978-0078025587 Chapter 9 Solution Manual Part 2

subject Type Homework Help
subject Pages 9
subject Words 2006
subject Textbook Fundamental Accounting Principles 21st Edition
subject Authors Barbara Chiappetta, John Wild, Ken Shaw
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PROBLEM SET A
Problem 9-1A (30 minutes)
June 4
Accounts Receivable—N. Morris .............................
650
Sales .....................................................................
650
To record sales on credit.
4
Cost of Goods Sold .........................................................
400
Merchandise Inventory .............................................
400
To record cost of sales.
5
Cash ............................................................................
6,693
Credit card expense* .................................................
207
Sales .....................................................................
6,900
To record credit card sales less fee. *($6,900 x .03)
5
Cost of Goods Sold .........................................................
4,200
Merchandise Inventory .............................................
4,200
To record cost of sales.
6
Accounts Receivable—Access ................................
5,733
Credit card expense* .................................................
117
Sales .....................................................................
5,850
To record credit card sales less fee. *($5,850 x .02)
6
Cost of Goods Sold .........................................................
3,800
Merchandise Inventory .............................................
3,800
To record cost of sales.
8
Accounts Receivable—Access ................................
4,263
Credit card expense* .................................................
87
Sales .....................................................................
4,350
To record credit card sales less fee. *($4,350 x .02)
8
Cost of Goods Sold .........................................................
2,900
Merchandise Inventory .............................................
2,900
To record cost of sales.
10
No journal entry required.
13
Allowance for Doubtful Accounts ............................
429
Accounts Receivable—A. McKee .......................
429
To write off account due.
17
Cash ............................................................................
9,996
Accounts Receivable—Access ..........................
9,996
To record cash received from credit card co. ($5,733+$4,263)
18
Cash ............................................................................
637
Sales Discounts* .......................................................
13
Accounts Receivable—N. Morris .......................
650
To record cash received less discount. *($650 x .02)
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Problem 9-2A (35 minutes)
2012
a.
1,345,434
1,345,434
975,000
975,000
b.
18,300
18,300
c.
669,200
669,200
d.
28,169
28,169
*Beginning receivables ......................
$ 0
Credit sales .......................................
1,345,434
Collections ........................................
(669,200)
Write-offs ...........................................
(18,300)
Ending receivables ...........................
657,934
Percent uncollectible ........................
x 1.5%
Required ending allowance ..............
9,869**
Cr.
Unadjusted balance ..........................
18,300
Dr.
Adjustment to the allowance ...........
$ 28,169
Cr.
** rounded to nearest dollar
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Problem 9-2A (Concluded)
2013
e.
Accounts Receivable ..............................................
1,525,634
Sales ................................................................
1,525,634
To record sales on account.
Cost of Goods Sold ......................................................
1,250,000
Merchandise Inventory ..........................................
1,250,000
To record cost of sales.
f.
Allowance for Doubtful Accounts .........................
27,800
Accounts Receivable ........................................
27,800
To record write-off of accounts.
g.
Cash .........................................................................
1,204,600
Accounts Receivable ........................................
1,204,600
To record cash received on account.
h.
Bad Debts Expense .................................................
32,199
Allowance for Doubtful Accounts ...................
32,199
To record estimated bad debts.*
*Beginning receivables ............................
$ 657,934
Credit sales ..............................................
1,525,634
Collections ...............................................
(1,204,600)
Write-offs .................................................
(27,800)
Ending receivables ................................
951,168
Percent uncollectible ..............................
x 1.5%
Required ending allowance ....................
14,268**
Cr.
Unadjusted balance
Beginning (Cr.) ......................................
$ 9,869
Write-offs (Dr.) .......................................
27,800
17,931
Dr.
Adjustment to the allowance ..................
$ 32,199
Cr.
** rounded to nearest dollar
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Problem 9-3A (35 minutes)
Part 1
a. Expense is 1.5% of credit sales
Dec. 31
Bad Debts Expense ...............................................
85,230
Allowance for Doubtful Accounts .................
85,230
To record estimated bad debts
[$5,682,000 x .015].
b. Expense is 1% of total sales
Dec. 31
Bad Debts Expense ...............................................
75,870
Allowance for Doubtful Accounts .................
75,870
To record estimated bad debts
[($1,905,000 + $5,682,000) x .01].
c. Allowance is 5% of accounts receivable
Dec. 31
Bad Debts Expense ...............................................
80,085
Allowance for Doubtful Accounts .................
80,085
To record estimated bad debts.*
* Unadjusted balance ........................................................
$16,580 debit
Estimated balance ($1,270,100 x 5%) ...........................
63,505 credit
Required adjustment ......................................................
$80,085 credit
Part 2
Current assets
Accounts receivable ...........................................
