Chapter Review
9-9ePractice Exercises
Direct Write-Off Method
OBJ. 3
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EE 9-1 Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:
Apr. 15. Received $1,800 from Joe Brown and wrote off the remainder owed of $2,700 as uncollectible. Aug. 7. Reinstated the account of Joe Brown and received $2,700 cash in full payment.
Direct Write-Off Method
OBJ. 3
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EE 9-2 Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:
Oct. 2. Received $1,140 from Elita Ramirez and wrote off the remainder owed of $2,570 as uncollectible. Dec. 20. Reinstated the account of Elita Ramirez and received $2,570 cash in full payment.
Allowance Method
OBJ. 4
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EE 9-2 Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:
Apr. 15. Received $1,800 from Joe Brown and wrote off the remainder owed of $2,700 as uncollectible. Aug. 7. Reinstated the account of Joe Brown and received $2,700 cash in full payment.
Allowance Method
OBJ. 4
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EE 9-2 Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:
Oct. 2. Received $1,140 from Elita Ramirez and wrote off the remainder owed of $2,570 as uncollectible. Dec. 20. Reinstated the account of Elita Ramirez and received $2,570 cash in full payment.
Percent of Sales Method
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EE 9-3 At the end of the current year, Accounts Receivable has a balance of $2,450,000, Allowance for Doubtful Accounts has a credit balance of $14,860, and sales for the year total $31,600,000. Bad debt expense is estimated at 1⁄2 of 1% of sales.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.
Percent of Sales Method
OBJ. 4
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EE 9-3 At the end of the current year, Accounts Receivable has a balance of $4,770,000, Allowance for Doubtful Accounts has a debit balance of $17,230, and sales for the year total $63,800,000. Bad debt expense is estimated at 3⁄4 of 1% of sales.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.
Analysis of Receivables Method
OBJ. 4
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EE 9-4 At the end of the current year, Accounts Receivable has a balance of $2,450,000, Allowance for Doubtful Accounts has a credit balance of $14,860, and sales for the year total $31,600,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $250,000.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.
Analysis of Receivables Method
OBJ. 4
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EE 9-4 At the end of the current year, Accounts Receivable has a balance of $4,770,000, Allowance for Doubtful Accounts has a debit balance of $17,230, and sales for the year total $63,800,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $380,000.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.
Note Receivable
OBJ. 6
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EE 9-5 Linstrum Company received a 60-day, 9% note for $56,000, dated July 23, from a customer on account.
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Determine the due date of the note.
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Determine the maturity value of the note.
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Journalize the entry to record the receipt of the payment of the note at maturity.
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Note Receivable
OBJ. 6
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EE 9-5 Maggiano Supply Company received a 120-day, 6% note for $420,000, dated June 12, from a customer on account.
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Determine the due date of the note.
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Determine the maturity value of the note.
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Journalize the entry to record the receipt of the payment of the note at maturity.
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Accounts Receivable Turnover and Days’ Sales in Receivables
OBJ. 8
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EE 9-6 Financial statement data for years ending December 31 for Schultze-Solutions Company follow:
20Y2 20Y1 Sales $1,848,000 $1,881,000 Accounts receivable: Beginning of year 195,300 184,700 End of year 224,700 195,300 -
Determine the accounts receivable turnover for 20Y2 and 20Y1. Round accounts receivable turnover to one decimal place.
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Determine the days’ sales in receivables for 20Y2 and 20Y1. Use 365 days and round to one decimal place.
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Does the change in accounts receivable turnover and the days’ sales in receivables from 20Y1 to 20Y2 indicate a favorable or unfavorable change?
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Accounts Receivable Turnover and Days’ Sales in Receivables
OBJ. 8
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EE 9-6 Financial statement data for years ending December 31 for Cinderella Company follow:
20Y9 20Y8 Sales $9,525,000 $7,616,000 Accounts receivable: Beginning of year 715,000 645,000 End of year 785,000 715,000 -
Determine the accounts receivable turnover for 20Y9 and 20Y8. Round accounts receivable turnover to one decimal place.
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Determine the days’ sales in receivables for 20Y9 and 20Y8. Use 365 days and round to one decimal place.
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Does the change in accounts receivable turnover and the days’ sales in receivables from 20Y8 to 20Y9 indicate a favorable or unfavorable change?
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