CHAPTER 8
Accounting for Receivables
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
A
Problems
B
Problems
1. Identify the different types
of receivables.
1, 2
1
2. Explain how companies
recognize accounts
receivable.
3
2
1A, 6A, 7A
1B, 6B, 7B
3. Distinguish between the
methods and bases
companies use to value
accounts receivable.
4, 5, 6,
7, 8
3, 4, 5,
6, 7
1
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
4. Describe the entries to
record the disposition of
accounts receivable.
9, 10, 11
8
2
6A, 7A
6B, 7B
5. Compute the maturity date
of and interest on notes
receivable.
12, 13, 14,
15, 16
9, 10
3
6A, 7A
6B, 7B
6. Explain how companies
recognize notes receivable.
11
10, 11, 12
7A
7B
7. Describe how companies
value notes receivable.
8. Describe the entries to
record the disposition of
notes receivable.
17
3
11, 12, 13
6A, 7A
6B, 7B
9. Explain the statement
presentation and analysis
of receivables.
18, 19, 20
3, 12
4
1A, 6A
1B, 6B
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Prepare journal entries related to bad debt expense.
Simple
15–20
2A
Compute bad debt amounts.
Moderate
20–25
3A
Journalize entries to record transactions related to bad debts.
Moderate
20–30
4A
Journalize transactions related to bad debts.
Moderate
20–30
5A
Journalize entries to record transactions related to bad debts.
Moderate
20–30
6A
Prepare entries for various notes receivable transactions.
Moderate
40–50
7A
Prepare entries for various receivable transactions.
Complex
50–60
1B
Prepare journal entries related to bad debt expense.
Simple
15–20
2B
Compute bad debt amounts.
Moderate
20–25
3B
Journalize entries to record transactions related to bad debts.
Moderate
20–30
4B
Journalize transactions related to bad debts.
Moderate
20–30
5B
Journalize entries to record transactions related to bad debts.
Moderate
20–30
6B
Prepare entries for various notes receivable transactions.
Moderate
40–50
7B
Prepare entries for various receivable transactions.
Complex
50–60
WEYGANDT FINANCIAL ACCOUNTING 9E
CHAPTER 8
ACCOUNTING FOR RECEIVABLES
Number
LO
BT
Difficulty
Time (min.)
BE1
1
C
Simple
1–2
BE2
2
AP
Simple
5–7
BE3
3, 9
AN
Simple
4–6
BE4
3
AP
Simple
4–6
BE5
3
AP
Simple
4–6
BE6
3
AP
Simple
2–4
BE7
3
AN
Simple
4–6
BE8
4
AP
Simple
6–8
BE9
5
AP
Simple
8–10
BE10
5
AP
Moderate
8–10
BE11
6
AP
Simple
2–4
BE12
9
AP
Simple
4–6
DI1
3
AP
Simple
2–4
DI2
4
AP
Simple
4–6
DI3
5, 8
AP
Simple
6–8
DI4
9
AN
Simple
4–6
EX1
2
AP
Simple
8–10
EX2
2
AP
Simple
8–10
EX3
3
AN
Simple
8–10
EX4
3
AN
Simple
6–8
EX5
3
AP
Simple
6–8
EX6
3
AP
Simple
6–8
EX7
4
AP
Simple
4–6
EX8
4
AP
Simple
6–8
EX9
4
AP
Simple
6–8
EX10
5, 6
AN
Simple
8–10
EX11
5, 6
AN
Simple
6–8
EX12
5, 6, 8
AP
Moderate
10–12
EX13
5, 8
AP
Simple
8–10
EX14
9
AP
Simple
8–10
ACCOUNTING FOR RECEIVABLES (Continued)
BYP4
4
AP
Simple
10–15
Number
LO
BT
Difficulty
Time (min.)
P1A
2, 3, 9
AN
Simple
15–20
P2A
3
AN
Moderate
20–25
P3A
3
AN
Moderate
20–30
P4A
3
AN
Moderate
20–30
P5A
3
AN
Moderate
20–30
P6A
2, 4, 5, 8, 9
AN
Moderate
40–50
P7A
2, 4–6, 8
AP
Complex
50–60
P1B
2, 3, 9
AN
Simple
15–20
P2B
3
AN
Moderate
20–25
P3B
3
AN
Moderate
20–30
P4B
3
AN
Moderate
20–30
P5B
3
AN
Moderate
20–30
P6B
2, 4, 5, 8, 9
AN
Moderate
40–50
P7B
2, 4–6, 8
AP
Complex
50–60
BYP1
3
E
Moderate
20–25
BYP2
9
AN, E
Simple
10–15
BYP3
9
AN, E
Simple
10–15
BYP5
4
AN
Moderate
20–30
BYP6
3
E
Simple
10–15
BYP7
3
E
Simple
10–15
BYP8
4
E
Simple
15–20
BYP9
—
AP
Moderate
10–15
BLOOM’S TAXONOMY TABLE
Copyright © 2014 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 9/e, Solutions Manual (For Instructor Use Only) 8-5
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End–of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
1. Identify the different types of
receivables.
Q8-2
Q8-1
BE8-1
2. Explain how companies recognize
accounts receivable.
Q8-3
BE8-2
E8-1
E8-2
P8–7A
P8–7B
P8–1A
P8–6A
P8–1B
P8–6B
3. Distinguish between the methods and
bases companies use to value
accounts receivable.
Q8-8
Q8-4
Q8-5
Q8-6
BE8-4
BE8-5
BE8-6
DI8-1
E8-5
E8-6
Q8-7
BE8-3
BE8-7
E8-3
E8-4
P8–1A
P8–2A
P8–3A
P8–4A
P8–5A
P8–1B
P8–2B
P8–3B
P8–4B
P8–5B
4. Describe the entries to record the
disposition of accounts receivable.
