tailieunhanh - Lecture Fundamentals of financial accounting (3e): Chapter 8 - Phillips, Libby, Libby
Chapter 8 - Reporting and interpreting receivables, bad debt expense, and interest revenue. In previous chapters, we quietly assumed that all sales on account ultimately are collected as cash. In this chapter, you’ll learn how companies handle the situation where customers don’t pay all that they owe. | Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Fundamentals of Financial Accounting 3e by Phillips, Libby, and Libby. Chapter 8 Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Fred Phillips, ., CA Chapter 8: Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue. Record sales on account dr Accounts Receivable cr Sales Revenue Balance Sheet Cash Accounts Receivable Inventory Income Statement Sales Revenue Cost of Goods Sold Gross Profit Bad debt known Accounts Receivable and Bad Debts Jan. 1 8- 6- 42 42 Part I When a company sells goods or services on account, it records both Accounts Receivable and Sales Revenue. Accounts Receivable is an asset on the balance sheet and Sales Revenue is a revenue account on the income statement. Part II Unfortunately, some accounts receivable will never be collected in full, resulting in a bad debt. These bad debts mean that not all accounts receivable will be converted to cash and not all sales will generate profit. Thus, when accounting for accounts receivable and bad debts, there are two objectives. Record sales on account dr Accounts Receivable cr Sales Revenue Balance Sheet Cash Accounts Receivable Inventory Income Statement Sales Revenue Cost of Goods Sold Gross Profit Bad debt known Balance Sheet Cash Accounts Receivable Less: Allowance for Doubtful Accounts Accounts Receivable, Net Inventory Income Statement Sales Revenue Cost of Goods Sold Gross Profit Bad Debt Expense Accounts Receivable and Bad Debts Record estimate of bad debts Jan. 1 Jan. 31 dr Bad Debt Expense (+E, -SE) cr Allowance for Doubtful Accounts (+xA, -A) 8- 6- 42 42 Part I The two objectives are: Report accounts receivable at the amount the company expects to collect (“net realizable value”). Match the estimated . | Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Fundamentals of Financial Accounting 3e by Phillips, Libby, and Libby. Chapter 8 Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Fred Phillips, ., CA Chapter 8: Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue. Record sales on account dr Accounts Receivable cr Sales Revenue Balance Sheet Cash Accounts Receivable Inventory Income Statement Sales Revenue Cost of Goods Sold Gross Profit Bad debt known Accounts Receivable and Bad Debts Jan. 1 8- 6- 42 42 Part I When a company sells goods or services on account, it records both Accounts Receivable and Sales Revenue. Accounts Receivable is an asset on the balance sheet and Sales Revenue is a revenue account on the income statement. Part II Unfortunately, some
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