intermediateaccountingtherevenue47receivables47cashcycle(编辑修改稿)

intermediateaccountingtherevenue47receivables47cashcycle(编辑修改稿)内容摘要：

xpense 2,250 Allowance for Bad Debts 2,250 To record estimated bad debt expense for the period ($2,870 required balance  $620 current balance = $2,250 adjustment) 738 Corrections to Allowance for Bad Debts • If the allowance provisions are too large or small, a correction in the allowance as well as a change in the rate or in the method employed will be needed (if the amount is material). • The effect of this change in accounting estimate would be reported in the current and future periods as an ordinary item on the ine statement, usually as an addition or subtraction from Bad Debt Expense. 739 Warranties for Service or Replacement Many panies agree to provide free services on units failing to perform satisfactorily or to replace defective goods. These agreements are referred to as a warranties. 740 MJW Video amp。 Sound sells DVD players with a 2year warranty. Past experience indicates that 10% of all systems sold will need repairs in the first year, and 20% will need repairs in the second year. The average repair cost is $50 per system. Warranties for Service or Replacement 741 The number of systems sold in 2020 and 2020 was 5,000 and 6,000, respectively. Actual repair costs were $12,500 in 2020 and $55,000 in 2020. Warranties for Service or Replacement 742 To record estimated warranty expense: 2020 Warranty Expense 75,000 Estimated Liability for Warranties 75,000 To record estimated warranty expense based on systems sold (5,000   $50 = $75,000). Warranties for Service or Replacement 743 To record the cost of actual repairs in 2020: 2020 Estimated Liability for Warranties 12,500 Cash 12,500 To record cost of actual repairs in 2020. Warranties for Service or Replacement 744 To record estimated warranty expense: 2020 Warranty Expense 90,000 Estimated Liability for Warranties 90,000 To record estimated warranty expense based on systems sold (6,000   $50). Warranties for Service or Replacement 745 To record cost of actual repairs in 2020: 2020 Estimated Liability for Warranties 55,000 Cash 55,000 To record cost of actual repairs in 2020. Warranties for Service or Replacement 746 Analyze accounts receivable to measure how efficiently a firm is using this operating asset. OBJECTIVE 3 747 Monitoring Accounts Receivable • Average collection period is the average number of days that lapse between the time that a sale is made and the time that cash is collected. • It is calculated by dividing the average daily sales by the average receivables outstanding. 748 In 2020, WS Corporation had average receivables of $354,250 and sales of $1,650,000. The average collection period can be calculated as follows: Average collection period = 78 days Average receivable $354,250 Average daily sales ($1,650,000/365) = Monitoring Accounts Receivable 749 Monitoring Accounts Receivable 750 Accounts receivable turnover = days Accounts receivable turnover is determined by dividing sales by the average trade accounts receivable outstanding during the year. Net sales $1,650,000 Average receivables $354,250 = Monitoring Accounts Receivable 751 Monitoring Accounts Receivable 752 In some cases, it may be more useful to report the average collection period for the receivables existing at the end of the period. Monitoring Accounts Receivable 753 754 Discuss the position, management, and control of cash, including the use of a bank reconciliation. OBJECTIVE 4 755 Items Classified as Cash • Coins and currency not yet deposited • Demand deposits • Petty cash funds • Cashier’s checks • Personal checks • Very shortterm interestearning securities 756 757 Compensating Balances • In connection with financing arrangements, it is mon practice for a pany to agree to maintain a minimum or average balance on deposit with a bank. • These pensating balances are defined by the SEC as “that portion of any demand deposit maintained by a corporation . . . which constitutes support for borrowing arrangements . . .” 758 759 Management and Control of Cash 1. Specifically assigned responsibilities for handling cash receipts 2. Separation of handling and recording cash receipts 3. Daily deposits of all cash received 4. Voucher system to control cash payments 5. Internal audits at irregular intervals 6. Double record of cash—bank and books, with reconciliations performed by someone outside the accounting function Basic characteristics of a cash control system are: 7。