emeronTI 6

KNenyRtUvTar
Accounting for Receivable

Lecturer: Hour Ry

I-RbePTnxg;RtUvTar (The types

of Receivables)

Bakfa RtUvTar ( Receivable )

KWCaTwkR)ak;EdlnwgRtUvputkMnt;
nwgekIteLIgBIkarlk; beGaybuKl
bRkumhunepSgeTotCMBak; . Receivable
KWCakarTamTarEdlRtUvrMBwgfanwgR
bmUl)an Casac;R)ak;
( Receivable s are claims
that are expected to be collected in cash) .
Receivable GacRtUvEbgEckCa Account receivable,
Notes receivable, and other receivable .
Lecturer: Hour Ry

KNnIRtUvTar

Account

Receivable
ekIteLIgedaysarkarpl;esvakm
bkarlk;TMnijEdlGtifiCnmin Tan;TUTat;
( Are a mounts owed by customers on account they result

.
CaTUeTAKNnITaMgenHnwgrMBwgfaR
bmUl)anenAcenaHBI 30 eTA 60 f
from the sale of goods and service)

( These receivables generally are expected to be collected

.
vaCaKNnI EdlsitenAkg
within 30 to 60 days)

Lecturer: Hour Ry

Current Assets

.
3

bNRtUvTTYl (Notes Receivable)

bgajBIkarTamTarsMrab;GVIEdlCa]bkrN_\NTanE
dlRtUv)anecj pSayedayTukCaPstagbMNul
(represent claims for which format instruments of credit are issued as
evidence of the debt)

]
bkrN__\NTanCaFmtaTamTarkUnbMNulRtUvsgk
arR)ak; nigryeBl nkarRtUvsgcenaHBI 60 eTA
90 f nigGacEvgCagenHeTot (The credit instrument
normally requires the debtor to pay interest and extends for time periods of

.
KNnIRtUvTar nig
bNbMNulRtUvTarEdlCalTplBIRbtibtikarlk;K
WehAfa Trade receivable (Notes and account receivable that result from
sales transactions are often called Trade receivable) .
60 to 90 days or longer)

Lecturer: Hour Ry

KNnIRtUvTardTeTot (Other
Receivable)

rYmmanTwkR)ak;RtUvTTYlEdlminEmn)an
mkBIkarlk; dUcCa
- karR)ak;RtUvTTYl (interest receivable)
- R)ak;EdlRkumhun)anpl; (loan to company
offers)

- R)ak;ExEdlnieyaCikRtUvTTYl

(advances to

employees )

- BnEdl)anbg;mun

income taxes refundable)

Lecturer: Hour Ry

.
5

II-KNnIRtUvTar ( Accounts Receivable )

bBaabIdMbUgEdlTak;TgnwgKNnIRtUv
TarKW (The three accounting problems associated with
accounts receivable are):

karTTYlsal;KNnIRtUvTar

(Recognizing

accounts receivable)

karvaytmKNnIRtUvTar (Valuing accounts

receivable)

karlubecalKNnIRtUvTar (Disposing of
accounts receivable)
Lecturer: Hour Ry

karTTYlsal;KNnIRtUvTar
karTTYlsal;KNnIRtUvTarEdl)ansikSar
YcehIyenAkgemeronTI 7
]TahrN_ Assume that Jordache Co. on July 01,2011, sells
merchandise on account to Polo Company for $1,000 terms 2/10,
n/30. On July 5, merchandise worth $100 is returned to Jordache Co.
On July 11, payment is received from Polo Company for the balance
due.

Date

Account name
Account Receivable

2011
July 1

Sale revenues

Dr.

Cr.

$1,000
$1,000

( To record sales on account )

Lecturer: Hour Ry

Sales Return and discount

Date
2011

Account name
Sale returns and allowances

July 5

Dr.

Cr.

$100

Account Receivable

$100

(To record merchandise return)

Date
2011

Account name
Cash

Dr.

Cr.

