清华管理学双学位会计学讲义5

nullChapter 6Chapter 6Reporting and Interpreting Sales Revenue, Receivables, and Cash Accounting for Sales Revenue Accounting for Sales RevenueThe revenue principle requires that revenues be recorded when earned: Delivery has occurred or services have been rendered. There is persuasive evidence of an arrangement for customer payment. Collection is reasonably assured. The price is fixed or determinable. Learning Objectives Learning ObjectivesAnalyze the impact of credit card sales, sales discounts, and sales returns on the amounts reported as net sales. Reporting Net Sales Reporting Net Sales Companies record credit card discounts, sales discounts, and sales returns and allowances separately to allow management to monitor these transactions. Credit Card Sales Credit Card SalesCompanies accept credit cards for several reasons: To increase sales. To avoid providing credit directly to customers. To avoid losses due to bad checks. To receive payment quicker. Credit Card Sales When credit card sales are made, the company must pay the credit card company a fee for the service it provides. Credit Card SalesCredit Card Sales to ConsumersCredit Card Sales to Consumers On January 2, a Timberland factory store’s credit card sales were $3,000. The credit card company charges a 3% service fee. Prepare the Timberland journal entry.Credit Card Discounts are reported as a contra revenue account. Sales on Account When companies allow customers to purchase merchandise on an open account, the customer promises to pay the company in the future for the purchase. Sales on Account Sales Discounts2/10, n/30 Sales Discounts When customers purchase on open account, they may be offered a sales discount to encourage early payment.Read as: “Two ten, net thirty” Sales Discounts2/10, n/30 Sales DiscountsSales Discounts to BusinessesOn January 6, Timberland sold $1,000 of merchandise on credit with terms of 2/10, n/30. Prepare the Timberland journal entry.Sales Discounts to BusinessesSales Discounts to Businesses$1,000 × 2% = $20 sales discount $1,000 - $20 = $980 cash receiptOn January 14, Timberland receives the appropriate payment from the customer for the January 6 sale. Prepare the Timberland journal entry.Sales Discounts to BusinessesSales Discounts to BusinessesSince the customer paid outside of the discount period, a sales discount is not granted.If the customer remits the appropriate amount on January 20 instead of January 14, what entry would Timberland make?Sales Discounts to Businesses Sales Returns and Allowances Sales Returns and AllowancesDebited for damaged merchandise.Debited for returned merchandise.Contra revenue account.Sales Returns and AllowancesSales Returns and AllowancesOn July 8, Fontana Shoes returns $500 of hiking boots originally purchased on account from Timberland. Prepare the Timberland journal entry.Reporting Net SalesReporting Net Sales Companies record sales discounts, sales returns and allowances, and credit card discounts separately to allow management to monitor these transactions. Learning Objectives Learning ObjectivesAnalyze and interpret the gross profit percentage(毛利率).Gross Profit PercentageGross Profit PercentageAll other things equal, a higher gross profit results in higher net income. Measures the ability to charge premium prices and produce goods and services at low costGross Profit PercentageGross Profit PercentageGross Profit Percentage$508,512,000 $1,091,478,000== 46.6%In 2011, Timberland reported gross profit of $508,512,000 on sales of $1,091,478,000. Measuring and Reporting Receivables Measuring and Reporting ReceivablesNotes Receivables (应收票据)Receivables Measuring and Reporting Receivables – Notes Receivable Measuring and Reporting Receivables – Notes Receivable Learning Objectives Learning ObjectivesEstimate, report, and evaluate the effects of uncollectible accounts receivable (bad debts，坏账) on financial statements. Accounting for Bad Debts Accounting for Bad Debts Bad debts (坏账) result from credit customers who will not pay the business the amount they owe, regardless of collection efforts. Accounting for Bad DebtsMatching PrincipleBad Debt ExpenseSales RevenueRecord in same accounting period. Accounting for Bad Debts Accounting for Bad