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Alternate Exercises and Problems 7–1
Chapter 7 Cash and Receivables
EXERCISES
Exercise 7-1
Requirement 1
Sales price = 200 units x $800 = $160,000 x 80% = $128,000
April 6, 2016
Accounts receivable ........................................................ 128,000
Requirement 2
April 6, 2016
Accounts receivable ........................................................ 128,000
7–2 Intermediate Accounting, 8/e
Exercise 7-1 (concluded)
Requirement 3
Requirement 1:
April 6, 2016
Accounts receivable ........................................................ 126,720
April 16, 2016
Cash ................................................................................. 126,720
Requirement 2:
April 6, 2016
Accounts receivable ........................................................ 126,720
May 6, 2016
Cash ................................................................................. 128,000
Alternate Exercises and Problems 7–3
Exercise 7-2
Requirement 1
To record the write-off of receivables.
Allowance for uncollectible accounts ............................ 46,200
Allowance for uncollectible accounts:
Balance, beginning of year $68,000
To record bad debt expense for the year.
Requirement 2
Current assets:
7–4 Intermediate Accounting, 8/e
Exercise 7-3
Requirement 1
March 31, 2016
Note receivable (face amount) ............................................ 80,000
December 31, 2016
March 31, 2017
Discount on note receivable ........................................... 1,200
Requirement 2
$ 4,800 interest for 12 months
Exercise 7-4
Cash (difference) ................................................................ 90,000
Alternate Exercises and Problems 7–5
Exercise 7-5
Cash (difference) ............................................................... 90,000
Exercise 7-6
Step 1: Accrue interest earned.
September 1, 2016
Interest receivable ........................................................... 1,000
Step 4: To record a loss for the difference between the cash proceeds and the
note’s book value.
September 1, 2016
Cash (proceeds determined above) ........................................ 49,950
Exercise 7-7
Requirement 1
Step 1: Bank Balance to Corrected Balance
Balance per bank statement $74,674
Step 2: Book Balance to Corrected Balance
Balance per books $78,984
Deduct:
Requirement 2
To record credits to cash revealed by the bank reconciliation.
Miscellaneous expense (bank service charges) .................... 50
Alternate Exercises and Problems 7–7
PROBLEMS
Problem 7-1
Requirement 1
Monthly bad debt expense accrual summary.
Bad debt expense (2% x $3,800,000) ................................. 76,000
Requirement 2
Year-end required allowance for uncollectible accounts:
Summary
Percent
Estimated
Age Group
Amount
Uncollectible
Allowance
0-60 days
$ 825,000
2%
$ 16,500
7–8 Intermediate Accounting, 8/e
Problem 7-1 (concluded)
Allowance for uncollectible accounts:
Beginning balance $106,000
Requirement 3
Bad debt expense for 2016:
Monthly accruals $76,000
Balance sheet:
Current assets:
Alternate Exercises and Problems 7–9
Problem 7-2
Requirement 1
March 31, 2016
Note receivable (face amount) ........................................... 12,000
April 12, 2016
April 21, 2016
Cash (98% x $10,000) ........................................................ 9,800
7–10 Intermediate Accounting, 8/e
Problem 7-2 (continued)
May 30, 2016
Cash (98% x $100,000) ....................................................... 98,000
July 31, 2016
Sept. 30, 2016
Interest receivable ........................................................... 200
Alternate Exercises and Problems 7–11
Problem 7-2 (concluded)
$15,000 Face amount
Requirement 2
To accrue nine months' interest on the Misthos Co. note receivable.
