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Team 3 - Report ACC101

This document is a group assignment report for an accounting principles course. It contains two parts: Part A analyzes accounting entries for purchases, depreciation, and disposal of a machine. Part B contains journal entries for transactions involving receivables and notes receivable. It also explains the reporting required when a business pledges receivables as security for a loan, including disclosing the pledged receivables and loan on the balance sheet and providing details about the loan terms.

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39 views7 pages

Team 3 - Report ACC101

This document is a group assignment report for an accounting principles course. It contains two parts: Part A analyzes accounting entries for purchases, depreciation, and disposal of a machine. Part B contains journal entries for transactions involving receivables and notes receivable. It also explains the reporting required when a business pledges receivables as security for a loan, including disclosing the pledged receivables and loan on the balance sheet and providing details about the loan terms.

Uploaded by

Trần Thi
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GROUP ASSIGNMENT

Principles of Accounting
ACC101

Lecturer: Nguyễn Thị Quế Anh

The title of the report Topic 5: Receivable and Plant (Chapter 8,9,10)
Code name ACC 101

Members and students number Nguyễn Thị Huệ (SS160671)


Đặng Thanh Vy ( SS160675)
Lê Phương GIao (SS171121)
Trần Thị Tây Thi (SS160678)

Table of content

Introduction 3

Part A

1. Journal entries to record the machine’s purchase


2. Journal entries to record depreciation
3. Journal entries to record the machine’s disposal

Part B

4. Journal entries to record these transactions and events.


5. What reporting is necessary when a business pledges receivables as security?
Why and explain

References

2
Introduction:

Component Introduction

Purpose The purpose of this report is to analyze accounting


for receivable and plant

Background and context Based on the given information about Bennett


company and apply the knowledge learned about
accounting, then calculate the data according to the
requirements of the problem.

Scope of research This report utilizes knowledge of accounting (chapter


8,9,10) to explain and analyze two significant parts in
various types of financial statements.

3
Part A

Date Account name Debit Credit

Jan 1 Depreciation expense 23001

Accumulated depreciation_Bennett 23001

Cost 179120

Accumulated depreciation_Bennett 138006

Book value 41114

a Book value 41114

Cash received 28500

Loss on sale (12614)

b Book value 41114

Cash received 51000

Gain on sale 9886

c Book value 41114

Cash received 27000

Loss from fire (14114)

Part B

4. Journal entries to record these transactions and events.

4
Date Account name Debit Credit

2020 - Note Receivable $5,800


Nov. 1 Accounts receivable 5,800

Dec. 31 - Interest receivable 73


Interest revenue 73

2021 - Cash 5,909


Jan. 30 Interest receivable 73
Interest revenue 36
Notes receivable 5,800

Feb. 28 - Notes receivable 13,600


Accounts receivable 13,600

Mar. 1 - Notes receivable 8,200


Accounts receivable 8,200

Mar..30 - Accounts receivable 8,275


Interest revenue 75
Notes receivable 8,200

Apr.30 - Cast 8,350


Interest revenue 150
Notes receivable - M. Shelly 8,200

June.15 - Notes receivable - R. Solon 2,500


Accounts receivable - R. Solon 2,500

June.21 - Notes receivable - J. Felton 9,500


Accounts receivable - J. Felton 9,500

Aug.26 - Cast 2,524


Interest revenue 24
Notes receivable - R. Solon 2,500

Sep.19 - Cast 2,709


Interest revenue 209
Notes receivable - J. Felton 9,500

Nov.30 - Allowance for Doubtful Accounts 13,691


Accounts receivable - King Co 13,691

According to the formula about interest:

5
Principal of the note × annual interest rate × time expressed in years = interest

2020: Dec. 31 5,800× 7,5% × (60/360)= 73

2021: Jan. 30 5,800 × 7,5% × (30/360)= 36

Mar. 30 8,200 ×11% × (30/360)= 75

Apr. 30 8,200 × 11% × (60/360)= 150

Aug. 26 2,500 × 8,5% × (40/360)= 24

Sep. 19 9,500 × 9% × (88/360)=209

Part A Cost = 170000+3520+5600= 179120

Straight-line (179120-18110)/7= 23001


method

5. What reporting is necessary when a business pledges receivable as security for a


loan and the loan is still outstanding at the end of the period? Why and explain

The required report when a business pledges receivables as security for a loan and the
loan is still outstanding at the end of the period are:

Report total accounts receivable balance, including the amount business pledged, in the
current assets section of the balance sheet. And a business must exclude doubtful
accounts, which are those expects will be uncollectible.

Report the loan for which the business pledged the receivables in the current liabilities
of the balance sheet. In case businesses expect to take a long time more than a year to
pay off, it will be reported in the long-term liabilities section.

Finally, must have a page in the appendix or annotation to a balance sheet that
specifies the name of the lender, the terms of the loan, the loan amount, the amount of
pledged receivables, and any other material information about the loan agreement of
the business.

6
The reason: A company can raise cash by borrowing money and pledging its
receivables as security for the loan. Pledging receivables does not transfer the risk of
bad debts to the lender because the borrower retains ownership of the receivables.

● If the borrower defaults on the loan, the lender has a right to be paid from the
cash receipts of the receivable when collected.
● Since pledged receivables are committed as security for a specific loan, the
borrower’s financial statements disclose the pledging of them.

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