$882

July 11 Sales discounts

18

Account receivable

900

( To record collection of account

receivable )
Lecturer: Hour Ry

III-\NeTyBii)akTar

(Bad debts /
Uncollectible Account)
kareFVIGaCIvkm BiessnaeBlbcb,nkarTij
karlk;minsUvmankarTUTat; PamenaHeT eBalKW
karlk;dUrmankarlk;bNak; .

karlk;bNak;minGaceCosputBIkar)at;bg;eTmannyf
a karEdlGtifiCnxH minsgbMNulEdlCMBak; .

edayehtuenHehIy)anCaRkumhunEtgEteFVIkarKitKU
reTAelIkar cMNayelI bMNulEdlminGacRbmUl)an
(Uncollectible account ) edIm,IeGaykarbUksrubrk
R)ak;cMeNjmanlkNsmRsbmannyfa
ecosvagRkumhuncMeNj)aneRcInEtsac;R)ak;minsUv
man edaysarEt Account receivable manTMhMeRcIn .
Lecturer: Hour Ry

IV-viFIsaRskMnt;\NeTyBi)akTar
(Measuring bad debts Method)
1-viFIsaRslb;edaypal; ( Direct write-off method)

viFIsaRsdkecjedaypal;
bMNulsyxatKWmin)an)a:n;san ehIyKNnI
sMviFanFn Allowance minRtUv)aneRbIR)as; (Under
the direct write-off method, bad debt losses are not estimated and no
allowance account is used).

enAeBlKNnIRtUv)ankMnt;faTarmin)anTwkR)a
k; xatbg;cat;TukCacMNay (When an account is
determined to be uncollectible, the loss is charged to bad debt

.
eFVIeLIgenAeBlEdlmas;bMNulminGacTarb
MNulBI GtifiCnEdlCMBak; .
expense)

Lecturer: Hour Ry

10

sikSa]TahrN_
enAfTI 5/7/11
Rkumhun)anlk;TMnijeGayGti
fiCnbNak;cMnYn $5,000 Edl
kgenaHman
$200 Kwelak A .
Date
Account name
Dr.
Cr.
2011-kt;RtaeBllk;bNak;KW
Account receivable
$5,000
July 5

$5,000

Sales
(To record sales on account)

Lecturer: Hour Ry

11

sikSa]TahrN_
-rhUtdl;fTI 20/10/11 ]
bmaRkumhunxitxMya:gNak
minGacTarbMNul BIelak A )
Date
Account name
Dr.
Cr.
andUcenHkarlb;elI\NeTy
2011
Bad debt expense
$200
Bi)akTarRtUveFVIdUcxageRka
Oct 20
$200
Account receivable
m
(To record write-off of A account)

Lecturer: Hour Ry

12

2-viFIsaRssMviFanFn (Allowance
Method)

kalNaRkumhunmankarlk;bNak;
GkRKb;RKgRtUveFVIkar)a:n;sanelI A/R
EdlehAfa kareFVI sMviFanFn ( Allowance method for bad debt ) .
Example : ]bmaRkumhunman\NeTy A/R cugqaM
2010 man $200,000 .
qgtambTBiesaFnqaMkngeTARkumhunB
akrNeXIjfaman $12,000
Cab;sgSyfaminGacTar)an .

Lecturer: Hour Ry

13

kt;RtakarBakrNelIGtifiCnCab;

sgSy (Recording Estimated Uncollectible)

Date
2010

Account name
Bad debt expense

Dec. 31

Dr.

Cr.

$12,000

Allowance for doubtful account

$12,000

(To record estimate of uncollectable

account)

Note : Allowance for doubtful accounts is a contra

asset account that shows the claims on customers
that are expected to become uncollectible in the
future.
Lecturer: Hour Ry

14

In Balance Sheet
Current Assets
Cash
$14,800
Account Receivable
$200,000
Less: Allowance for doubtful accounts
12,000 188,000
Merchandise inventory
310,000
Prepaid expense
25,000
Total current assets
$ 537,800

Lecturer: Hour Ry

15

kt;Rtakarlb;ecal\NeTyBi)akTar
Recording the write-off an Uncollectible account

]bmaRkumhunenAfTI
01/03/2011

xitxMeFVIkarTarb:uEnman
Account name
Dr.
Cr.
2011
Allowance for doubtful account
$500
$500 minGacTar)anBIGtifiCn A .
Date

March 01

Account Receivable

$500

(To record write-off customer A)

Before Write-off After Write-off
Account receivable
$200,000
$199,500
Allowance for doubtful accounts
12,000
11,500
Cash realizable value
$188,000
$188,000
Lecturer: Hour Ry

16

kt;RtakareRsacRsg;nUv\NeTyBi)ak

Tar

( Recovery of an Uncollectible Account )

]bmaeRkaymkenAfTI
Rsab;EtGtifiCn
Date
Account name A
Dr.
2011enaH)ansgbMNulvij
Account receivable
$500
July 01

Allowance for doubtful account

01/7/11
Cr.