Q8-9
Q8–10
Q8–11
BE8-8
DI8-2
E8-7
E8-8
E8-9
P8–7A
P8–7B
P8–6A
P8–6B
5. Compute the maturity date of and
interest on notes receivable.
Q8–13
Q8–12
Q8–16
Q8–14
Q8–15
BE8-9
BE8-10
DI8-3
E8–12
E8–13
P8–7A
P8–7B
E8–10
E8–11
P8–6A
P8–6B
6. Explain how companies recognize
notes receivable.
BE8-11
P8–7A
P8–7B
E8–12
E8–10
E8–11
7. Describe how companies value
notes receivable.
8. Describe the entries to record the
disposition of notes receivable.
Q8–17
DI8-3
E8–11
E8–12
E8–13
P8–7A
P8–7B
P8–6A
P8–6B
9. Explain the statement presentation
and analysis of receivables.
Q8–18
Q8–19
Q8–20
BE8-12
E8–14
BE8-3
DI8-4
P8–1A
P8–6A
P8–1B
P8–6B
Broadening Your Perspective
Real-World Focus
FASB Codification
Decision Making Across
the Organization
Comparative Analysis
All About You
Financial Reporting
Comparative Analysis
Ethics Case
Communication
ANSWERS TO QUESTIONS
1. Accounts receivable are amounts owed by customers on account. They result from the sale of goods
2. Other receivables include nontrade receivables such as interest receivable, loans to company officers,
advances to employees, and income taxes refundable.
3. Accounts Receivable ………………………………………………………………………………… 40
Interest Revenue ……………………………………………………………………………….. 40
4. The essential features of the allowance method of accounting for bad debts are:
Accounts through an adjusting entry at the end of each period.
5. Roger Holloway should realize that the decrease in cash realizable value occurs when estimated
realizable value does not change.
6. The two bases of estimating uncollectibles are: (1) percentage–of–sales and (2) percentage-of–
for doubtful accounts is derived from an analysis of individual customer accounts. This method
emphasizes cash realizable value.
7. The adjusting entry under the percentage-of-sales basis is:
Bad Debt Expense ……………………………………………………………………. 4,100
Allowance for Doubtful Accounts ………………………………………….. 4,100
Bad Debt Expense ……………………………………………………………………. 2,800
Allowance for Doubtful Accounts ($5,800 – $3,000) ………………… 2,800
8. Under the direct write-off method, bad debt losses are not estimated and no allowance account is used.
9. From its own credit cards, the Freida Company may realize financing charges from customers who do
not pay the balance due within a specified grace period. National credit cards offer the following
advantages:
(2) The issuer maintains individual customer accounts.
Questions Chapter 8 (Continued)
(3) The issuer undertakes the collection process and absorbs any losses from uncollectible accounts.
customers.
10. The reasons companies are selling their receivables are:
11. Cash …………………………………………………………………………………………. 776,000
Service Charge Expense (3% X $800,000) ……………………………………… 24,000
Accounts Receivable ……………………………………………………………. 800,000
12. A promissory note gives the holder a stronger legal claim than one on an accounts receivable. As a
can earn interest.
13. The maturity date of a promissory note may be stated in one of three ways: (1) on demand, (2) on
16. If a financial institution uses 360 days rather than 365 days, it will receive more interest revenue. The
revenue larger.
17. When Jana Company has dishonored a note, the ledger can set up a receivable equal to the
18. Each of the major types of receivables should be identified in the balance sheet or in the notes to the
19. Net credit sales for the period are 8.14 X $400,000 = $3,256,000.
20. Apple’s 2011 allowance for doubtful accounts of $53 million represents 1% of its gross
receivables of $5,422 million.
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 8-1
BRIEF EXERCISE 8-2
(a) Accounts Receivable ……………………………………. 17,200
(b) Sales Returns and Allowances ……………………… 3,800
(c) Cash ($13,400 – $268) …………………………………… 13,132
BRIEF EXERCISE 8-3
(b) Current assets
Cash …………………………………………………….. $ 90,000
Accounts receivable ……………………………… $600,000
BRIEF EXERCISE 8-4
(a) Allowance for Doubtful Accounts ………………………. 6,200
(b)
(1)
Before Write-Off
(2)
After Write-Off
Accounts receivable
Allowance for doubtful
accounts
Cash realizable value
$700,000
54,000
$646,000
$693,800
47,800
$646,000
BRIEF EXERCISE 8-5
Accounts Receivable—Gray ……………………………………… 6,200
BRIEF EXERCISE 8-6
Bad Debt Expense [($800,000 – $40,000) X 2%] ………….. 15,200
BRIEF EXERCISE 8-7
BRIEF EXERCISE 8-8
(a) Cash ($175 – $7)…………………………..……………………. 168
BRIEF EXERCISE 8-9
Interest
Maturity Date
(a)
(b)
(c)
$800
$1,120
$200
August 9
October 12
July 11
BRIEF EXERCISE 8-10
Maturity Date
Annual Interest Rate
Total Interest
(a)
(b)
(c)
May 31
August 1
September 7
6%
8%
10%
$6,000
$ 600
$6,000
BRIEF EXERCISE 8-11
Jan. 10 Accounts Receivable ……………………………….. 15,600
Feb. 9 Notes Receivable……………………………………… 15,600
BRIEF EXERCISE 8-12
Accounts Receivable Turnover Ratio:
$20B
($2.7B+ $2.8B) ÷ 2
=
$20B
$2.75B
= 7.3 times
Average Collection Period for Accounts Receivable:
365 days
7.3 times
= 50 days