1. ตั๋วเงินรับและลูกหนี้
(Note and Account Receivable)
Chapter 7 2

2. Note Receivable ประเภท แบ่งตามลักษณะของตราสาร แบ่งตามลักษณะดอกเบี้ย
ตั๋วสัญญาใช้เงิน
ตั๋วแลกเงิน
แบ่งตามลักษณะดอกเบี้ย
ระบุอัตราดอกเบี้ย
ไม่ระบุอัตราดอกเบี้ย

3. PROMISSORY NOTES
A promissory note is a written promise to pay a specified amount of money on demand or at a definite time.
The party making the promise is the maker.
The party to receive payment is the payee.

4. MATURITY & INTEREST – NOTES RECEIVABLE
When the life of the note is expressed in terms of days, you need to count the days.
In counting, the date of issue is omitted but the due date is included.
Example: The maturity date of a 60-day note dated July 17 is:
Term of note
60 days
July (31-17)
-14 days
August
-31days
Maturity date:
September 15

5. COMPUTING INTEREST
The formula for computing interest on an interest-bearing note is:
The interest rate specified on the note is an annual rate of interest.
Face Value
of Note
Annual
Interest
Rate
Time
in Terms of
One Year
Interest X X =

6. COMPUTATION OF INTEREST The interest rate specified
$ X % X / = $ $1, X % X / = $ $2, X % X / = $240.00
The interest rate specified
is the annual rate.

7. RECOGNIZING NOTES RECEIVABLE
ขายสินค้าและได้รับตั๋วสัญญาใช้เงินเป็นการชำระหนี้จากผู้ซื้อ
General Journal
Date
Account Titles
Debit
Credit
April Notes Receivable ,000
Sales ,000

8. RECOGNIZING NOTES RECEIVABLE
Notes receivable are recorded at FACE VALUE
General Journal
Date
Account Titles
Debit
Credit
May Notes Receivable ,000
Accounts Receivable – Brent Company ,000
Wilma Company receives a $1,000, 2-month, 12% promissory note from Brent Company to settle an open account.

9. VALUATION OF NOTES RECEIVABLE
N/R are recorded at face value.
Allowance for Doubtful Accounts used to record estimated uncollectible accounts.
N/R reported on the balance sheet at net realizable value.
Gross N/R – Allowance = Net Realizable Value

10. DISPOSING OF NOTES RECEIVABLE
HONORED NOTE
A note is honored when it is paid in full at its maturity date.
For an interest-bearing note,
the maturity amount is the face value plus interest.
Date
Account Titles
Debit
Credit
Nov 1
Cash
10,375
Notes Receivable
10,000
Interest Revenue
375
(collection of Higley, Inc. note)
Betty Co. lends Higley Inc. $10,000 on June 1,
accepting a 5-month, 9% interest-bearing note. Betty collects the maturity value of the note from Higley on Nov 1.

11. HONORED NOTE RECEIVABLE
ACCRUING INTEREST --
HONORED NOTE RECEIVABLE
Date
Account Titles
Debit
Credit
Sept 30
Interest Receivable ($10,000 x 9% x 4/12)
300
Interest Revenue
(accrue 4 month’s interest on Higley, Inc. note)
If Betty Co. prepares financial statements on September 30, interest for 4 months, would be accrued.
Interest receivable is a current asset

12. ACCRUING INTEREST -- HONORED NOTE RECEIVABLE
Date
Account Titles
Debit
Credit
Nov 1
Cash
10,375
Notes Receivable
10,000
Interest Receivable
300
Interest Revenue 75
(collection of note at maturity)
When interest has been accrued, it is necessary
to credit Interest Receivable at maturity.

13. This scenario assumes the note will eventually be collected.
DISHONOR OF
NOTE RECEIVABLE
Date
Account Titles
Debit
Credit
Nov 1
A/R—Higley, Inc.
10,375
Notes Receivable
10,000
Interest Revenue
375
(record dishonor of Higley note)
A dishonored note is a note that is not paid in full at maturity. Since the payee still has a claim against the maker of the note, the balance in Notes Receivable is usually transferred to Accounts Receivable.
NOTE:
This scenario assumes the note
will eventually be collected.

14. DISHONOR OF NOTE RECEIVABLE
Date
Account Titles
Debit
Credit
Nov 1
Allowance for doubtful accounts
10,000
Notes Receivable
(record dishonor of Higley note)
If there is no hope of collection,
The face value eliminated, and the allowance is debited.
Also, no interest would be accrued.