$500

(To reverse write-off customer A )

Date
2011
July 01

Account name
Cash

Dr.

Cr.

$500

Account Receivable

$500

(To record collection from A )

Lecturer: Hour Ry

17

V-viFIsaRseRbIR)as;CamUldansMrab;eFVIsMviFanFn
(Bases Used for Allowance Method)

vamanPaBsamBaelIkarBnl;cMnYnTw
kR)ak;EdlrMBwgfaTarmin)an .
EteTaHCaya:gNa ry eBlBitR)akd
RkumhunRtUv)a:n;sanfab:unan
RbsineKeRbIR)as;viFIsaRssMviFanFn .
To simplify the preceding explanation, the amount of the expected uncollectible was
given. However, in real life companies must estimate that amount if they use the
allowance method.

manmUldanBIrEdlRtUv)aneKeRbIedIm,Ik
Mnt;TwkR)ak;enH (Two bases are used to determine this
amount) KW PaKrynkarlk; ( Percentage of Sales) nig
PaKrynKNnIRtUvTar
( Percentage of Receivables) .
Lecturer: Hour Ry
18

1-

PaKrynkarlk; ( Percentage of
Sales)

karykPaKrynkarlk;CamUldan
fak;RKb;RKgRtUvkMnt;PaKrymYyEdl
ykTMnak;TMngn
TwkR)ak;lk;CMBak;eTAnwgKNnIEdlminGacT
ar)an (In the percentage of sales basis, management establishes a
percentage relationship between the amount of credit sales and
expected losses from uncollectible account)

karkMnt;PaKryenHEpkelIbTBiesaFn_BImun
nigeKalneya)ay \NTan Edl)anRbemIlTuk (The
percentage is based on past experience and anticipated credit
policy) .
Lecturer: Hour Ry

19

Percentage of Sales
Example: assume that Gonzalez Company
elects to use the percentage of sales basis
and concludes that 1% of net credit sales
will become uncollectible. If net credit
sales for 2010 are $800,000, the
estimated bad debts expense is $8,000
(1% x 800,000).
Date

Account name

The adjusting entry is:

Bad debt expense

2010

Dec. 31

Allowance for doubtful accounts

Dr.

Cr.

$8,000
$8,000

(To record estimated bad debts for year )

Lecturer: Hour Ry

20

2-PaKrynKNnIRtUvTar
(Percentage of receivables)

eRkammUldannkarviPaKtamPaKryn
Receivable fak;RKb;RKgkMnt;
PaKryenHTMnak;TMng
enHrvagTwkR)ak;enHCamYynwg
karxatbg;fanwgmin GacTar)an (Under the
percentage of receivables basis, management establishes a
percentage relationship between the amount of receivables
and expected losses from uncollectible accounts).
A schedule (often called an aging schedule ) is prepared, in which
customer balances are classified by the length of time they have
been unpaid. Because of its emphasis on time, the analysis is often
called aging the accounts receivable.
Lecturer: Hour Ry

21

Percentage of receivables
Customer
Name

Total

Not yet
due

30-day

31-60

Over 91

35,000

9,000

29,000

3,000

Others

157,000

45,000

30,000

22,000

25,000

35,000

230,000

68,000

40,000

31,000

36,000

55,000

1%

2%

4%

10%

20%

Estimated
percentage
Uncollectible
Total estimate
$ 17,320
bad debt

10,000

61-90

Total

20,000

Number of Days Due

5,000
3,000

680

6,000

6,000

800

Lecturer: Hour Ry

1,240

20,000

3,600

11,000
22

Percentage of receivables

TwkR)ak;srubEdlminGacTar)anrbs;Rkumhun $
17,320 bgajBIcMnYnEdl
GtifiCnnwgminsgnaeBlGnaKt .
dUecHTwkR)ak;enHRtUvbgajenAkg Allowance
of doubtful accounts at the balance sheet date.

