Exercise 5-14 (LO 5-7)
a. April 1
Debit
Credit
Notes Receivable
7,000
Service Revenue
7,000
b. June 1
Notes Receivable
11,000
Cash
11,000
c. November 1
Notes Receivable
6,000
Accounts Receivable
6,000
Exercise 5-15 (LO 5-7)
March 1
Debit
Credit
Notes Receivable
11,000
Service Revenue
11,000
September 1
Cash
11,495
Notes Receivable
11,000
Exercise 5-16 (LO 5-7)
March 1
Debit
Credit
Legal Fees Expense
11,000
September 1
Notes Payable
11,000
Interest Expense
Chapter 5 – Receivables and Sales
Exercise 5-17 (LO 5-7)
Requirement 1
April 1, 2018
Debit
Credit
Notes Receivable
600,000
Cash
Requirement 2
December 31, 2018
Debit
Credit
Interest Receivable
49,500
Interest Revenue
Requirement 3
April 1, 2019
Debit
Credit
Cash
666,000
Notes Receivable
600,000
Interest Receivable
Interest Revenue
Exercise 5-18 (LO 5-8)
WalCo
TarMart
CostGet
Receivables
turnover
=
Net sales
$322,427
$67,878
$68,963
Average
($1,815 +
($6,166 +
($629 +
Average
collection
=
365
365
365
365
Receivables
140.9
10.6
106.6
Exercise 5-19 (LO 5-9)
Requirement 1
December 31, 2018
Debit
Credit
Bad Debt Expense
5,500
Requirement 2
December 31, 2018
Debit
Credit
Bad Debt Expense
7,800
Requirement 3
Percentage of
receivables
method
Percentage of
credit sales
method
5-26 Financial Accounting, 3e
Exercise 5-20 (LO 5-9)
Requirement 1
December 31, 2018
Debit
Credit
Bad Debt Expense
7,700
Allowance for Uncollectible Accounts
7,700
December 31, 2018
Debit
Credit
Bad Debt Expense
Allowance for Uncollectible Accounts
7,800
Chapter 5 – Receivables and Sales
Exercise 5-21
Requirement 1
January 2
Debit
Credit
Cash
35,100
Service Revenue
35,100
(Provide services for cash)
January 6
Debit
Credit
Accounts Receivable
72,400
Service Revenue
72,400
January 15
Debit
Credit
Allowance for Uncollectible Accounts
Accounts Receivable
January 20
Debit
Credit
Salaries Expense
31,400
January 22
Debit
Credit
Cash
70,000
Accounts Receivable
70,000
January 25
Debit
Credit
Accounts Payable
Cash
January 30
Debit
Credit
Utilities Expense
13,700
Cash
13,700
Exercise 5-21 (continued)
Requirement 2
(a) January 31
Debit
Credit
Bad Debt Expense
1,100
Allowance for Uncollectible Accounts
1,100
(b) January 31
Debit
Credit
Supplies Expense
1,800
Supplies
1,800
(c) January 31
Debit
Credit
Interest Receivable
Salaries Expense
33,500
33,500
Exercise 5-21 (continued)
Requirement 3
3D Family Fireworks
Adjusted Trial Balance
January 31, 2018
Accounts
Debit
Credit
Cash
$78,400
Accounts Receivable
15,000
Supplies
Notes Receivable
20,000
Land
77,000
Allowance for Uncollectible Accounts
$ 1,500
Accounts Payable
Salaries Payable
Retained Earnings
Service Revenue
Interest Revenue
Salaries Expense
64,900
Bad Debt Expense
Totals
$272,700
5-30 Financial Accounting, 3e
Exercise 5-21 (continued)
Requirement 3 (continued)
Accounts
Ending
Balance
Beginning balance in bold, entries during
January in blue, and adjusting entries in red.
