CP8–2
Req. 1 (in thousands)
Allowance for Doubtful Accounts
3,400
Beg. balance
700
Bad debt exp.
Write–offs
1,100
3,000
End. balance
CP8–3
Req. 1
April 30, 2015 (note created)
Notes Receivable ……………………………………………. 100,000
Cash ………………………………………………………. 100,000
Req. 2
June 30, 2015 (end-of–quarter accrual)
Interest Receivable …………………………………………. 1,667
($100,000 x 10% x 1/12)
Dec. 31, 2015 (end-of-quarter accrual)
Interest Receivable …………………………………………. 1,667
Interest Revenue ……………………………………… 1,667
($100,000 x 10% x 2/12)
CP8–4
Req. 1
a.
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
+200,000
Service Revenue (+R)
+200,000
b.
Assets
=
Liabilities
+
Stockholders’ Equity
Allowance for Doubtful
–2,000
Bad Debt Expense (+E)
–2,000
Accounts (+xA)
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
+100,000
Accounts Receivable
–100,000
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
–500
Allow for Doubtful Accts (– xA)
+500
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
+150,000
Service Revenue (+R)
+150,000
Assets
=
Liabilities
+
Stockholders’ Equity
Allowance for Doubtful
–1,500
Bad Debt Expense (+E)
–1,500
Accounts (+xA)
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
–12,000
Note Receivable (+A)
+12,000
h.
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
+500
Allow. for Doubt. Accts. (+xA)
–500
Cash
+500
Accounts Receivable
–500
Assets
=
Liabilities
+
Stockholders’ Equity
Interest Receivable
+100
Interest Revenue (+R)
+100
CP8–4 (continued)
Req. 1 (continued)
Total
0–30
31–60
61–90
> 90
Total Accounts Receivable
$ 90,000
$ 36,500
$42,400
$ 5,100
$ 6,000
Estimated Uncollectible (%)
× 2%
× 10%
× 20%
× 40%
Estimated Uncollectible ($)
$ 8,390
$ 730
$ 4,240
$1,020
$ 2,400
Assets
=
Liabilities
+
Stockholders’ Equity
Allowance for Doubtful
–2,390
Bad Debt Expense (+E)
–2,390
Accounts (+xA)
Req. 2
a.
Accounts Receivable
200,000
Service Revenue
200,000
b.
Bad Debt Expense
2,000
Allowance for Doubtful Accounts
2,000
c.
Cash
100,000
Accounts Receivable
100,000
d.
Allowance for Doubtful Accounts
500
Accounts Receivable
500
e.
Accounts Receivable
150,000
Service Revenue
150,000
f.
Bad Debt Expense
1,500
Allowance for Doubtful Accounts
1,500
g.
Note Receivable
12,000
Cash
12,000
CP8–4 (continued)
Req. 2 (continued)
h.
Accounts Receivable
500
Allowance for Doubtful Accounts
500
Cash
500
Accounts Receivable
500
i.
Interest Receivable
100
Interest Revenue
100
Allowance for Doubtful Accounts
CP8–5
Req.1
Mattel
2012
Receivables
Turnover
Ratio
=
Net sales
=
$6,400
=
5.2
Average net
receivables
($1,230+ $1,250)/2
Days to collect
=
365
=
365
=
70.2 days
Receivables Turnover
5.2
2011
Receivables
Turnover
Ratio
=
Net sales
=
$6,300
=
5.2
Average net
receivables
($1,250+ $1,180)/2
Days to collect
=
365
=
365
=
70.2 days
Receivables Turnover
5.2
=
Days to collect
=
365
=
365
=
Receivables Turnover
Receivables
Ratio
=
Days to collect
=
365
=
365
=
84.9 days
Receivables Turnover
Fundamentals of Financial Accounting, 5/e 8– 27
© 2016 by McGraw– Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
ANSWERS TO GROUP A PROBLEMS
PA8–1
Req. 1
Bad Debt Expense ……………………………………………………. 92
Allowance for Doubtful Accounts ……………………….. 92
($92 = $18,300 x 0.005)
Req. 2
PA8–2
Req. 1
Allowance for Doubtful Accounts
7,000
Beg. balance
Write-offs
3,100
4,100
Bad Debt Exp.
8,000
End. balance
PA8–3
Req. 1
Feb. 28, 2015 (note created)
Notes Receivable ……………………………………………. 50,000
Cash ………………………………………………………. 50,000
Req. 2
June 30, 2015 (semi-annual interest accrual)
Interest Receivable …………………………………………. 1,333
PA8–4
Req. 1
a.
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
+40,000
Service Revenue (+R)
+40,000
b.
Assets
=
Liabilities
+
Stockholders’ Equity
Allowance for Doubtful
–400
Bad Debt Expense (+E)
–400
Accounts (+xA)
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
+20,000
Accounts Receivable
–20,000
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
–100
Allow. for Doubtful Accts. (–xA)
+100
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
+30,000
Service Revenue (+R)
+30,000
Assets
=
Liabilities
+
Stockholders’ Equity
Allowance for Doubtful
–300
Bad Debt Expense (+E)
–300
Accounts (+xA)
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
–2,400
Note Receivable
+2,400
h.
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Receivable
+100
Allow. for Doubt. Accts. (+xA)
–100
Cash
+100
Accounts Receivable
–100
Assets
=
Liabilities
+
Stockholders’ Equity
Interest Receivable
+12
Interest Revenue (+R)
+12