DebtsMost businesses record an estimate of the bad debt expense by an adjusting entry at the end of the accounting period. Accounting for Bad DebtsAccounting for Bad DebtsAccounting for Bad DebtsAllowance Method Estimate bad debt expense – adjusting entry Write – off bad debt Recording Bad Debt Expense EstimatesBad Debt Expense is normally classified as a selling expense and is closed at year-end. Recording Bad Debt Expense EstimatesDeckers estimated bad debt expense for 2011 to be $504,000. Prepare the adjusting entry. Allowance for Doubtful Accounts Allowance for Doubtful AccountsBalance Sheet Disclosure Writing Off Uncollectible Accounts Writing Off Uncollectible Accounts When it is clear that a specific customer’s account receivable will be uncollectible, the amount should be removed from the Accounts Receivable account and charged to the Allowance for Doubtful Accounts. Writing Off Uncollectible Accounts Deckers’ total write-offs for 2011 were $876,000. Prepare a summary journal entry for these write-offs(冲销). Writing Off Uncollectible Accounts Writing Off Uncollectible Accounts Assume that before the write-off, Deckers’ Accounts Receivable balance was $11,000,000 and the Allowance for Doubtful Accounts balance was $1,000,000. Let’s see what effect the total write-offs of $876,000 had on these accounts. Writing Off Uncollectible Accounts Writing Off Uncollectible AccountsNotice that the total write-offs of $876,000 did not change the net realizable value nor did it affect any income statement accounts. Writing Off Uncollectible AccountsAccounting for Bad DebtsAccounting for Bad DebtsAllowance MethodAllowance Method (1) Estimate bad debt expense – adjusting entry Debit: BDE; Credit: ADA. AR – ADA = net AR; (2) Write – off bad debt Debit: ADA; Credit: AR. Methods for Estimating Bad Debts Methods for Estimating Bad DebtsPercentage of credit sales or Aging of accounts receivable Percentage of Credit Sales Percentage of Credit Sales Percentage of Credit Sales Percentage of Credit SalesBad debt percentage is based on actual uncollectible accounts from prior years’ credit sales.Focus is on determining the amount to record on the income statement as Bad Debt Expense. Percentage of Credit Sales Percentage of Credit SalesIn 2011, Kid’s Clothes had credit sales of $600,000. Past experience indicates that bad debts are one percent of sales. What is the estimate of bad debts expense for 2011?$600,000 × .01 = $6,000 Now, prepare the adjusting entry. Percentage of Credit Sales Percentage of Credit SalesnullAging of Accounts ReceivableAging of Accounts Receivable Aging of Accounts Receivable Aging of Accounts ReceivableFocus is on determining the desired balance in the Allowance for Doubtful Accounts on the balance sheet. Aging Schedule Aging ScheduleEach customer’s account is aged by breaking down the balance by showing the age (in number of days) of each part of the balance. An aging of accounts receivable for Kid’s Clothes in 2011 might look like this . . . Aging ScheduleBased on past experience, the business estimates the percentage of uncollectible accounts in each category. Aging Schedule Aging ScheduleThese percentages are then multiplied by the appropriate column totals. Aging Schedule Aging ScheduleThe column totals are then added to arrive at the total estimate of uncollectible accounts of $1,201. Aging Schedule Aging of Accounts Receivable Aging of Accounts ReceivableRecord the Dec. 31, 2011, adjusting entry assuming that the Allowance for Doubtful Accounts currently has a $50 credit balance. Aging of Accounts ReceivableAllowance for Doubtful AccountsNotice that the balance after adjustment is equal to the estimate of $1,201 based on the aging analysis performed earlier. Aging of Accounts Receivable Aging of Accounts Receivable Aging of Accounts ReceivableAging of Accounts ReceivableAging of Accounts ReceivableRecord the Dec. 31, 2011, adjusting entry assuming that the Allowance for Doubtful Accounts currently has a $50 debit balance.Aging of Accounts ReceivableAging of Accounts ReceivableAllowance for Doubtful Accounts Aging of Accounts Receivable Aging of Accounts ReceivableEstimating Bad DebtsEstimating Bad DebtsPercentage of Credit Sales Method (Income Statement Method)Aging of