西方财务会计_Chapter6.pptVIP

Accounting For Notes Receivable: Dishonored Notes Sometimes when a note matures, the customer is unable or unwilling to pay the debt. At that time the note should be transferred from Notes Receivable to a special account for dishonored notes. Dishonored Notes If Mendoza does not pay her note when due, Jan.30 Accounts Receivable 6,090 Notes Receivable 6,000 Interest Revenue 45 Interest Receivable 45 to record note in default The interest revenue has been earned and is therefore recorded. Chapter 6 Accounts Receivable And Notes Receivable Introduction In addition to cash, cash equivalents, and short-term investments, the current (liquid ) assets of an entity include receivables that result from credit sales to customers. These receivables include (1) accounts receivables and (2) notes receivable. Accounts Receivable Accounts receivable are relatively liquid asset, usually converting into cash within a period of 30 to 60 days. Therefore, accounts receivable from customers are classified as current assts and are listed in the balance sheet immediately after cash and short-term investments. Accounts Receivable Three Important Concepts about A/R 1. Cash Discounts(Sales Discounts) 2. Sales Returns and Allowances 3. Bad Debts (Uncollectible Accounts) Uncollectible Accounts When a company grants credit to its customers, there usually are a few who do not pay what they promised. The accounts of such customers are called uncollectible accounts or bad debts. The bad debts amounts that cannot be collected is an expense of selling on credit. When the bad debt expense is recorded, a contra asset account – Allowance for uncollectible accounts is established to report accounts