Ch07 Cash.and.Receivables 2015

7-1 WELCOME TO MY CLASS https://sites.google.com/site/ketoantuyduc 7-2 REVIEW – CIRCULAR 200 TK 2291 - Dự phòng giảm giá chứng khốn kinh doanh TK 2292 - Dự phòng tổn thất đầu tư vào đơn vị khác TK 2293 - Dự phòng phải thu khó đòi TK 2294 - Dự phòng giảm giá hàng tồn kho TK 5211 - Chiết khấu thương mại TK 5212 - Giảm giá hàng bán TK 5213 - Hàng bán bị trả lại 7-3 CHAPTER CASH AND RECEIVALBES 7-4 Cash Coins Coins and and currency currency Balances Balances in in checking checking accounts accounts Petty Petty cash cash Items Items for for deposit deposit such such as as checks checks 7-5 Cash Equivalents Treasury Treasury bills bills Commercial Commercial paper paper Investments must have maturity date no longer than months from the date of purchase 7-6 Learning Objectives Distinguish between the gross and net methods of accounting for cash discounts 7-7 Accounts Receivable Result from the credit sales of goods or services to customers Are classified as current assets Credit Credit sales sales require: require:   Maintaining Maintainingaaseparate separate account accountreceivable receivable for for each each customer customer Accounting Accountingfor forbad bad debts debts that thatresult resultfrom fromcredit credit sales sales Are recorded net of trade discounts 7-8 Cash Discounts Increase Increase sales sales Cash Cash discounts discounts Encourage Encourage early early payment payment Increase Increaselikelihood likelihood of of collections collections 7-9 Cash Discounts 2/10,n/30 Discount Discount Percent Percent Number Number of of Days Days Discount Discount is is Available Available Otherwise, Otherwise, Net Net (or (or All) All) is is Due Due Credit Credit Period Period 7-10 Cash Discounts Gross Method Sales Sales are are recorded recorded at at the the invoice invoice amounts amounts Sales Sales discounts discounts are are recorded recorded ifif payment payment is is received received within within the the discount discount period period 7-67 Receivables Management Dell Dell Apple Apple 2004 2003 2004 2003 2004 2003 2004 2003 Accounts 774 766 Accountsreceivable receivable (net) (net) $$ 3,635 3,635 $$ 2,586 2,586 $$ 774 $$ 766 Net 41,444 8,279 Netsales sales 41,444 8,279 Average Collection Period Dell 365 = 27.4 days 13.32 365 = Receivables Turnover Ratio Apple 365 = 34 days 10.75 7-68 Cash Controls Appendix 7-69 Bank Reconciliation Explains the difference between cash reported on bank statement and cash balance on company’s books Provides Provides information information for for reconciling reconciling journal journal entries entries 7-70 The Bank Reconciliation  What are two records of a business’s cash? Cash account in the business’s own general ledger The bank statement which tells the actual amount of cash the business has in the bank 7-71 Bank Reconciliation Bank Balance Book Balance + Deposits in Transit + Bank Collections - Outstanding Checks - Service Charges - NSF Checks ± Bank Errors ± Book Errors = Corrected Balance = Corrected Balance 7-72 Bank Reconciliation All reconciling + Deposits in Transit items on the book side - Outstanding requireChecks an adjusting ± entry Bank Errors to the cash account = Adjusted Balance Balance per Bank Book Balance + Bank Collections - Service Charges - NSF Checks ± Book Errors = Corrected Balance 7-73 Bank Reconciliation Let’s Let’s prepare prepare aa May May 31 31 bank bank reconciliation reconciliation for for the the Hawthorne Hawthorne Company Company   The The May May 31 31 bank bank statement statement indicated indicated aa balance balance of of $34,680 $34,680   The The cash cash general general ledger ledger account account on on that that date date shows shows aa balance balance of of $35,276 $35,276 Additional Additional information information necessary necessary for for the the reconciliation reconciliation is is shown shown on on the the next next screen screen 7-74 Bank Reconciliation  Cash receipts not yet deposited on May 31 totaled $2,965  A $1,020 check mailed to the bank for deposit had not reached the bank at the statement date  Outstanding checks totaled $5,536  A check written to pay for raw materials purchased on account cleared the bank for $1,790 but was erroneously recorded at $790 by the accoutant of the company  The bank statement showed $80 in service charges in May  The bank returned NSF checks in the amount of $2,187 received as payment on accounts receivable  The bank collected a note receivable for $1,120 that included $120 of interest 7-75 Bank Reconciliation 7-76 Bank Reconciliation 7-77 Bank Reconciliation Prepare Prepare the the entries entries to to adjust adjust the the cash cash account account to to the the corrected corrected balance balance 7-78 Petty Cash Used for minor expenditures Petty cash fund Has one custodian Replenished periodically 7-79 Petty Cash Hawthorne Hawthorne Co Co established established aa petty petty cash cash fund fund on on May May 11 by by writing writing aa check check for for $200 $200 to to the the petty petty cash cash custodian custodian Prepare Prepare the the May1st May1st journal journal entry entry to to record record the the establishment establishment of of the the fund fund GENERAL JOURNAL Date May Description Petty Cash Cash Page 64 Post Ref Debit Credit 200 200 7-80 Petty Cash During During May, May, the the petty petty cash cash custodian custodian paid paid bills bills using using cash cash from from the the fund fund totaling totaling $160 $160 as as follows: follows: Postage $40 Office supplies 35 Delivery charges 55 Entertainment 30 Prepare the May 31 journal entry to record replenishing the fund GENERAL JOURNAL Date Description May 31 Postage expense Page 65 Post Ref Debit Credit 40 Office supplies expense 35 Delivery expense 55 Entertainment expense 30 Cash 160 7-81 End of Chapter Homework  Read the textbook  Do all examples in text book  Do homework