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Chapter 5 - Receivables and Sales
Exercise 5-13 (LO 5-6)
Requirement 1
1.
Debit
Credit
Accounts Receivable
190,000
Service Revenue
190,000
(Provide service on account)
2.
4.
Allowance for Uncollectible Accounts
8,000
Accounts Receivable
8,000
(Write off actual bad debts)
Requirement 2
1.
Debit
Credit
4.
Bad Debt Expense
8,000
Accounts Receivable
8,000
(Write off actual bad debts)
5-22 Financial Accounting, 5e
Exercise 5-13 (concluded)
Requirement 3
Bad Debt Expense
Allowance
Method
Direct Write-off
Method
2021:
$4,650
$0
2022:
$0
$8,000
Under the allowance method, we record bad debt expense in the period we estimate
Chapter 5 - Receivables and Sales
Exercise 5-14 (LO 5-7)
1. April 1
Debit
Credit
Notes Receivable
7,000
Service Revenue
7,000
(Provide services and accept note)
Exercise 5-15 (LO 5-7)
March 1
Debit
Credit
Notes Receivable
11,000
Service Revenue
11,000
(Provide legal services and accept note)
5-24 Financial Accounting, 5e
Exercise 5-16 (LO 5-7)
March 1
Debit
Credit
Legal Fees Expense
11,000
Notes Payable
11,000
(Receive legal services and sign note)
Chapter 5 - Receivables and Sales
Exercise 5-17 (LO 5-7)
Requirement 1
April 1, 2021
Debit
Credit
Notes Receivable
600,000
Cash
600,000
(Lend cash to supplier and accept note)
Requirement 2
December 31, 2021
Debit
Credit
Interest Receivable
49,500
Requirement 3
April 1, 2022
Debit
Credit
Cash
666,000
Exercise 5-18 (LO 5-8)
WalCo
TarMart
CostGet
Receivables
turnover
ratio
=
Net sales
$322,427
$67,878
$68,963
Average
accounts
($1,815 +
$2,762) /2
($6,166 +
$6,694) /2
($629 +
$665) /2
Exercise 5-19 (LO 5-9)
Requirement 1
December 31, 2021
Debit
Credit
Requirement 2
December 31, 2021
Debit
Credit
Bad Debt Expense
7,800
Allowance for Uncollectible Accounts
7,800
(Estimate future bad debts)
($7,800 = $260,000 x 3%)
Requirement 3
Percentage of
receivables
method
Percentage of
credit sales
method
5-28 Financial Accounting, 5e
Exercise 5-20 (LO 5-9)
Requirement 1
December 31, 2021
Debit
Credit
Requirement 2
December 31, 2021
Debit
Credit
Requirement 3
Percentage of
receivables
method
Percentage of
credit sales
method
Total assets
−$7,700
−$7,800
Chapter 5 - Receivables and Sales
Exercise 5-21 (LO 5-1, 5-4, 5-5, 5-7, 5-9)
Requirement 1
January 2
Debit
Credit
Cash
35,100
Service Revenue
35,100
(Provide services for cash)
January 6
Debit
Credit
January 20
Debit
Credit
Salaries Expense
31,400
Cash
31,400
(Pay for salaries)
January 22
Debit
Credit
Cash
70,000
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
(Adjust supplies)
($1,800 = $2,500−$700)
Chapter 5 - Receivables and Sales
Exercise 5-21 (continued)
Requirement 3
3D Family Fireworks
Adjusted Trial Balance
January 31, 2021
Accounts
Debit
Credit
Cash
$ 78,400
Accounts Receivable
15,000
Interest Receivable
100
5-32 Financial Accounting, 5e
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
100
=
100
Chapter 5 - Receivables and Sales
Exercise 5-21 (continued)
Requirement 4
3D Family Fireworks
Income Statement
For the year ended January 31, 2021
Revenues:
Service revenue
$107,500
Requirement 5
3D Family Fireworks
Balance Sheet
January 31, 2021
Assets
Liabilities
Cash
$ 78,400
Accounts payable
$ 1,700
Accounts receivable
$15,000
Salaries payable
33,500
Less: Allowance
(1,500)
13,500
Total current liabilities
35,200
Exercise 5-21 (concluded)
Requirement 6
January 31, 2021
Debit
Credit
Service Revenue
107,500
Interest Revenue
100
Requirement 7
(a) The receivables turnover ratio is:
Receivables
Turnover
Ratio
=
Net credit sales
=
$72,400
=
5.1
Average accounts
receivable
($13,600 + $15,000) / 2
A ratio of 5.1 suggests that credit sales are about five times the average balance of
(b) The ratio at the end of January is:
Allowance for Uncollectible
Exercise 5-22 (LO 5-1, 5-2, 5-4, 5-5, 5-7)
Requirement 1
1.
Debit
Credit
Accounts Receivable
7,000
Service Revenue
7,000
(Provide services on account)
2.
Debit
Credit
Cash
4,900
Requirement 2
(a) December 31
Debit
Credit
Bad Debt Expense
3,500
Allowance for Uncollectible Accounts
3,500
Exercise 5-22 (continued)
Requirement 3
Pop’s Fireworks
Adjusted Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$ 26,100
Accounts Receivable
42,000
Chapter 5 - Receivables and Sales
Exercise 5-22 (continued)
Requirement 3 (continued)
Accounts
Ending
Balance
Given balance in bold, entries
during the year in blue, and
adjusting entries in red.
Cash
$26,100
=
21,200+4,900
Accounts Receivable
42,000
=
41,500+7,000−5,000−1,500
Allowance for Uncollectible Accounts
4,200
=
2,200−1,500+3,500
Interest Receivable
200
=
200
5-38 Financial Accounting, 5e
Exercise 5-22 (continued)
Requirement 4
Pop’s Fireworks
Income Statement
For the year ended December 31, 2021
Revenues:
Service revenue
$131,800
Sales Discounts
(100)
Requirement 5
Pop’s Fireworks
Balance Sheet
December 31, 2021
Assets
Liabilities
Cash
$ 26,100
Accounts payable
$ 12,300
Accounts receivable
$42,000
Less: Allowance
(4,200)
37,800
Total current liabilities
12,300
Chapter 5 - Receivables and Sales
Exercise 5-22 (concluded)
Requirement 6
January 31, 2021
Debit
Credit
Service Revenue
131,800
Interest Revenue
200
(Close expense accounts)
Requirement 7
(a) Bad Debt Expense = $3,500
PROBLEMS: SET A
Problem 5-1A (LO 5-1)
Revenue recognized in 2021
Scenario 1:
$11,000