Cash
78,400
=
23,900+35,100+70,000−31,400−5,500−13,700
Accounts Receivable
15,000
=
13,600+72,400−1,000−70,000
Interest Receivable
=
Notes Receivable
20,000
=
Land
77,000
=
Accounts Payable
=
7,200−5,500
Salaries Payable
33,500
=
Retained Earnings
32,400
=
Service Revenue
=
Interest Revenue
=
Supplies Expense
=
Salaries Expense
64,900
=
Bad Debt Expense
=
Chapter 5 – Receivables and Sales
Exercise 5-21 (continued)
Requirement 4
3D Family Fireworks
Income Statement
For the year ended January 31, 2018
Revenues:
Service revenue
$107,500
Interest revenue
100
Expenses:
Supplies expense
Salaries expense
Utilities expense
Net income
$ 26,100
Requirement 5
3D Family Fireworks
Balance Sheet
January 31, 2018
Assets
Liabilities
Cash
$ 78,400
Accounts payable
$ 1,700
Accounts receivable
$15,000
Salaries payable
33,500
Interest receivable
Supplies
Total current assets
Notes receivable
Retained earnings
58,500
*
Land
Total assets
$189,700
$189,700
Exercise 5-21 (concluded)
Requirement 6
January 31, 2018
Debit
Credit
Service Revenue
107,500
Interest Revenue
100
107,600
64,900
13,700
Requirement 7
(a) The receivables turnover ratio is:
Receivables
Net credit sales
$72,400
(b) The ratio at the end of January is:
Allowance for Uncollectible
Accounts
=
$1,500
=
10%
Chapter 5 – Receivables and Sales
PROBLEMS: SET A
Problem 5-1A (LO 5-1)
Revenue recognized in 2018
Scenario 1:
$11,000
Scenario 2:
Scenario 3:
Scenario 4:
Problem 5-2A (LO 5-1, 5-2)
Requirement 1
May 2
Debit
Credit
No entry
May 7
May 9
No entry
May 15
Requirement 2
Outdoor Expo
Partial Income Statement
Problem 5-3A (LO 5-3, 5-5)
Requirement 1
June 12, 2018
Debit
Credit
Accounts Receivable
41,000
Service Revenue
41,000
(Provide services on account)
September 17, 2018
Cash
25,000
Accounts Receivable
December 31, 2018
Allowance for Uncollectible Accounts
($16,000 x 45% = $7,200)
March 4, 2019
Accounts Receivable
56,000
Service Revenue
56,000
(Provide services on account)
May 20, 2019
Cash
10,000
Accounts Receivable
(Receive cash on account)
July 2, 2019
Allowance for Uncollectible Accounts
Accounts Receivable
(Write off actual bad debts)
Cash
45,000
Accounts Receivable
(Receive cash on account)
December 31, 2019
Bad Debt Expense
Allowance for Uncollectible Accounts
Problem 5-3A (concluded)
Requirement 2
Cash
Accounts Receivable
25,000
41,000
25,000
Dec. 31, 2018
25,000
Dec. 31, 2018
16,000
10,000
56,000
45,000
Dec. 31, 2019
80,000
11,000
Requirement 3
2018
2019
Total accounts receivable
Less: Allowance for uncollectible accounts
Chapter 5 – Receivables and Sales
Problem 5-4A (LO 5-4, 5-5)
Requirement 1
Age group
Amount
receivable
Estimated
percent
uncollectible
Estimated
amount
uncollectible
Not yet due
$40,000
4%
$ 1,600
0-90 days past due
More than 180 days past due
Requirement 2
December 31, 2018
Debit
Credit
Bad Debt Expense
12,950
Requirement 3
July 19, 2019
September 30, 2019
5-38 Financial Accounting, 3e
Problem 5-5A (LO 5-3, 5-6)
Requirement 1
Arnold should not use the direct write-off method. Even if no accounts are known to
Requirement 2
Chapter 5 – Receivables and Sales
Problem 5-6A (LO 5-3)
Requirement 1
Debit
Credit
Bad Debt Expense
59,000
Requirement 2
Requirement 3
Debit
Credit
Bad Debt Expense
26,000
Requirement 4
Problem 5-7A (LO 5-3, 5-5)
Requirement 1
December 31, 2018
Debit
Credit
Bad Debt Expense
455,000
Requirement 2
Because actual bad debts in 2019 were only $300,000 when the company estimated