Intermediate Accounting Chapter6.pptVIP

Understanding Cash and Receivables Chapter 6 What is Cash? Management and Control of Cash Reporting Cash Reporting Cash Reporting Cash Receivables Written promises to pay a sum of money on a specified future date. Receivables Recognition of Accounts Receivables Trade Discounts Reductions from the list price Not recognized in the accounting records Customers are billed net of discounts Recognition of Accounts Receivables Cash Discounts Inducements for prompt payment Gross Method vs. Net Method Recognition of Accounts Receivables Recognition of Accounts Receivables Recognition of Accounts Receivables Recognition of Accounts Receivables Accounting for Accounts Receivable How are these accounts presented on the Balance Sheet? Assets Current Assets: Cash $ 346 Accounts receivable 500 Less allowance for doubtful accounts 25 475 Inventory 812 Prepaids _ 40 Total current assets 1,673 Fixed Assets: Office equipment 5,679 Furniture fixtures 6,600 Less: Accumulated depreciation 3,735 Total fixed assets 8,544 Total Assets $10,217 Assets Current Assets: Cash $ 346 Accounts receivable, net of $25 allowance for doubtful accounts 475 Inventory 812 Prepaids _ 40 Total current assets 1,673 Fixed Assets: Office equipment 5,679 Furniture fixtures 6,600 Less: Accumulated depreciation 3,735 Total fixed assets 8,544 Total Assets $10,217 Accounting for Accounts Receivable Journal entry for credit sale of $100? Accounts receivable 100 Sales 100 Accounting for Accounts Receivable Journal entry for credit sale of $100? Accounts receivable 100 Sales 100 Accounting for Accounts Receivable Collected of $333 on account? Cash 333 Accounts receivable 333 Accounting for Accounts Receivable Collected of $333 on account? Cash 333 Accounts receivable 333 Accounting for Accounts Receivable Adjustment of $15 for estimated Bad-Debts? Bad debt expense 15 Allowance for Doubtful Accounts 15 Accounting for Accounts Receivable Adjustment