[财务管理]Ch 7 week 5 Financial Assets ACC 1 2012.pptVIP

Identifying a Note’sMaturity Date When the period is given in days… the maturity date is determined by counting the days from the date of issue. The date the note was issued is omitted. The maturity date is counted. Principal × Rate × Time = Interest $10,000 × 10% × 90 ÷ 360 = $250 Computing Interest on a Note Compute interest on the note due to Popular Bank. Principal: $10,000 Interest: 10% Time: December 1, 2001, to February 28, 2002 Account for notes receivable. Objective 4 Recording Notes Receivable Assume the accounting period ended December 31. How much interest was earned by the bank as of December 31? $10,000 × 10% × (31 ÷ 360) = $86.11 Recording Notes Receivable December 31 Interest Receivable 86.11 Interest Revenue 86.11 To accrue interest on the note Recording Notes Receivable How does the bank record the collection at maturity? February 28 Cash 10,250.00 Note Receivable 10,000.00 Interest Receivable 86.11 Interest Revenue 163.89 Record interest on note Dishonored Notes Receivable If the maker of the note fails to pay the maturity value to the new payee, then the original payee legally must pay the bank the amount due. Report receivables on the balance sheet. Objective 5 Reporting Receivables Some companies report a single amount for its current receivables in the body of the balance sheet. They use a note to the financial statements to give more details. Use the acid-test ratio and days’ sales in receivables to evaluate a company’s financial position. Objective 6 Acid-test ratio = (Cash + Short-term investments + Net current receivables) ÷ Total current liabilities Acid-Test Ratio This is a stringent test of liquidity. It measures the entity’s ability to pay its current liabilities immediately. Days’ Sales in Receivables It is a measure of the time it takes to collect receivables. A smaller number indicates a quick conversion to cash. One day’s sales = Net sales ÷ 365 days Days’ sales in average accoun