DQ1.
RECEIVABLES
Discussion Questions
CHAPTER 9―Solutions
Accrual accounting and valuation are violated by the direct charge-off method be-
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$1,385,000 × 0.01 = $13,850
To record estimated uncollectible accounts
expense
Short Exercises
SE1. Accounts Receivable and Notes Receivable
SE2. Evaluating the Level of Accounts Receivable
Allowance for Uncollectible Accounts
Uncollectible Accounts Expense
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Net accounts receivable is the same before and after the write-off.
SE4. Accounts Receivable Aging Method
a.
*Rounded
SE6. Interest Computations*
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Maturity value:
Principal =Maturity Value
+
$34,894.25
Interest
Maturity date: November 23
+
SE8. Notes Receivable Calculations
Maturity ValueInterest
*Rounded
Principal
Maturity value: $20,443.84
SE7. Notes Receivable Calculations
Maturity date: November 4
=
*Rounded
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365 days
Receivables Turnover
SE9. Management Issues
=
b. Days’ Sales
Uncollected
*Rounded
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b.
7,500
7,500
5,900
The resulting balance of Allowance for Uncollectible Accounts is the same, $6,700.
($6,700 + $800 = $7,500)
($6,700 – $800 = $5,900)
Allowance for Uncollectible Accounts
To record estimated uncollectible accounts
expense and bring the allowance account
expense and bring the allowance account
E3A. Accounts Receivable Aging Method
To record estimated uncollectible accounts
Uncollectible Accounts Expense
Allowance for Uncollectible Accounts
Uncollectible Accounts Expense
*$175,000 × 7.5% = $13,125
Allowance for Uncollectible Accounts
To record the estimated uncollectible
accounts expense for the year
E1A. Evaluating the Level of Accounts Receivable
Exercises: Set A
E2A. Percentage of Net Sales Method
The resulting balance of Allowance for Uncollectible Accounts is $131,850 ($106,050 +
To record estimated uncollectible
accounts expense
$15,150,000 × 0.007 = $106,050
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a.
b.
Allowance for Uncollectible Accounts
Adjusting entry:
Allowance for Uncollectible Accounts
Adjusting entry:
T accounts prepared to determine ending balances:
Accounts Receivable
E4A. Aging Method and Net Sales Method Contrasted
Allowance for Uncollectible Accounts
1,800
Bal.
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To record estimated uncollectible accounts
E5A. Aging Method and Net Sales Method Contrasted
$24,000).
$5,700,000 × 0.015 = $85,500
$70,000 + $24,000 = $94,000
Percentage of net sales method:
The resulting balance of Allowance for Uncollectible Accounts is $61,500 ($85,500 –
expense for the year
To record estimated uncollectible accounts
expense for the year
Accounts receivable aging method:
The results are different because these are estimation methods. They would not be ex-
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a.
b.
E6A. Aging Method and Net Sales Method Contrasted
accounts expense
If the beginning balance of Allowance for Uncollectible Accounts had been a credit,
the entry would have been the same, but the resulting balance would have been
The resulting balance of Allowance for Uncollectible Accounts is $28,800 ($32,200 –
$3,400).
Percentage of net sales method:
Accounts receivable aging method:
To record estimated uncollectible
$2,300,000 × 0.014 = $32,200
not directly take into account the debit balance in the allowance account, which
may have resulted from changed conditions.
$3,400).
To record estimated uncollectible
accounts expense for the year
If the beginning balance of Allowance for Uncollectible Accounts was a credit, the
account current conditions. For example, the percentage of net sales method does
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