Kế toán, kiểm toán - Short - Term financing

Short-Term FinancingFinancing ConsiderationsInterest costContinuing availability of financing methodEffects on availability and cost of alternative sources of moneyPromissory NoteUnconditional written promise to payPromissory NoteUnconditional written promise to pay a definite sum of moneyPromissory NoteUnconditional written promise to pay a definite sum of money on demand or at a future date.Promissory NoteUnconditional written promise to pay a definite sum of money on demand or at a future date.Person promising to payee is makerPerson promised the payment is payeeCharacteristics of Promissory NoteIn writing and signed by makerUnconditional promise to pay a certain sum of moneyPayable to a bearer or stated personPayable on demand or a specified future timeMay or may not be interest bearingMaturity DateDate when payment is dueCalculationDays in month note is dated minus date of noteAdd number of days in succeeding months until total is reachedComputing Interest Interest = Principal x Rate x TimeMaturity stated in days $30 = $1,000 x 0.12 x 90/360Maturity stated in months $50 = $1,000 x 0.12 x 5/12Maturity stated in years $240 = $1,000 x 0.12 x 2Maturity Value of NotePrincipal amount plus interest to maturity$1,000, 12%, 90 day note$1,000 + $30 = $1,030Annual Effective Interest RateAverage annual interest costdivided byAverage outstanding principalBorrow $1,000 with 24 payments of $5024 x $50 = $1,200$1,200 - $1,000 = $200$100 / $500 = 20%Issuance of Note Bearing Interest on Face ValueAt issuanceIncrease Cash for amount received (face value)Increase Notes Payable for face valueAt maturityDecrease Notes Payable for face valueIncrease Interest Expense for interest to maturityDecrease Cash for totalIssuance of Note Discounted on Face ValueAt issuanceIncrease Cash for face value less discountIncrease Discount on Notes Payable for discountIncrease Notes Payable for face valueIssuance of Note Discounted on Face ValueAt maturityIncrease Interest Expense for discountDecrease Discount on Notes Payable for discountDecrease Notes Payable for face valueDecrease Cash for face valueEffective Interest CalculationEffectiveInterestRateDiscountNet Proceeds360Termof Note=XEnd of Period AdjustmentsNotes written in one accounting period and maturing in a later period require adjustment to accrue interestCalculate interest from date of note to period ending dateNotes ReceivableReceipt of note for saleRecord normal sale entryTransfer amount from Accounts Receivable to Notes ReceivableReceipt of note in settlement of open accountTransfer amount from Accounts Receivable to Notes ReceivableDiscounting Customers NoteDetermine maturity valueFind discount period bank will hold noteCompute discount by multiplying maturity value by discount rateDeduct discount from maturity value to determine proceedsDiscounting Customers NotePayee is contingently liable for note if maker does not pay at maturityNotes Receivable Discounted used to indicate contingent liabilityPresentationNotes Receivable $1,000Deduct: N/R discounted 400 Net Notes Receivable $600Analyzing InformationDetermine the availability and adequacy of credit sourcesWhat percent of credit line used up at balance sheet date?When does the line expire?Is it likely to be renewed?Are any credit line requirements not being met?Is credit line sufficient?