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Title: Accounts Receivable
Description: Concept-map discussion of Accounts Receivable concept for Business students.
Description: Concept-map discussion of Accounts Receivable concept for Business students.
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TRADE
and
OTHER RECEIVABLES
RECEIVABLES
PFRS 15, paragraph 108
a receivable is an entity’s right to consideration that is unconditional
...
Refers to amounts owed by customers to a
company at a particular time and not yet paid
...
Accounts Receivable
Receivable that is not supported
by promissory note
...
TRADE RECEIVABLES
SOURCE:
Claims from sale of goods or services
in the ordinary course of business
...
months
...
Unlike Trade Receivables, for it to be considered current non-trade receivables, it
should be 1 year or within 1 year only
...
TYPES:
NOTES RECEIVABLE
Is a written promise (promissory
note) to receive a specific amount
of cash from another party on
one or more future dates
...
Net Realizable Value
(a
...
a
...
TRADE DISCOUNT are discounts often offered to
companies that buy in bulk, buy in large volumes, or meet
the conditions
...
lists for sale
...
Explanation:
The $20,000 is the gross amount which means it is not yet reduced by Trade
discounts and Cash Discounts
...
On the other hand, n/30 means the credit term
...
NET REALIZABLE VALUE refers to the net amount of
accounts receivable that will be collected
...
CREDIT BALANCE describes an amount that a business
owes to a customer
...
JOURNAL ENTRIES
SALE
PAYMENT
WITHIN THE
DISCOUNT
PERIOD
PAYMENT
BEYOND THE
DISCOUNT
PERIOD
Gross Method is PRACTICALLY
CORRECT METHOD
...
This method records the Face value of
receivables, which means that we
record debit to “sales discount” only
if the customer paid within the
discount period and on the other
hand, ignore sales discount if
payment is beyond the discount
period
...
Therefore, this method only
records the “Sales discount forfeited”
to correct the assumption that “every
customer will pay in time” in case the
customer paid beyond the discount
period
...
ACCOUNTS RECEIVABLE: T-account
ACCOUNTS RECEIVABLE: Subsequent Measurement
=
ALLOWANCE FOR BAD DEBTS: T-account
=
Accounts Receivable
Less: Allowance for Sales Return
Less: Allowance for Sales Discount
Less: Allowance for Freight Charge
Less: Allowance for Bad Debts
INVOICE PRICE
XX
XX
XX
XX
XX
XX
ACCOUNTING FOR FREIGHT
Shipping Terms
The owner of goods while in transit is liable for the freight
...
SELLER’S WAREHOUSE
SHIPPING DOCK
Owner is the SELLER until the
goods is on the shipping dock
...
Owner: SELLER
The seller retains the legal title to the goods until they reach
the location of the buyer
...
BUYER’S WAREHOUSE
Owner is still the SELLER until the
goods arrive at the Buyer’s Warehouse
...
JOURNAL ENTRIES
Freight Prepaid, means that the freight
charge on the goods shipped was already
paid by the seller
...
FOB Shipping Point, Freight Collect
Seller has no journal entry because the Freight is
appropriately paid by the buyer
Title: Accounts Receivable
Description: Concept-map discussion of Accounts Receivable concept for Business students.
Description: Concept-map discussion of Accounts Receivable concept for Business students.