tailieunhanh - Lecture Fundamental accounting principles (19/e) - Chapter 9: Accounting for receivables

After completing this chapter you should be able to: Describe accounts receivable and how they occur and are recorded; describe a note receivable, the computation of its maturity date, and the recording of its existence; explain how receivables can be converted to cash before maturity. | ACCOUNTING FOR RECEIVABLES Chapter 9 Chapter 9: Accounting for Receivables. ACCOUNTS RECEIVABLE Amounts due from customers for credit sales. Credit sales require: Maintaining a separate account receivable for each customer. Accounting for bad debts that result from credit sales. C 1 Accounts Receivable arise from credit sales to customers. We will create a separate subsidiary accounts receivable ledger for each customer. This helps us keep track of how much each customer owes us individually. Selling on credit also creates a need to account for the bad debts that will result from customers not fulfilling their obligation to pay their Accounts Receivable. SALES ON CREDIT C 1 Part I First, we post the amounts in the journal entries to the individual accounts for each customer. The Accounts Receivable Ledger will look this is after the posting. Part II We use the Accounts Receivable Subsidiary Ledger to prepare a schedule of Accounts Receivable. The schedule is a complete listing of the balances in the Accounts Receivable Subsidiary Ledgers. Part III Finally, we can post the total on the accounts receivable subsidiary ledger, or the balance in each individual account, to the Accounts Receivable account in the general ledger. Advantages of allowing customers to use credit cards: Customers’ credit is evaluated by the credit card issuer. The risks of extending credit are transferred to the credit card issuer. Cash collections are quicker. Sales increase by providing purchase options to the customer. CREDIT CARD SALES C 1 Most companies allow customers to use credit cards for sales on credit at their company. There are several advantages to this arrangement. First, the credit card company evaluates the customer’s credit worthiness for the company making the sale. Second, when customers can delay payment, they purchase more. Third, the credit card company carries the risk related to the customers’ bad debts. Fourth, cash collections are quicker because the | ACCOUNTING FOR RECEIVABLES Chapter 9 Chapter 9: Accounting for Receivables. ACCOUNTS RECEIVABLE Amounts due from customers for credit sales. Credit sales require: Maintaining a separate account receivable for each customer. Accounting for bad debts that result from credit sales. C 1 Accounts Receivable arise from credit sales to customers. We will create a separate subsidiary accounts receivable ledger for each customer. This helps us keep track of how much each customer owes us individually. Selling on credit also creates a need to account for the bad debts that will result from customers not fulfilling their obligation to pay their Accounts Receivable. SALES ON CREDIT C 1 Part I First, we post the amounts in the journal entries to the individual accounts for each customer. The Accounts Receivable Ledger will look this is after the posting. Part II We use the Accounts Receivable Subsidiary Ledger to prepare a schedule of Accounts Receivable. The schedule is a complete .