edayeyagelIbBaaenHTwkR)ak;enAkg bad debt

adjusting entry is the difference between the required balance and the existing balance in the allowance

.
]bmaRkumhunmansmtul\NTayi Allowance for doubtful accounts
cMnYn $10,000 . edaykarBakrN manTwkR)ak; $
17,320 dUcenHRtUveFVIkarEktMrUv
dUcxageRkam
account

Date
2010

Account name
Bad debt expense

Dec. 31

Allowance for doubtful accounts

(To adjust allowance account to total estimated
Lecturer: Hour Ry
uncollectible )

Dr.

Cr.

$7,320
$7,320
23

VI-bNRtUvTar ( Notes Receivable)

bNRtUvTarKWCabNmYyEdlmanlkNBitR)akd
Cagxg;RtUvTar . enaHKWCaxg; RtUvTarEdl kUn
bMNulRtUvcuHhtelxaenAelIsnwkbNsnasgR)a
k;mYykg eBlkMnt;mYuyEdlkUnbMNulRtUvbg;
karR)ak; .
karKNnakarR)ak;
karR)ak;
= R)ak;edIm x
GRtakarR)ak; x
ryeBl
(Interest)

= (Principal of Note) .(Rate of Interest) . (Time of Note)

Example : PV = 10,000 R = 12% TN = 60 days

karR)ak; I = 10,000 x 0.12 x 60/360 = $200

karkt;RtabNRtUvTar (Recording a Note Receivable)
Lecturer: Hour Ry

24

A-krNIeGayxIR)ak;

]bmaRkumhun Dara manR)ak;cMnYn $5,000

eGaybuKlmak;xI edayyl; RBmnUvGRtakar R)ak;
10% ehIysnasg kgkalkMnt; 4 ExRtUvsg ( Maturity date ) 20/8/10 .
kt;RtaenAeBleGayxI
Date
2010

Account name
Note receivable

April. 20

Dr.

Cr.

$5,000

Cash

$5,000

(To record company made loan )

kt;RtaenAeBlbuKlenaHsgT
aMgedImTaMgkarR)ak;
Date
Account name
Dr.
Cr.
2010

Cash
Aug. 20

$5,167

Note receivable

$5,000

Interest revenue

$ 167

(To record repayment )

Lecturer: Hour Ry

25

B-

krNIlk;TMnijTTYl)anbN
RtUvTar
]bma enAf
12/8/10 Rkumhun
)anlk;TMnijeGayGtifiCn
TwkR)ak; $800 TTYl)an
Date
Account name
Dr.
bNRtUvTar
2010
Note receivable
$800
Aug.
12
Sales
CamYyGRtakarR)ak;
8%
kalkMnt;RtUvsg
30f
.
Date
Account name
Dr.
Dara

C
Cr.
$800

(To record sales on note )

2010

Cash
Sept. 11

Cr.

$805.33

Note receivable

$800

Interest revenue

$5.33

(To record repayment )

Lecturer: Hour Ry

26

karlk;TMnijeCO
ehIyeRkaymkTTYlCabNRtUvTar
C-

]bma enAf 20/8/10 Rkumhun

Dara )anlk;TMnijeCOeGayGtifiCn
cMnYn $2,000 edaypl; Terms : 2/15/,n/30 .

Date
2010

Aug. 20

Account name

Account receivable
Sales

Dr.

Cr.

$2,000
$2,000

(To record Sale on credit )

Lecturer: Hour Ry

27

karlk;TMnijeCO ehIyeRkaymkTTYlCabNRtUvTar

C-

rhUtdl;f 19/9/10 edayGtifiCnKanlTPaBsgbMNul

GtifiCnyl; RBmeGayRkumhunKitkarR)ak; 12%
ryeBlkMnt;RtUvsg 60 f .
Date
2010

Account name
Note receivable

Sept. 19

Dr.

Cr.

