Kế toán, kiểm toán - Chapter nineteen: The accounts receivable ledger

CHAPTER NINETEENTHE ACCOUNTS RECEIVABLE LEDGER1. Post to the accounts receivable ledger.2. Prepare a schedule of accounts receivable.3. Prepare a statement of account.4. Prepare and use a schedule of accounts receivable by age.5. Record transactions involving notes receivable. THE ACCOUNTS RECEIVABLE LEDGERObjectives:3The Accounts Receivable LedgerBusinesses use special ledgers to be more efficient in their financial operation.4The Accounts Receivable Ledger (continued)In order to know how much is owed by credit customers, separate accounts can be used for each one. All accounts for credit customers can be placed in the Accounts Receivable ledger. Accounts Receivable ledgers are known as subsidiary ledgers. 5Posting To the Accounts Receivable LedgerEntries should be posted to the accounts receivable ledger on a daily basis.Up-to-date information is critical for the operation of a business.6Posting to the Accounts Receivable Ledger (continued)When the ledger is set up, the name, address, and terms for each credit customer are recorded on a separate ledger card.7Posting to the Accounts Receivable Ledger (continued)Each transaction listed in the sales journal is posted individually to a customer’s account in the Accounts Receivable ledger.8Posting to the Accounts Receivable Ledger (continued)Each transaction listed in the Accounts Receivable Credit column of the Cash Receipts journal is posted individually to a customer’s account in the Accounts Receivable ledger.9Posting to the Accounts Receivable Ledger (continued)Each return or allowance is entered in the General Journal and posted to both the General Ledger and subsidiary ledger accounts involved.10Proving the Accounts Receivable LedgerAt the end of the month, the Accounts Receivable ledger must be proved. To do this, a schedule of Accounts Receivable is prepared.11Proving the Accounts Receivable Ledger (continued)The name and account balance for each customer with an unpaid balance are listed on the schedule form.The balances are added to find the total amount owed by all credit customers.12Proving the Accounts Receivable Ledger (continued)The total of the Schedule of Accounts Receivable is compared with the balance of the Accounts Receivable account in the General Ledger. The two accounts must be the same.13Proving the Accounts Receivable Ledger (continued)Even though the totals agree, there may still be an error, such as posting the correct amount to the wrong customer’s account.14Proving the Accounts Receivable Ledger (continued)The Accounts Receivable account in the General Ledger is known as the control account because it summarizes the balances of the subsidiary ledger.15Preparing the Statements of AccountMost businesses send a statement of account to each credit customer at regular intervals, usually at the end of each month. The statement of account summarizes the month’s activities and ending balance due.16Aging the Accounts ReceivableSome firms prepare a schedule that shows the accounts receivable and how long the balances have been owed. This information helps the owners manage the money owed to them. It lets them know who, how much, and for how long.17Notes ReceivableSometimes customers may need an extension to pay the balance owed. Once a firm date for payment has been established, a promissory note is issued, indicating the pertinent information.18Notes Receivable (continued)To account for the change, Accounts Receivable is credited and Notes Receivable is debited. 19Accounting TerminologyAccounts receivable ledgerBalance ledger formInterest IncomeNotes receivable Promissory noteSchedule of accounts receivableSchedule of accounts receivable by ageStatement of accountSubsidiary ledger20Chapter SummaryThe accounts receivable ledger is a subsidiary ledger that contains individual accounts for all credit customers.21Chapter Summary (continued)Transactions involving credit customers are posted to the Accounts Receivable ledger from the Sales Journal, the Cash Receipts Journal, and the General Journal.22Chapter Summary (continued)At the end of each month, the Accounts Receivable ledger is proved. The Accounts Receivable account in the General Ledger account is a control account. 23Chapter Summary (continued)A statement of account is sent to each credit customer, usually monthly, indicating financial activity and the ending balance due.Management uses the information in a schedule of Accounts Receivable by age to make financial decisions.24Chapter Summary (continued)Promissory notes received by a business are an asset and are known as notes receivable.25 Investigating on the InternetAs a research assignment, access the Ford® web site and report the sources of information that might concern accounts receivable.261. The Accounts Receivable control account does not provide a total for the amount owed by credit customers.2. There is no need to prove the Accounts Receivable ledger monthly. 3. Information found in the Schedule of Accounts Receivable by age is needed for paperwork sent to the IRS.Topic QuizAnswer the following true/false questions:FALSEFALSEFALSE27(Return to Topic Quiz)1. The Accounts Receivable control account does not provide a total for the amount owed by credit customers.FALSEIt DOES provide a total of the amount owed by credit customers.28(Return to Topic Quiz)2. There is no need to prove the Accounts Receivable ledger monthly. FALSEThe Accounts Receivable ledger must be proven monthly.29(Return to Topic Quiz)3. Information found in the schedule of Accounts Receivable by age is needed for paperwork sent to the IRS.FALSEIt is not needed by the IRS. It is needed by the management to make financial decisions.30