外国会计选读chapter08.pptVIP

Accounts Receivable 应收账款—used for selling merchandise or services on credit, and normally expected to be collected in a relatively short period. Notes Receivable应收票据—used to grant credit on the basis of a formal instrument of credit, called a promissory note. Other Receivables其他应收款—include interest receivable, taxes receivable, and receivables from officers and employees. Separating the Receivable Functions This method is consistent with the matching principle. Management makes an estimate each year of the portion of accounts receivable that may not be collectible. Uncollectible Accounts Expense is debited and Allowance for Doubtful Accounts is credited. Actual accounts that prove to be uncollectible are debited to Allowance for Doubtful Accounts and credited to Accounts Receivable. This method is not consistent with the matching principle. Accounts that prove to be uncollectible are written off in the year they become worthless. Uncollectible Accounts Expense is debited and Accounts Receivable is credited for each such transaction. Receivables on the Balance Sheet Crabtree Co. Balance SheetDecember 31, 2006 Assets Current assets: Cash $119,500 Notes receivable 250,000 Accounts receivable $445,000 Less allowance for doubtful accounts 15,000 430,000 Interest receivable 14,500 Merchandise inventory 714,000 If W. A. Bunn Company fails to pay the note on the due date, it is considered a dishonored note receivable. The note and interest are transferred to the customer’s account. Dec. 21 Accounts Receivable—Bunn Co. 6 060 00 Notes Receivable 6 000 00 To record dishonored note and interest. Interest Revenue 60 00 Accounting for Notes Receivable If a note matures in a later fiscal period, the interest accrued in the period in which the note is received must be recorded by an adjusting entry: Dr. Interest receivable Cr. Interest revenue The interest revenue accounts will be closed at the end of the