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Chapter 05 - Receivables and Sales
Chapter 5
Receivables and Sales
EXERCISES
Exercise 5-1
May 7
Debit
Credit
Accounts Receivable
4,760
Exercise 5-2
May 1
Debit
Credit
Exercise 5-3
March 12
Debit
Credit
Accounts Receivable
25,800
Exercise 5-4
March 12
Debit
Credit
Accounts Receivable
25,800
Exercise 5-5
March 12
Debit
Credit
Service Fee Expense
25,800
Exercise 5-6
Requirement 1
April 25
Debit
Credit
Accounts Receivable
3,200
Service Revenue
3,200
(Provide services on account)
Requirement 2
April 27
Debit
Credit
Exercise 5-7
Requirement 1
December 31, 2014
Debit
Credit
Exercise 5-8
Requirement 1
December 31, 2014
Debit
Credit
Bad Debt Expense
19,500
Requirement 2
Bad debt Expense
$19,500
Requirement 3
Total accounts receivable
$88,000
Exercise 5-9
Requirement 1
December 31, 2014
Debit
Credit
Bad Debt Expense
18,600
Requirement 2
Bad debt Expense
$18,600
Requirement 3
Total accounts receivable
$112,000
Exercise 5-10
Requirement 1
Age Group
Amount
Receivable
Estimated
Percent
Uncollectible
Estimated
Amount
Uncollectible
Not yet due
$ 53,000
15%
$ 7,950
0-30 days past due
27,000
20%
5,400
Requirement 2
December 31, 2014
Debit
Credit
Bad Debt Expense
25,500
Requirement 3
Total accounts receivable
$104,000
Exercise 5-11
Requirement 1
Age Group
Amount
Receivable
Estimated
Percent
Uncollectible
Estimated
Amount
Uncollectible
Not yet due
$ 69,500
10%
$ 6,950
Requirement 2
December 31, 2014
Debit
Credit
Bad Debt Expense
47,200
Requirement 3
Total accounts receivable
$173,700
Exercise 5-12
Credit sales
transaction cycle
Assets
Liabilities
Stockholders’
equity
Revenues
Expenses
1. Provide services on
account
I
NE
I
I
NE
Exercise 5-13
Requirement 1
a.
Debit
Credit
Accounts Receivable
270,700
Service Revenue
270,700
(Provide service on account)
b.
Requirement 2
a.
Debit
Credit
Accounts Receivable
270,700
Service Revenue
270,700
(Provide services on account)
b.
Exercise 5-13 (concluded)
Requirement 3
Bad Debt Expense
Allowance
Method
Direct Write-off
Method
2018:
$38,875
$0
Under the allowance method, we record bad debt expense in the period we estimate
them (2018) so net income would be lower under the allowance method in 2018.
Under the direct write-off method, we record bad debts when they actually occur
Exercise 5-14
a. April 1
Debit
Credit
Notes Receivable
8,000
Service Revenue
8,000
Exercise 5-15
March 1
Debit
Credit
Notes Receivable
18,600
September 1
Cash
19,716
Exercise 5-16
March 1
Debit
Credit
Legal Fees Expense
18,600
September 1
Notes Payable
18,600
Exercise 5-17
Requirement 1
April 1, 2014
Debit
Credit
Requirement 2
December 31, 2014
Debit
Credit
Interest Receivable
27,000
Requirement 3
April 1, 2015
Debit
Credit
Cash
486,000
Notes Receivable
450,000
Interest Receivable
27,000
Exercise 5-18
Wal-Mart
Target
Costco
Receivables
Net Sales
$337,500
$93,600
$115,500
Average
collection
=
365
365
365
365
Receivables
125
12
77
Exercise 5-19
Requirement 1
December 31, 2014
Debit
Credit
Bad Debt Expense
4,500
Requirement 2
December 31, 2014
Debit
Credit
Bad Debt Expense
5,700
Requirement 3
Percentage-of-
receivables
method
Percentage-of-
credit-sales
method
Total Assets
−$4,500
−$5,700
Exercise 5-20
Requirement 1
December 31, 2014
Debit
Credit
Bad Debt Expense
7,500
Allowance for Uncollectible Accounts
7,500
Requirement 2
December 31, 2014
Debit
Credit
Bad Debt Expense
5,700
Requirement 3
Percentage-of-
receivables
method
Percentage-of-
credit-sales
method
Total Assets
−$7,500
−$5,700
