IA1-cash and receivables

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Author:
yhliuaa
ID:
286747
Filename:
IA1-cash and receivables
Updated:
2014-10-24 13:08:23
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IA1 cash receivables
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IA1-cash and receivables
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  1. JE for gross method

    • goods sold: Dr AR Cr Sales (full amt)
    • $ coll.: Dr (Cash, Sales discounts) Cr AR

  2. net method-characteristics and JE for $2000 sales collected in discount period

    • goods sold: Dr AR Cr Sales (amt: sales*discount)
    • $ coll.: Dr Cash Cr AR

  3. net method-characteristics and JE f0r $2000 sales collected after discount period

    • goods sold: Dr AR Cr Sales (amt: sales*discount)
    • $ coll.: Dr cash Cr (AR, sales discount forfeited)

  4. JE for adjustment of $15 for bad debt expense/impairment loss

    Dr Bad debt expense Cr Allowance of doubtful accounts

  5. JE for write-off $10 uncollectible account

    Dr Allowance of doubtful accounts Cr AR

  6. JE for $5 recovery of uncollectible account
    *Dr AR Cr Allowance of doubtful accounts

    • Dr Cash Cr AR
    • *reverse the write off, then normal entry for¬†receiving cash from AR
  7. how to calculate the impairment loss

    PV(contractual remaining FCF, i original) - PV(new est. FCF, i original)

  8. how to estimate fair value of note

    PV(new est. FCF, i current)

  9. net sales=

    sales - trade discount - sales discount(cash discount) - sales return and allowance

  10. calculating bad debt using %sales approach

    bad debt expense = net sales*%

  11. calculating bad debt using %ARapproach

    bad debt expense = (end AR * %) - unadjusted Allowance of doubtful accounts

  12. rules of impairment loss

    • total impairment: individually impair significant account +
    • significant accounts not impaired + collectively assessed receivables * estimate

  13. rules of recog. ST notes receivable

    record at face value less allowance

  14. rules of recog. LT notes receivable

    record at PV

  15. schedule of note discount/premium amortization

    • 1. coupon(face value of note * coupon rate)
    • 2. interest revenue (carryinging amt * interest rate)
    • 3. discount/premium amortized: interest revenue - coupon
    • 4. carrying amt: unadjusted carrying amt + discount/premium amortized

  16. JE of note discount amortization

    Dr {Cash(coupon), Note receivable} Cr Interest revenue

  17. JE of note premium amortization

    Dr Cash Cr {Interest revenue, Note receivable}

  18. JE of recog issuance of LT note receivable at fair value of property, goods and services
    Dr Note receivable* Cr {Land**, Gain on sale of land}

    *at sales price

    **at historical cost
  19. adjusting JE for using fair value option to recognize receivables

    • Dr Note receivable* Cr Unrealized holding gain (or reverse for loss)
    • *amt = difference between carrying amt and fair value

  20. the word 'assign' means..

    secured borrowing

  21. secured borrowing steps

    • transfer of notes receivable and issuance of note
    • collection of AR money
    • remitt collections plus interest
    • collect the remaining balance of AR
    • remit remaining note payable plus interest

  22. secured borrowing steps - transfer of account receivable and issuance of note

    • Trader: Dr (Cash, Finance charges*) Cr $Note Payable
    • Bank: Dr $Note Receivable Cr (Cash, Finance revenue)
    • *AR sold*%

  23. secured borrowing steps - collection of AR money

    Trader: Dr (Cash, Sales return, sales discounts) Cr $AR

  24. secured borrowing steps - remitt collections plus interest

    • Trader: Dr (Interest expense*, Note Payable**) Cr $Cash
    • Bank: Dr $Cash Cr(Note receivable, interest revenue)
    • *loan amt*%*n/12
    • **the CASH collected in the month, not the AR deducted

  25. secured borrowing steps - collect the remaining balance of AR (part of AR written off)
    Dr (Cash$, Allowance for doubtful accounts*) Cr $AR**

    *amt written off

    **total AR- remaining AR - written off
  26. secured borrowing steps - remit remaining note payable plus interest
    Trader: Dr (Note Payable*, Interest expense**) Cr $Cash

    Bank: Dr $Cash Cr (Note receivable, interest revenue)

    *total loan - remaining note payable

    **carrying amt of note payable *%*n/12
  27. sales of AR without guarantee - JE for the transfer of AR

    • Trader: Dr(Cash, Due from factor*, Loss on Sale of Receivable**) Cr $AR
    • Factor: Dr $AR Cr (Cash, Due to trader, Finance Revenue)
    • *AR sold*%
    • **Finance charge

  28. sales of AR with guarantee - JE for the transfer of AR
    • Trader: Dr (Cash, Due from factor, Finance charge) Cr $Liability to factor
    • Factor: Dr $AR Cr (Cash, Due to trader, Finance revenue)
  29. Sales of AR without guarantee - Adjusting entry when there are sales return

    • Factor: Dr Due to trader* Cr AR
    • Trader: Dr Sales return Cr Due from factor
    • *The amount of the sales return
    • rationale: if there are sales return, the Trader cannot receive money from the factor, the Factor cannot collect money from the AR

  30. Sales of AR without guarantee - Adjusting entry when there are no sales return

    Factor Dr Due to trader Cr Cash (reverse for trader)

  31. Accounts receivable turnover - formula and usage
    Net Sales/Average of beg. receivable and end. receivable

    used to assess the liquidity of receivables
  32. JE to record sales return, purchased on account
    Dr Sales return Cr AR

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