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ACC 821 (24)

Revenue recognition.docx

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Ryerson University
ACC 821
Louis Pike

Revenue recognition: Performance has occurred Amount of revenue and cost to earn it is resoanbly measure Collection of payment is assured Critical event: Delivery Completion og production Cash collection Completion of warranty/return period Objective: Tax minimization Stweradship Management evaluation Performance evaluation Cash flow evaluation Monitoring contract compliance Earning management Direct write off: Bad debt exp a/r other ways: bad debt exp allowance for uncolleastable debts writing of receivable: afua a/r 11. Allowance for doubtful accounts December 31, 2009 $38,150 Less: Accounts written of during 2010 (39,600) Pre-closing allowance for doubtful accounts December 31, 2010 (1,450) Credit sales during 2010 2,262,500 Average percentage of credit sales uncollectible 2% Bad debts expense for 2010 45,250 Pre-closing allowance for doubtful accounts December 31, 2010 (1,450) Allowance for doubtful accounts December 31, 2010 $43,800 Bad debt expense 45,250 Joggins Inc. Cash From Operations - Indirect Method For the Year Ended Dec. 31, 2010 Cash From Operations: Net Income $437,500 Adjustments for non-cash items: Amortization (add) $262,500 262,500 Changes in non-cash current operating accounts: Accounts receivable (187,500) Inventory 225,000 Accounts payable 250,000 287,500 Cash From Operations $ 987,500 Accounts Receivable Cash End (=) Beginning (+) Credit Sales (-) Collected $456,000 $363,000 $4,626,000 ? $4,533,000 Perpetual inventory: Record purchase of inventory Inventory a/p when inventory sold: cash rev cost of slaes inventory periodic
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