INTACC

arise from sales of merchandise or services in the ordinary courses of business. Examples of _______ include accounts receivable and notes receivables

do not arise from the ordinary course of business.

6 Other Receivables/Non-Trade Receivables

is income already earned but not yet received.

these are collectibles related to bonds, notes, and other long-term receivables.

these are collectibles representing money to be paid to the entity for rent of the properties it owns

is received for artistic works or professional services

these are collectibles representing money to be paid to the entity for investment on another entity

this type of advance happens when companies offer an employee part of his/her pay in advance-essentially a short-term loan. Collections usually happen during payday

this type of advance arises when the entity pays its vendors early with the expectation to receive goods or services.

the entity gives a loan to them, recognizing their promises to pay back the entity in the form of cash, with or without interest.

are the high-ranking employees

are the investors

are the one responsible for the management of the business

are the parents and of an entity

normally are about returnable bottles and containers. The entity pays for them but not with the intent of buying them but returning them when the product is consumed.

this type of receivable arises from the entity's shares being subscribed without receiving payment yet

are volume discounts given by sellers to encouragecustomers to order in bulk.

This type of discount is not recorded in the books as discount but is reflected byrecording accounts receivables and sales at amountsalready reduced

To record the sale of trade discounts

are also known as sales discounts, are given bysellers to buyers who pay earlier than the due date toavail the discount.

This is usually presented to includediscount, discount period, and term of credit.

assumes that the customers do not avail the cash discount. Accounts receivable and sales will be recorded net of trade discounts

To record the sale of Gross price method

To record the collection of GPM

The journal entry will be on Dec. 31 for GPM

assumes that the customer will avail the cash discount. Entity records the accounts receivable and sales net of trade discounts and cash discounts.

To record the sale of NPM

To record the collection of NPM

Journal Entry on May 15, 20x2 under NPM

Adjusting Journal Entry on Dec. 31, 20x2 under NPM

we combine the gross price method and net pricemethod by recording the sales as net of trade discounts and cash discounts while using anallowance for sales discounts to record the cashdiscount.

To record the sale under AM
Journal Entry on May 1, 20x2

To record the collection under AM
Journal Entry on May 5, 20x2

Journal Entry on May 15, 20x2 under AM

The journal entry will be: under AM
Adjusting Journal Entry on Dec. 31, 20x2

To further explain the accounting for notes receivable, let's say that Chris sold P20,000 of merchandise to James on account. James later asked to have more time to pay and agreed to provide a formal three-month note bearing interest at 12% per year. Journalized the said transactions.

To entry to record the conversion of the accounts receivable to a formal note is provided as follows:
Journal Entry on 06-01-X8 under NR

At due date, Chris’s entry to record collection of thenote’s maturity value would appear as follows:
Journal Entry on 08-31-X8 under NR

If James dishonors the note of maturity or when herefuses to pay, then Chris would prepare the following entry:

Journal entry to set up bad debts expense and allowance for bad debts under the allowance method:

Journal entry to write-off accounts receivable:

Journal entry to recover previously written-off accounts receivable under Allowance Method

Journal entry to write-off accounts receivable:
under Direct Write-Off Method

Journal entry to recover previously written-off accounts receivable:

Inventories are classified into two,

is the term used for the goods or inventories held by trading entities. Examples include clothes, cars, tables, and canned goods in retail outlets.

The inventories of a manufacturing concern may include:

It buys goods (e.g raw materials to be comverted intoanother form (eg, finished goods) which it subsequently sells.

refer to goods directly or indirectly used in producing or manufacturingproducts. No work or process has been done on them yet

Examples of Raw Materials

Examples of Factory/Manufacturing Supplies

Examples of Finished Goods

these may be referred to as indirect materials. They cannot be directly traced to the product.

these are also called Works in Process (WIPS). WIPS is used for the products still being worked on or is just partially completed and not yet ready for sale.

is an inventoryaccount used to refer to the completed products whichare ready for sale. These completed goods areassigned their full share of manufacturing costs.

may vary from cost of purchase, cost of conversion, cost of service, cost of agricultural produce, and other special costs.

Purchase Price + Taxes + Duties +Transportation-ln - Trade Discount - Cash Discount (timing of deduction depends on method of recognition)

equals the amount that an entity pays for purchasing or acquiringan item/ service.

it is the cost to acquire an inventory held for sale.

these are deductions from the purchase price. Discountsmay be cash or trade discounts.

fees charged by thegovernment on manufacturing,importing, and exporting of goods.

mandatory obligations to pay to the government. (e.g. (e.g. capital gains tax, excise tax, estate tax,value-added tax)

pertains to the cost of physically transporting car, plane, train, ship, and the like.

examples of which are fuel, parking fee tax lodging, meals, and telephone charges, and may be deducted for purposes subject to the appropriate restrictions and guidelines.

Direct Labor + Factory overhead (Fixed + Variable)

labor, other costs directly related to providing the service, Indirect costs attributable.

are only included in the cost of inventories if they are incurred in getting the inventories to their current location and condition. Inventory counting is part of the control in inventory. Inventory includes: (1) inventory held by the client; (2) goods in trans; (3) consigned goods; and (4) inventory sold under conditional sales agreement.

Inventory quantities and costs may be accounted for
using either the _______ or the ________

physical system determines the ending inventory by conducting a physical count of the number of items the entity has at the end of each reporting period.

Normally adapted by businesses that keep small quantities of inventory with high unit costs.

A method is used by businesses who keep track on the movement of their inventoryon a regular basis. Unlike the periodic system where physical counting is needed, ending inventory under perpetual method was determined simply by checking the records of the entity.