Financial Accounting, 10/e 6-21
E6–26.
Req. 1
Under the indirect method, the decrease in the accounts receivable balance of $1,511
recording credit sales revenue.
Req. 2
(a) Declining sales revenue leads to lower accounts receivable because fewer new
E6–27.
Req. 1
BENTLEY COMPANY
Bank Reconciliation, June 30
Company’s Books
Bank Statement
Ending balance per Cash
account………………………
$5,600
Ending balance per bank
statement………………
$6,060
None
Deposit in transit…………
Bank service charges……
40
Outstanding checks…
Correct cash balance………
$5,560
Correct cash balance……
Req. 2
Bank service charge expense (+E, –SE) …………………………….. 40
Cash (–A) ……………………………………………………………… 40
To record deduction from bank account for service charges.
Req. 3
E6–28.
Req. 1
BENNETT COMPANY
Bank Reconciliation, September 30
Company’s Books
Bank Statement
Ending balance per Cash
account ……………………..
$5,700
Ending balance per bank
statement ……………………
None
$5,470
Req. 2
(1) Bank service charge expense (+E, –SE) ………………………….. 60
Cash (–A) …………………………………………………………… 60
Req. 3
Same as the correct balance on the reconciliation, $5,470.
Req. 4
Balance Sheet (September 30):
E6–29. (Supplement)
Req. 1
November 20
Cash (+A) ………………………………………………………….. 441
November 25:
Accounts receivable (Customer C) (+A) …………………. 2,800
Sales revenue (+R, +SE) ……………………………. 2,800
To record a credit sale.
November 28:
November 30:
Sales returns and allowances (+XR, –R, –SE) ………… 600
December 6:
Cash (+A) ………………………………………………………….. 6,468
December 30:
Cash (+A) ………………………………………………………….. 2,800
Accounts receivable (Customer C) (–A)………… 2,800
To record collection after the discount period.
Req. 2
PROBLEMS
P6–1.
Req. 1
Sales
Revenue
Sales Discounts
(taken)
Sales Returns
and Allowances
Bad Debt
Expense
(a)
+235,000
NE
NE
NE
(b)
+11,500
NE
NE
NE
(c)
+26,500
NE
NE
NE
(d)
NE
NE
+500
NE
(e)
+24,000
NE
NE
NE
(f)
NE
NE
NE
(g)
NE
NE
NE
(h)
NE
NE
NE
(i)
+19,000
NE
NE
NE
(j)
NE
NE
(k)
NE
NE
NE
NE
(l)
NE
NE
NE
NE
(m)
NE
NE
NE
Total
**Credit sales ($11,500 + $26,500 + $24,000 + $19,000) . $81,000
Req. 2
Income statement:
Sales revenue ………………………………………………….. $316,000
Less: Sales returns and allowances ………….. 4,000
Financial Accounting, 10/e 6-25
P6–2.
(Amounts in thousands)
Req 1
Bad debt expense (+E, –SE) …………………………………………….. 1,202
Req. 2
Year 2 …………………………..…….. $3,882 + $3,705 – $1,960 = $5,627
Year 1 …………………………..…….. $2,599 + $1,796 – $513= $3,882
Allowance for DA Year 2
Allowance for DA Year 1
P6–3.
Req. 1
Aging Analysis of Accounts Receivable
Customer
Total
Receivables
(a) Not Yet
Due
(b) Up to One
Year Past
Due
(c) More Than
One Year
Past Due
B. Brown…………..
$ 6,200
$6,200
D. Donalds………..
7,000
7,000
S. Strothers………
24,500
T. Thomas…………
4,000
$48,700
$6,200
Req. 2
Aging Schedule—Estimated Amounts Uncollectible
Age
Amount of
Receivables
Estimated
Uncollectible
Percentage
Estimated
Amount
Uncollectible
a.
Not yet due……………………
$15,000
3%
$ 450
b.
Up to one year past due…….
27,500
9%
2,475
Over one year past due……..
1,736
$3,741
Req. 3
Bad debt expense (+E, –SE) …………………………………… 3,741
Allowance for doubtful accounts (+XA, –A) ……….. 3,741
Req. 4
Income statement:
Selling, general, and administrative expenses
Financial Accounting, 10/e 6-27
P6–4.