$2,000

Account receivable

$2,000

(To record company made loan )

sntdl;eBlkMnt;GtifiCnsgTwkR)
Date
Account name
Dr.
Cr.
ak;TaMgedIm
TaMgkarR)ak;
.
2010
Cash
$2,040
Nov. 18

Note receivable

$2,000

Interest revenue

$40

(To record collection )

Lecturer: Hour Ry

28

VII-karlk; Receivable ( Disposing receivable)

karlk; Receivable
CameFa)ayedaHRsaybBaaenAeBlRkumhunxV
Hsac;R)ak;kg kareFVIGaCIvkm. karlk; receivable

RtUvcMNaykMr:Gb,harxHeGayFnaKar.
1-karlk;KNnIRtUvTar

( Disposing Account receivable)

]TahrN_ enAfTI 20/9/10

edaymankarxVHxatfvikaRkumhunelak Dara
sMerccitlk; Account receivable cMnYn $5,000
eGayFnaKaredayyk service charge 2% .
Date

2010

Account name

Cash

Dr.

Cr.

$4,900

Sept. 20 Service charge expense

Account receivable

$100
$5,000

(To record sale account receivable )

Lecturer: Hour Ry

29

2-karlk;bNRtUvTar ( Disposing Note receivable)

enAf 20/8/10
Rkumhun)anlk;bNRtUvTarmYyEdl
manTWk R)ak;edImdMbUg $45,000
karR)ak;bNRtUvTarKW 12% kalkMnt;
60 days Edl Maturity date : 10/9/10
eGayFnaKarkgGRtaGb,har 15% :
TwkR)ak;EdlGtifiCnRtUvsgKW
Example :

FV = 45,000 + 45,000 x 0.12 x 60/360

= 45,900

Lecturer: Hour Ry

30

Disposing Note receivable

b:uEnmunGtifiCnRtUvsg 20 days
Gb,harEdlFnaKarKitKW
Discount = 45,900 x 0.15 x 20/360 = 382.5
Date

Account name

Dr.

Cr.

dUecHRkumhunTTYlkarR)ak
Cash
$45,517.5
Aug.
20
Note
$45,000
;)an
900receivable
382.5 = 517.5

2010

Interest revenue

$517.5

(To record collection )

Lecturer: Hour Ry

31

VIII-bNRtUvTarminRtUvsgtamkalkMNt;
( Dishonored Note Receivable)

RbsinCaGkbegItbNRtUvsg ( Make of
Note ) minsgtamkal kMNt;nbNenaH
eBlenaHGkRtUveFVIkarepr Note receivable
eTACa Account Receivable vij .
Example : Rkumhun Dara manbNRtUvTar
BIGtifiCn C Edlman TwkR)ak;edIm $25,000
GRta karR)ak; 12%
ehIykalkMNt;bIExRtUv sg . 20/8/10
CafkMNt;RtUvsg b:uEn C min)ansg .
Lecturer: Hour Ry

32

Dishonored Note Receivable

Date
2008
Aug. 20

Account name
Account receivable

Dr.

Cr.

$25,750

Note receivable

$25,000

RbsinbNenaH)anlk;eTAeGayF
(To record dishonor of the note )
naKarehIy
eBlenaHRkumhunRtUvsgeGay
FnaKarvijehIy
Date
Account name
Cr.
bEnmelIkMrepSg
. Dr. ]TahrN
2008
Account receivable
$25,780
kMrenaHesI
$30 .
Interest revenue

Aug. 20

$750

Cash

$25,780

(To record dishonor of the note )

Lecturer: Hour Ry

33

IX-

karcuHtMrUvelIkarR)ak;RtUvTTYl

enAf 01/11/10
RkumhunmanbNRtUvTTYlEdlmantMle
dIm $1,200 GRtakarR)ak; 12%
ryHeBlkMnt;RtUvsg
BIrEx .
Date
Account Name
Dr.
Cr.
Example :

2010
Adj. Nov. 30

Interest receivable

$12

Interest revenue

$12

(To record adjusting )

]bmaenAf
31/12/08
RtUvTTYlkarsgTaMgedImTa
MkarR)ak;
Lecturer: Hour Ry

34

]bmaenAf 31/12/10
RtUvTTYlkarsgTaMgedImTaM
karR)ak;
Date
2010
Dec. 31

Account name
Cash

Dr.

Cr.

$1,224

Note receivable

$1,200

Interest receivable

$12

Interest revenue

$12

(To record collection )

Lecturer: Hour Ry

35

Assignment
Lecturer: Hour Ry

36