Accounts Receivable Method (Balance Sheet Method) Learning Objectives Learning ObjectivesAnalyze and interpret the accounts receivable turnover ratio (应收帐款周转率) and the effects of accounts receivable on cash flows. Receivables TurnoverThis ratio measures how many times average receivables are recorded and collected for the year. Receivables TurnoverThis ratio assesses the effectiveness of overall credit granting and collection activities. Receivables Turnover= 6.1 Receivables TurnoverDeckers reported 2011 net sales of $121,055,000. December 31, 2010, receivables were $18,745,000 and December 31, 2011, receivables were $20,851,000. Learning Objectives Learning ObjectivesReport, control, and safeguard cash. Cash and Cash Equivalents Cash and Cash EquivalentsChecks (支票)Money Orders (汇票)Bank Drafts(银行汇票)Certificates of Deposit (定期存单)T-Bills(国债) Internal Control of Cash Internal Control of Cash Internal Control of CashDaily DepositsPurchase ApprovalPrenumbered ChecksPayment ApprovalCheck SignaturesBank Reconciliations Internal Control of Cash Bank Reconciliation Bank ReconciliationExplains the difference between cash reported on bank statement and cash balance on company’s books. Bank Reconciliation Balance per Bank+ Deposits in Transit- Outstanding Checks± Bank Errors= Correct Balance Balance per Book+ Deposits by Bank (credit memos)- Service Charge - NSF Checks± Book Errors= Correct Balance Bank Reconciliation Bank Reconciliation Bank Reconciliation Bank ReconciliationPrepare a July 31 bank reconciliation statement and the resulting journal entries for the Simmons Company. The July 31 bank statement indicated a cash balance of $9,610, while the cash ledger account on that date shows a balance of $7,430. Additional information necessary for the reconciliation is shown on the next page. Bank Reconciliation Bank ReconciliationOutstanding checks totaled $2,417. A $500 check mailed to the bank for deposit had not reached the bank at the statement date. The bank returned a customer’s NSF check for $225 received as payment of an account receivable. The bank statement showed $30 interest earned on the bank balance for the month of July. Check 781 for supplies cleared the bank for $268 but was erroneously recorded in our books as $240. A $486 deposit by Acme Company was erroneously credited to our account by the bank. Bank Reconciliationnull Bank Reconciliation Bank Reconciliation Bank ReconciliationEnd of Chapter 6End of Chapter 6SummarySummaryReading: Chapter 6 Accounting for sales Credit card discount (contra-revenue) Sales discount (contra-revenue) Sales return and allowance (contra-revenue) Net sales = Sales – all contra-revenue account 3. Accounting for bad debts estimation of bad debt expense Write-off bad debt 4. Estimating of BDE Percentage of credit sales – estimation of BDE Aging of A/R – estimation of EB for ADA 5. Internal control of cash/Bank Reconciliation 6. Gross profit percentage & Receivables Turnover Ratio 7. HW 6Exercise 1: percentage of credit salesExercise 1: percentage of credit sales 12/31/2011 12/31/2010 Allowance for doubtful accounts $5,500 (cr.) $6,000 (cr.) During 2011, Pam recorded revenue of $100,000 including $80,000 on account. Past experience indicates 3% bad debt rate on credit sales (1) Prepare journal entry for sales during 2011 (2) Record the estimation of bad debt expense (3) How much did Pam write off in 2011 (4) Record the write-off (5) Show how the amounts related to A/R and bad debt expenses would be reported on the I/S and B/S for 2011. (On 12/31/10, A/R showed a $20,000 balance)Exercise 2: Aging of A/RExercise 2: Aging of A/REthan Inc. uses the aging approach to estimate bad debt expense. The balance of each A/R is aged on the basis of three time periods as follows at Dec. 31, 2011: (1) Not yet due $12,000; (2) up to 120 days past due $5,000; and (3) more than 120 days past due $3,000. Experience has shown that for each age group, the average loss rate on the amount of the receivable at year-end due to uncollectability is (1) 2%; (2) 10%; (3) 30%, respectively. Assume at Jan. 1, 2011, the allowance for doubtful accounts had $500 credit balance. Total write-off during 2011 was $1500. (a) Record write-off (b) Record adjusting entry at the end of 2011