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CHAPTER 8 Receivables
Ex. 8–28
a. and b.
Net sales………………………
…
c. The accounts receivable turnover indicates an increase in the efficiency of
collecting accounts receivable by increasing from 30.7 to 37.3, a favorable trend.
Year 2 Year 1
$9,613 $8,632
8-21
CHAPTER 8 Receivables
Ex. 8–29
a. The average accounts receivable turnover ratios are as follows:
The Limited Brands Inc.: 34.0 [(37.3 + 30.7) ÷ 2]
c. The Limited Brands operates a specialty retail chain of stores that sell directly
to individual consumers. Many of these consumers (retail customers) pay
8-22
CHAPTER 8 Receivables
Prob. 8–1A
2. 20—
Feb. 8 Cash 7,200
Allowance for Doubtful Accounts 10,800
Accounts Receivable—DeCoy Co. 18,000
May 27 Accounts Receivable—Seth Nelsen 7,350
PROBLEMS
8-23
CHAPTER 8 Receivables
Prob. 8–1A (Concluded)
1. and 2.
Feb. 8 10,800 Jan. 1 Balance 26,000
4. a. $45,500 ($18,200,000 × 0.0025)
Allowance for Doubtful Accounts
8-24
CHAPTER 8 Receivables
Prob. 8–2A
1.
Customer
Adams Sports & Flies
Blue Dun Flies
2. and 3.
Not
Past Over
Customer Balance Due 1–30 31–60 61–90 91–120 120
AAA Outfitters 20,000 20,000
Brown Trout Fly Shop 7,500 7,500
Days Past Due
Due Date
May 22, 2013
Number of Days Past Due
223 days (9 + 30 + 31 + 31 + 30 + 31 + 30 + 31)
December 31, 2013
Aging of Receivables Schedule
82 days (21 + 30 + 31)
Oct. 10, 2013
8-25
CHAPTER 8 Receivables
Prob. 8–2A (Concluded)
4. Bad Debt Expense 124,600
5. On the balance sheet, assets would be overstated by $124,600, since the allowance
for doubtful accounts would be understated by $124,600. In addition, the
8-26
CHAPTER 8 Receivables
Prob. 8–3A
1.
Increase Balance of
Expense Expense (Decrease) Allowance
Actually Based on in Amount Account,
Reported Estimate of Expense End of Year
$ 4,500 $ 9,000 $4,500 $ 4,500
2. Yes. The actual write-offs of accounts originating in the first two years are
reasonably close to the expense that would have been charged to those years
Bad Debt Expense
Year
1st
8-27
CHAPTER 8 Receivables
Prob. 8–4A
1.
Note
1. $500
2. 360
2. Nov. 17 Accounts Receivable 42,840
3. Dec. 31 Interest Receivable 154
Interest Revenue 154
4. Jan. 28 Cash 27,270
Notes Receivable 27,000
Interest Receivable 144
Interest Due at Maturity
(b)
($80,000 × 45/360 × 5%)
($24,000 × 60/360 × 9%)
Apr. 20
Due Date
(a)
June 22
8-28
CHAPTER 8 Receivables
Prob. 8–5A
Apr. 10 Notes Receivable 144,000
Accounts Receivable 144,000
8-29
CHAPTER 8 Receivables
Prob. 8–6A
Jan. 3 Notes Receivable 18,000
Cash 18,000
14 Notes Receivable 60,000
Accounts Receivable—Dry Creek Co. 60,000
Apr. 3 Notes Receivable 18,000
Cash 360
Notes Receivable 18,000
8-30
CHAPTER 8 Receivables
Prob. 8–6A (Concluded)
Aug. 1 Cash 18,540
8-31
CHAPTER 8 Receivables
Prob. 8–1B
2. 20—
Jan. 19 Accounts Receivable—Arlene Gurley 2,660
Allowance for Doubtful Accounts 2,660
19 Cash 2,660
Accounts Receivable—Arlene Gurley 2,660
8-32
CHAPTER 8 Receivables
Prob. 8–1B (Concluded)
1. and 2.
Apr. 3 12,750 Jan. 1 Balance 50,000
4. a. $79,000 ($15,800,000 × 0.005)
Allowance for Doubtful Accounts
8-33