$1,270,100
Less allowance for doubtful accounts .............
(68,650)*
$1,201,450
Or:
Accounts receivable (net of $68,650*
uncollectible accounts) ................................
$1,201,450
* Adjustment to the allowance ................................
$85,230
credit
Unadjusted allowance balance ................................
16,580
debit
Adjusted balance .........................................................
$68,650
credit
Part 3
Current assets
Accounts receivable ...........................................
$1,270,100
Less allowance for doubtful accts. ...................
(63,505)**
$1,206,595
Or:
Accounts receivable (net of $63,505**
uncollectible accounts) ................................
$1,206,595
** See computations in Part 1c.
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Problem 9-4A (35 minutes)
Part 1
Calculation of the estimated balance of the allowance for uncollectibles
Not due:
$830,000 x .0125 =
$10,375
1 to 30:
254,000 x .0200 =
5,080
31 to 60:
86,000 x .0650 =
5,590
61 to 90:
38,000 x .3275 =
12,445
Over 90:
12,000 x .6800 =
8,160
$41,650
credit
Part 2
Dec. 31
Bad Debts Expense ..............................................
27,150
Allowance for Doubtful Accounts ................
27,150
To record estimated bad debts.*
* Unadjusted balance ...........................
$14,500 credit
Estimated balance .............................
41,650 credit
Required adjustment .........................
$27,150 credit
Part 3
Writing off the account receivable in 2014 will not directly affect year 2014
net income. The entry to write off an account involves a debit to Allowance
for Doubtful Accounts and a credit to Accounts Receivable, both of which
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Problem 9-5A (75 minutes)
Part 1
2012
Dec. 16
Notes Receivable—D. Todd ................................
10,800
Accounts Receivable—D. Todd ...................
10,800
To record note received on account.
31
Interest Receivable ..............................................
36
Interest Revenue ...........................................
36
To record interest earned
[$10,800 x .08 x 15/360 = $36].
2013
Feb. 14
Cash ......................................................................
10,944
Interest Revenue* ..........................................
108
Interest Receivable ........................................
36
Notes Receivable—D. Todd..........................
10,800
To record cash received on note with interest.
*[$10,800 x 0.08 x 45/360 = $108]
Mar. 2
Notes Receivable—Midnight Co ........................
6,100
Accounts Receivable—Midnight Co. ...........
6,100
To record note received on account.
17
Notes Receivable—A. Privet ..............................
2,400
Accounts Receivable—A. Privet
2,400
To record note received on account.
Apr. 16
Accounts Receivable—A. Privet ........................
2,414
Interest Revenue ...........................................
14
Notes Receivable—A. Privet ........................
2,400
To record receivable for dishonored
note plus interest [$2,400 x .07 x 30/360= $14].
June 2
Accounts Receivable—Midnight Co. .................
6,222
Interest Revenue* ..........................................
122
Notes Receivable—Midnight Co ..................
6,100
To record receivable for dishonored note
*[$6,100 x 0.08 x 90/360 = $122]
page-pf7
Problem 9-5A (Concluded)
July 17
Cash ......................................................................
6,286
Interest Revenue* ..........................................
64
Accounts Receivable—Midnight Co. ...........
6,222
To record cash received on account
plus additional interest.
*[$6,222 x .08 x 46/360= $64 (rounded)]
Aug. 7
Notes Receivable—Mulan ...................................
7,450
Accounts Receivable—Mulan ......................
7,450
To record note received on account.
Sept. 3
Notes Receivable—N. Carson ............................
2,100
Accounts Receivable—N. Carson................
2,100
To record note received on account.
Nov. 2
Cash ......................................................................
2,135
Interest Revenue* ..........................................
35
Notes Receivable—N. Carson ......................
2,100
To record cash received on note plus interest
*($2,100 x .10 x 60/360 = $35).
5
Cash ......................................................................
7,636
Interest Revenue* ..........................................
186
Notes Receivable—Mulan.............................
7,450
To record cash received on note plus
Interest. *($7,450 x .10 x 90/360 = $186)
Dec. 1
Allowance for Doubtful Accounts ......................
2,414
Accounts Receivable—A. Privet ..................
2,414
To record write-off of account.
Part 2
Analysis Component: When a business pledges its receivables as security
for a loan and the loan is still outstanding at period-end, the business must
disclose this information in notes to its financial statements. This is a
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PROBLEM SET B
Problem 9-1B (30 minutes)
Aug. 4
Accounts Receivable—M. Carpenter ......................
3,700
Sales.....................................................................
3,700
To record sales on credit.
Cost of Goods Sold .........................................................
2,000
Merchandise Inventory ..............................................
2,000
To record cost of sales.
10
Cash ...........................................................................