15. เช็ครับลงวันที่ล่วงหน้า
บันทึกบัญชีเป็นเช็คลงวันที่ล่วงหน้าหรือเป็นตั๋วเงินรับหรือไม่บันทึกการรับเช็คจนกว่าเช็คครบกำหนดขึ้นเงิน
เมื่อรับเช็คลงวันที่ล่วงหน้าจากลูกหนี้หรือเมื่อขายสินค้า
เดบิต เช็คลงวันที่ล่วงหน้า/ตั๋วเงินรับ xx
เครดิต ลูกหนี้/ขาย xx
เมื่อเช็คครบกำหนด
เดบิต ธนาคาร xx
เครดิต เช็คลงวันที่ล่วงหน้า/ตั๋วเงินรับ xx

16. Receivables
ลูกหนี้การค้า( Account Receivables)
ลูกหนี้อื่น(Others)

17. (merchandise returned)
RECOGNIZING A/R
A classic general journal sequence for credit sales.
Date
Description
Debit
Credit
July 1
A/R—Polo Company
1000
Sales
(sales on account)
July 5
Sales returns & allowances
100
(merchandise returned)
July 11
Cash
882
Sales Discounts 18
900
(collection of A/R)

18. VALUATION OF A/R Receivables are current assets on the balance sheet
They are stated at net realizable value, the amount expected to be received in cash.
Uncollectible A/R are accounted for using two methods
Direct Write-Off
Method
Allowance
Method

19. DIRECT WRITE-OFF METHOD
No entries are made for bad debts until an account is determined to be uncollectible at which time the loss is charged to bad debts expense.
Bad debt expense shows only actual losses.
Not acceptable for financial reporting purposes unless losses are insignificant.
Operating
expense
on the
income
statement
Bad debts expense

20. DIRECT WRITE-OFF METHOD
General Journal
Date
Account Titles
Debit
Credit
Dec Bad Debts Expense
Accounts Receivable – M.E. Doran
Warden Co. writes off M. E. Doran’s $200 balance as uncollectible on December 12. When this method is used, Bad Debts Expense will show only actual losses from uncollectibles.

21. The allowance method is required when bad debts are material.
Uncollectible accounts are estimated
The expense is matched against sales in the same accounting period.
Uncollectible accounts expense = bad debts expense

22. RECORDING ESTIMATED UNCOLLECTIBLES
ALLOWANCE METHOD
RECORDING ESTIMATED UNCOLLECTIBLES
General Journal
Date
Account Titles
Debit
Credit
Dec Bad Debts Expense 12,000
Allowance for Doubtful Accounts ,000
Estimated uncollectibles are debited to Bad Debts Expense and credited to Allowance for Doubtful Accounts at the end of each period.

23. RECORDING A WRITE-OFF ALLOWANCE METHOD
General Journal
Date
Account Titles
Debit
Credit
Mar Allowance for Doubtful Accounts
Accounts Receivable - R. A. Ware
Actual uncollectibles are debited to Allowance for Doubtful Accounts and credited to Accounts Receivable at the time the specific account is written off.

24. RECORDING A RECOVERY ALLOWANCE METHOD
To recover an account that has been written off:
1 reverse the write-off entry.
General Journal
Date
Account Titles
Debit
Credit
July Accounts Receivable – R. A. Ware
Allowance for Doubtful Accounts
2 record the collection in the usual manner.
General Journal
Date
Account Titles
Debit
Credit
July Cash
Accounts Receivable

25. BASIS FOR ESTIMATING UNCOLLECTIBLES Percentage of Receivables
ALLOWANCE METHOD
BASIS FOR ESTIMATING UNCOLLECTIBLES
Two methods of estimating uncollectible accounts
comply with GAAP.
Percentage of Sales X
Percentage of Receivables √
Emphasis on Income
Statement Relationships
Emphasis on Balance
Sheet Relationships
Uses aging schedule

26. PERECENTAGE OF RECEIVABLES BASIS
ALLOWANCE METHOD
PERECENTAGE OF RECEIVABLES BASIS
Bad debt expense based on % of the ending balance in A/R.
The adjusting entry is the difference between the required balance and the existing balance in the allowance account.
Estimates NRV of receivables.
General Journal
Date
Account Titles
Debit
Credit
Dec Bad Debts Expense ,700
Allowance for Doubtful Accounts ,700
If the trial balance shows Allowance for Doubtful Accounts with a credit balance of $528, an adjusting entry for $,1,700 ($2,228 - $528) is necessary.

27. CREDIT CARD SALES Three parties are involved with credit card sales:
The retailer pays the credit card issuer
a fee of 2-6% of the invoice price.
Sales from Visa, MasterCard, and Discover are treated
differently than American Express & Diners Club
Credit card issuer
Retailer
Customer

28. VISA, MASTERCARD, & DISCOVER
Considered cash sales by the retailer.
Upon receipt of credit card sales slips from a retailer, the bank adds the amount to the seller’s bank balance.
General Journal
Date
Account Titles
Debit
Credit
Cash
Service Charge Expense
Sales ,000
Barbara Hardy purchases CD’s for her restaurant from Ty Parker Music Co. for $1,000 using her VISA First Bank Card. First Bank charges a 3% fee.

29. PRESENTATION & ANALYSIS
FINANCIAL STATEMENT
PRESENTATION & ANALYSIS
In the balance sheet, short-term receivables are reported in the current assets section below short-term investments.
Report both the gross amount of receivables and the allowance for doubtful accounts.
Accounts receivable
$1,200,000
Less: allowance for doubtful accounts
(48,000)
Accounts receivable, net
$1,152,000

30. End of Chapter 7 4