Chapter10会计英语.ppt

Accounts Receivable and Notes Receivable Accounting for Notes Receivable Uncollectible Accounts Expenses The Two Methods of Accounting for Bad Debts * * Chapter 10 Accounts Receivable and Notes Receivable Outline of Chapter 10 10.1 Accounts Receivable and Notes Receivable Accounts receivable arise when a business sells goods and services on credit. Accounts receivable are relatively liquid assets, usually converting into cash within a period of 30 to 60 days. Sometimes companies sell merchandise on long-term installment plans, requiring 12, 24, or even 48 months to collect the entire amount receivable from the customer. A promissory note is a written promise to pay a sum of money on demand or at a definite time. $2,500.00 Fresno, California March 16 2004 Ninety days AFTER DATE We PROMISE TO PAY TO THE ORDER OF Smith’s Company Two thousand five hundred DOLLARS PAYABLE AT City National Bank VALUE RECEIVED WITH INTEREST AT 10% NO. 14 DUE June 14, 2004 H. B. Lane TREASURER, NATIONAL COMPANY Notes have several characteristics that affect how they are recorded and reported in the financial statements: Due Date Question: what is the due date of a 120-day note receivable dated September 9? Answer: January 7[21days in September (30 days-9 days)+31days in October + 30days in November + 31 days in December +7days in January=120days] Interest Face Amount ( or Principal)× Rate× Time=Interest Maturity Value The maturity value of a $15,000, 90-day, 12% note is $15,450[$15,000+ ($15,000×0.12×90/360)] 10.2 Accounting for Notes Receivable Assume that a 30-day, 12% note dated November 21, 2004, is accepted in settlement of the Account Receivable of National Company, which is past due and has a balance of $6,000. The entry to record the transaction is as follows: Nov. 21 Dr. Notes Receivable