5,044
Credit Card Expense* ...............................................
156
Sales.....................................................................
5,200
To record credit card sales less fee. *($5,200 x .03)
Cost of Goods Sold .........................................................
2,800
Merchandise Inventory ..............................................
2,800
To record cost of sales.
11
Accounts Receivable—Aztec ...................................
1,225
Credit card expense* ................................................
25
Sales.....................................................................
1,250
To record credit card sales less fee. *($1,250 x .02)
Cost of Goods Sold .........................................................
900
Merchandise Inventory ..............................................
900
To record cost of sales.
14
Cash ...........................................................................
3,626
Sales Discounts* .......................................................
74
Accounts Receivable—M. Carpenter ................
3,700
To record cash received less discount.*($3,700 x .02)
15
Accounts Receivable—Aztec ...................................
3,175
Credit Card Expense*(rounded to nearest dollar) .....
65
Sales......................................................................
3,240
To record credit card sales less fee. *($3,240 x .02)
Cost of Goods Sold .........................................................
1,758
Merchandise Inventory ..............................................
1,758
To record cost of sales.
18
No journal entry required.
22
Allowance for Doubtful Accounts ...........................
498
Accounts Receivable—Craw Co. .......................
498
To write off account due.
25
Cash ...........................................................................
4,400
Accounts Receivable—Aztec .............................
4,400
To record cash rec’d from credit card co. ($1,225+$3,175)
page-pf9
Problem 9-2B (35 minutes)
2012
a.
Accounts Receivable .........................................
685,350
Sales ..............................................................
685,350
To record sales on account.
Cost of Goods Sold ......................................................
500,000
Merchandise Inventory ..........................................
500,000
To record cost of sales.
b.
Cash .....................................................................
482,300
Accounts Receivable ...................................
482,300
To record cash received on account.
c.
Allowance for Doubtful Accounts .....................
9,350
Accounts Receivable ...................................
9,350
To record write-off of accounts.
d.
Bad Debts Expense ............................................
11,287
Allowance for Doubtful Accounts...............
11,287
To record estimated bad debts.*
*Beginning receivables .....................
$ 0
Credit sales ......................................
685,350
Collections .......................................
(482,300)
Write-offs ..........................................
(9,350)
Ending receivables ..........................
193,700
Percent uncollectible .......................
x 1.0%
Required ending allowance .............
1,937**
Cr.
Unadjusted balance .........................
9,350
Dr.
Adjustment to the allowance ...........
$ 11,287
Cr.
** Rounded to nearest dollar
page-pfa
Problem 9-2B (Concluded)
2013
e.
Accounts Receivable ..........................................
870,220
Sales ...............................................................
870,220
To record sales on account.
Cost of Goods Sold ......................................................
650,000
Merchandise Inventory ..........................................
650,000
To record cost of sales.
f.
Cash ......................................................................
990,800
Accounts Receivable ....................................
990,800
To record cash received on account.
g.
Allowance for Doubtful Accounts ......................
11,090
Accounts Receivable ....................................
11,090
To record write-off of accounts.
h.
Bad Debts Expense .............................................
9,773
Allowance for Doubtful Accounts................
9,773
To record estimated bad debts.*
*Beginning receivables ...........................
$ 193,670
Credit sales ............................................
870,220
Collections .............................................
(990,800)
Write-offs ................................................
(11,090)
Ending receivables ................................
62,000
Percent uncollectible .............................
x 1.0%
Required ending allowance ...................
620
Cr.
Unadjusted balance
Beginning (credit) ................................
$ 1,937
Write-offs (debit) ................................
11,090
9,153
Dr.
Adjustment to the allowance .................
$ 9,773
Cr.
page-pfb
Problem 9-3B (35 minutes)
Part 1
a. Expense is 2.5% of credit sales
Dec. 31
33,550
33,550
b. Expense is 1.5% of total sales
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Problem 9-4B (35 minutes)
Part 1
Calculation of the estimated balance of the allowance
Not due:
$396,400 x .020 =
$ 7,928
1 to 30:
277,800 x .040 =
11,112
31 to 60:
48,000 x .085 =
4,080
61 to 90:
6,600 x .390 =
2,574
Over 90:
2,800 x .820 =
2,296
$27,990
Part 2
Dec. 31
Bad Debts Expense ...........................................
31,390
Allowance for Doubtful Accounts .............
31,390
To record estimated bad debts.*
* Unadjusted balance ...........................
$ 3,400 debit
Estimated balance ..............................
27,990 credit
Required adjustment .........................
$31,390 credit
Part 3
Writing off the account receivable in 2014 will not directly affect Year 2014
net income. The entry to write off an account involves a debit to Allowance
for Doubtful Accounts and a credit to Accounts Receivable, both of which

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