Req. 1
TUNGSTEN COMPANY, INC.
Income Statement
For the Year Ended December 31, Current Year
Net sales revenue ($147,100 − $5,600 − $6,400) ……………. $135,100
Cost of goods sold………………………………………………………. 78,400
Gross profit ……………………………………………………………….. 56,700
Req. 2
Receivables
=
Net Sales
=
$135,100
=
8.89
Accounts Receivable
P6–5.
Req. 1
JEFFERSON COMPANY
Bank Reconciliation
April 30, Current Year
Company’s Books
Bank Statement
Ending balance per Cash
account ……………………..
$23,900
Ending balance per bank
statement ………………….
$26,070
Interest collected …………….
Deposits in transit* …………..
4,400
Bank charges …………………
210
$24,870
$24,870
Req. 2
(1) Cash (+A) ……………………………………………………………….. 1,180
Interest revenue (+R, +SE) ………………………………. 1,180
Interest collected.
Req. 3
Balance in regular Cash account ……………………………………………… $24,870
Req. 4
Balance Sheet (April 30, Current Year):
Financial Accounting, 10/e 6-29
P6–6.
Req. 1
Comparison of deposits listed in the Cash account with deposits listed on the bank
statement reveals a $5,200 deposit in transit on August 31.
Req. 2
Comparison of the checks cleared on the bank statement with (a) outstanding checks
Req. 3 ALLISON COMPANY
Bank Reconciliation
August 31, Current Year
Company’s Books
Bank Statement
Ending balance per Cash
account ……………………..
$20,370
Ending balance per bank
statement ………………….
$18,190
Req. 4
(1) Cash (+A) ……………………………………………………………….. 2,350
Interest revenue (+R, +SE) ………………………………. 2,350
Interest collected.
Req. 5
Current Assets:
Cash ……………………………………………………………………………….. $22,600
P6–7. (Supplement)
Req. 1
(a) Cash (+A) ………………………………………………………… 235,000
Sales revenue (+R, +SE) ………………………….. 235,000
Cash sales for current year.
Sales revenue (+R, +SE) ………………………….. 24,000
Credit sale, $24,000.
(f) Cash (+A) ………………………………………………………… 10,780
Sales discounts (+XR, –R, –SE) ………………………….. 220
Accounts receivable (R. Smith) (–A) …………… 11,000
Financial Accounting, 10/e 6-31
P6–7. (continued)
(j) Sales returns and allowances (+XR, –R, –SE) ………. 3,500
Cash (–A) ……………………………………………….. 3,430
Sales discounts (–XR, +R, +SE) ………………… 70
Sales return, 7 units @ $500 less sales discounts taken
= $3,500 x .98.
(m) Bad debt expense (+E, –SE) ………………………………. 1,155
Allowance for doubtful accounts (+XA, –A) ….. 1,155
To adjust for estimated bad debt expense
.
Req. 2
Income statement:
Sales revenue ($235,000 + $11,500 + $26,500
+ $24,000 + $19,000) ………………………………. $316,000
ALTERNATE PROBLEMS
AP6–1.
Req. 1
Sales
Revenue
Sales Discounts
(taken)
Sales Returns
and Allowances
Bad Debt
Expense
(a)
+227,000
NE
NE
NE
(b)
+12,000
NE
NE
NE
(c)
+23,500
NE
NE
NE
(d)
NE
+240
NE
NE
(e)
+26,000
NE
NE
NE
(f)
NE
+500
NE
(g)
NE
NE
NE
(h)
NE
NE
NE
(i)
NE
+400
NE
NE
(j)
+18,500
NE
NE
NE
(k)
NE
NE
NE
NE
(l)
NE
NE
NE
NE
(m)
NE
NE
NE
Total
+$4,000
* [($88,200/.98) x .02] = $1,800
**Credit sales ($12,000 + $23,500 + $26,000 + $18,500) . $80,000
Req. 2
Income statement:
Sales revenue ………………………………………………….. $307,000