptionsSeason passes to sporting eventsTwo jo

50、urnal entries are required:When the advance payment is receivedWhen the revenue is earnedPowerPoint presentation by Dr Anne Abraham, University of Western Sydney53PowerPoint presentation by Dr Anne Abraham, University of Western Sydney54Question 7Stanley Travel Magazine typically sells subscriptions

51、 on an annual basis, and publishes six times a year. The magazine sold 50,000 yearly subscriptions in January at $105 each. What entry is made in January to record the sale of the subscriptions?a.Dr Subscriptions Receivable$5,250,000Cr Subscription Revenue$5,250,000b.Dr Cash$5,250,000Cr Unearned Sub

52、scription Revenue$5,250,000c.Dr Subscriptions Receivable$5,250,000Cr Unearned Subscription Revenue$5,250,000d.Dr Prepaid Subscriptions$5,250,000Cr Cash$5,250,000LO3Bank overdraftA bank overdraft is a line of creditextended on an existing bank account, orallowed on the commencement of a new bank acco

53、untFirms use this overdraft as a normal account, but they owe money instead of saving itThe borrower pays interest on the overdue amountPowerPoint presentation by Dr Anne Abraham, University of Western Sydney55Current maturities of long-term debtFirms often have a portion of long-term debt that fall

54、s due in the current yearIt is not necessary to prepare an adjusting entry to recognise current maturities of long-term debtThe proper classification is recognised on the statement of financial performance PowerPoint presentation by Dr Anne Abraham, University of Western Sydney56Financial statement

55、presentationPresentationCurrent liabilities are the first category under liabilities on the statement of financial positionEach of the principal types is listed separatelyThey are seldom listed in the order of maturity, but often in order of magnitude, with the largest ones firstSome firms show note

56、s payable and accounts payable first regardless of amountPowerPoint presentation by Dr Anne Abraham, University of Western Sydney57LO4PROVISIONS AND CONTINGENT LIABILITIESContingent liabilities are potential liabilities that may become an actual liabilities in the futureIAS 37 provides reporting gui

57、delines Contingent liabilities are not recognised in the accounts because they are neither probable nor able to be measured reliablyHowever, they must be disclosed in the notes to the financial statementsPowerPoint presentation by Dr Anne Abraham, University of Western Sydney58LO5Presenting a provis

58、ionProvisions can be classified as current or non-current depending on projected timing of when present obligation will be paidMany firms classify provisions in statement of financial position under both current and non-current sectionsPowerPoint presentation by Dr Anne Abraham, University of Wester

59、n Sydney59Recording a provisionProduct warranties are an example of a provision that should be recorded in the accountsWarranty contracts result in future costs that may be incurred in replacing defective units or in repairing malfunctioning unitsAccounting for warranty costs is based on the expense recognition principlePowerPoint presentation by Dr Anne Abraham, University of Western Sydney60Estimated co