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Title: Question 1
QA_Ori: When customers use credit cards, the selling companies can avoid having to directly evaluate
Title: Question 2
QA_Ori: Revenues and expenses usually are not matched under the direct write-off method because the
Title: Question 3
QA_Ori: The accounting constraint of materiality suggests that the requirements of accounting standards
Title: Question 4
QA_Ori: Creditors prefer notes receivable to accounts receivable because the notes can be more easily
Title: Question 5
QA_Ori: Writing off a bad debt against the Allowance account does not reduce the estimated realizable
Title: Question 6
QA_Ori: The adjusted balances of Bad Debts Expense and Allowance for Doubtful Accounts are virtually
never equal because the expense amount reflects only the events of the current period, and the
Title: Question 7
QA_Ori: Polaris lists its accounts receivable as “Trade receivables, net” on its balance sheet. Polaris
Title: Question 8
QA_Ori: Artic Cat uses the allowance method to account for doubtful accounts as evidenced by the
Title: Question 9
QA_Ori: KTM’s lists its accounts receivable as “Accounts receivable— trade to third parties”, “Accounts
Title: Question 10
QA_Ori: Piaggio titles its accounts receivable as “Trade receivables.” Piaggio reports its accounts
Title: Quick Study 9-1
QA_Ori:
1. Cash................................................................................ 19,000
Credit Card Expense*..................................................... 1,000
Sales......................................................................... 20,000
2. Accounts Receivable—Credit Card Cos......................... 4,800
Credit Card Expense*..................................................... 200
Sales......................................................................... 5,000
Title: Quick Study 9-2
QA_Ori:
1.
Jan. 31 Allowance for Doubtful Accounts................................ 800
2.
Mar. 9 Accounts Receivable—C. Green*............................... 300
*If there is a strong belief that the remaining $500 will be
collected soon, then the full $800 balance can be reinstated.
9 Cash............................................................................ 300
QA_Edit:
Title: Quick Study 9-3
QA_Ori:
1.
Dec. 31 Bad Debts Expense.................................................. 885
2. Desired balance in allowance = $1,485 (part 1)
Title: Quick Study 9-4
QA_Ori:
Title: Quick Study 9-5
QA_Ori:
1. Maturity date is October 31, which is computed as follows:
Days in August................................................................... 31
2.
Aug. 2 Notes Receivable—R. Albany.............................. 6,000
Title: Quick Study 9-6
QA_Ori:
Title: Quick Study 9-7
QA_Ori:
Dec. 31 Interest Receivable.............................................. 50
Maturity date
Jan. 15 Cash..................................................................... 10,075
Title: Quick Study 9-8
QA_Ori:
May 1 Cash........................................................................121,875
Factoring Fee Expense*.......................................... 3,125
Title: Quick Study 9-9
QA_Ori:
Oct. 1 Bad Debts Expense.......................................................50,000
Title: Quick Study 9-10
QA_Ori:
Oct. 30 Accounts Receivable—P.Moore....................................50,000
Oct. 30 Cash..............................................................................50,000
Title: Quick Study 9-11
Accounts receivable turnover =
QA_Ori: Interpretation: An accounts receivable turnover of 5.9 implies that
the company’s average accounts receivable balance is converted into cash
Title: Quick Study 9-12
a. QA_Ori: Both U.S. GAAP and IFRS have similar asset criteria that apply to
recognition of receivables. Further, receivables that arise from
b. QA_Ori: Both U.S. GAAP and IFRS require receivables to be reported net of
estimated uncollectibles. Further, both systems require that the expense for
Title: Exercise 9-1
QA_Ori:
Part 1
GENERAL LEDGER
Net sales
Average accounts receivable
Accounts Receivable Sales
Sales Returns and
Allowances
Nov. 5 4,615 Nov. 21 209 Nov. 5 4,615 Nov. 21 209
ACCOUNTS RECEIVABLE LEDGER
Ski Shop Welcome Enterprises Zia Natara
Nov. 5 4,615 Nov. 10 1,350 Nov. 13 832 Nov. 21 209
Part 2
Morales Company
Schedule of Accounts Receivable
November 30, 2013
Ski Shop................................................................................... $7,328
Title: Exercise 9-2
QA_Ori:
Apr. 8 Cash......................................................................... 8,064
8 Cost of Goods Sold.................................................. 6,000
12 Accounts Receivable—Continental.......................... 5,460
12 Cost of Goods Sold.................................................. 3,500
20 Cash......................................................................... 5,460
Title: Exercise 9-3
QA_Ori:
March 11 Bad Debts Expense.......................................................45,000
March 29 Accounts Receivable—Lester Co..................................45,000
March 29 Cash..............................................................................45,000
Accounts Receivable—Lester Co............................ 45,000
To record cash received on account.
Title: Exercise 9-4
QA_Ori:
Dec. 31 Bad Debts Expense....................................................... 4,875
Feb. 1 Allowance for Doubtful Accounts................................... 580
June 5 Accounts Receivable—P. Park...................................... 580
June 5 Cash.............................................................................. 580
Title: Exercise 9-5
QA_Ori:
a.
Dec. 31 Bad Debts Expense*....................................................... 685
Allowance for Doubtful Accounts............................. 685
b.
Dec. 31 Bad Debts Expense**......................................................1,391
Allowance for Doubtful Accounts............................. 1,391
