Accounting Chapter 7 Homework Requirement Allowance For Uncollectible Accounts Millions

subject Type Homework Help
subject Pages 14
subject Words 2010
subject Authors David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
Exercise 731 (concluded)
Amortization Schedule Not required
Cash Effective Increase in Outstanding
Interest Interest Balance Balance
by agreement 10% x Outstanding Balance Discount Reduction
10,826,490
1 1,000,000 .10 (10,826,490) = 1,082,649 82,649 10,909,139
page-pf2
742 Intermediate Accounting, 8/e
Exercise 732
ANALYSIS
Previous Value:
Accrued 2015 interest (10% x $240,000) $ 24,000
New Value:
$11,555 + 11,555 + 11,555 + 240,000 = $274,665
JOURNAL ENTRIES
January 1, 2016
Loss on troubled debt restructuring (to balance) ......... 37,003
December 31, 2016
Note receivable (to balance) ........................... ............ 22,700
December 31, 2017
Note receivable (to balance) ........................... ............ 24,968
page-pf3
Exercise 732 (concluded)
Amortization Schedule Not required
Cash Effective Increase in Outstanding
Interest Interest Balance Balance
by agreement 10% x Outstanding Balance Discount Reduction
226,997
1 0 .10 (226,997) = 22,700 22,700 249,697
page-pf4
CPA / CMA REVIEW QUESTIONS
CPA Exam Questions
1. a. Allowance for uncollectible accounts, beginning balance $260,000
2. a. Accounts receivable, beginning balance $ 600
Add: Credit sales 3,200
3. c. The reinstatement of a previously written off account increases the
allowance account. The collection of the reinstated account does not
4. b. Accounts receivable, beginning balance $ 650,000
Add: Credit sales 2,700,000
5. c. The key phrase is "without recourse" which means that Gar Co. has
transferred the collection risk to Ross Bank. Ross does not have any
page-pf5
CPA Exam Questions (concluded)
6. a. The aging method is a balance sheet approach that calculates the required
ending balance in the allowance for uncollectible accounts. The
calculation is as follows:
Estimated %
Uncollectible
x
Amount
=
Required
Balance
1%
x
$120,000
=
$1,200
7. a. The estimate using the income statement approach is:
$1,750,000 x 2% = $35,000
The estimate using the balance sheet approach is:
8. b. IFRS allows overdrafts to be offset with positive cash balances if the
9. c. IAS No. 39 allows receivables to be accounted for as “available for sale”
10. d. Under IFRS, measurement of an impairment of a receivable is required if there
page-pf6
746 Intermediate Accounting, 8/e
CMA Exam Questions
1. c. The allowance method records bad debt expense systematically as a
percentage of either credit sales or the level of accounts receivable.
2. d. If a company uses the allowance method, the write-off of a receivable
has no effect on total assets. The journal entry involves a debit to the
3. c. The entry is to debit bad debt expense and credit the allowance
account. Net credit sales were $1,500,000 ($1,800,000 $125,000 of
page-pf7
PROBLEMS
Problem 71
Requirement 1
Monthly bad debt expense accrual summary.
Bad debt expense (3% x $2,620,000) ................................. 78,600
Requirement 2
Bad debt expense ........................................................... 4,300
Year-end required allowance for uncollectible accounts:
Summary
Percent
Estimated
Age Group
Uncollectible
Allowance
060 days
4%
$17,200
6190 days
15%
14,700
page-pf8
748 Intermediate Accounting, 8/e
Problem 71 (concluded)
Allowance for uncollectible accounts:
Beginning balance $54,000
Add: Monthly bad debt accruals 78,600
Requirement 3
Bad debt expense for 2016:
Monthly accruals $78,600
Balance sheet:
Current assets:
page-pf9
Problem 72
Requirement 1
(a)
Accounts receivable analysis ($ in thousands):
Balance, beginning of year ($580,640 + 6,590) $ 587,230
(b)
Allowance for uncollectible accounts analysis ($ in thousands):
Beginning balance $6,590
(c)
Requirement 2
(a) ($ in thousands)
Current year Previous year
Current assets:
(b) ($ in thousands)
Bad debt expense would be equal to actual receivables written off
of $5,934.
page-pfa
750 Intermediate Accounting, 8/e
Problem 73
Requirement 1
2013 2012
($ in millions)
Accounts receivable, net $3,117 $3,132
Requirement 2
Allowance for Uncollectible Accounts
_______________________________________
($ in millions)
91 Beg. Bal.
Write-offs 19
Requirement 3
Gross Accounts Receivable
_______________________________________
($ in millions)
Beg. Bal. 3,223
Sales 25,313
page-pfb
Problem 73 (concluded)
Requirement 4
Net Accounts Receivable
________________________________________
($ in millions)
Beg. Bal. 3,132
page-pfc
752 Intermediate Accounting, 8/e
Problem 74
Requirement 1
To record accounts receivable written off during the year 2016:
Allowance for uncollectible accounts ............................. 35,000
To record collection of account receivable previously written off:
Requirement 2
(a)
December 31, 2016
Bad debt expense (3% x $1,750,000) .................................. 52,500
(b)
December 31, 2016
Bad debt expense ............................................................ 36,700
page-pfd
Problem 74 (continued)
Accounts receivable analysis:
Beginning balance $ 462,000
Add: Credit sales 1,750,000
Less: Write-offs (35,000)
Allowance for uncollectible accounts analysis:
Beginning balance $30,000
Add: Collection of receivable previously written off 3,000
(c)
Required allowance:
Age Group
Amount
Percent
Uncollectible
Estimated
Allowance
060 days
$225,550
4%
$ 9,022
91120 days
34,700
25%
8,675
page-pfe
754 Intermediate Accounting, 8/e
Problem 74 (concluded)
Allowance for uncollectible accounts analysis:
Beginning balance $30,000
Add: Collection of receivable previously written off 3,000
Less: Write-offs (35,000)
Requirement 3
Accounts receivable Year-end allowance
page-pff
Problem 75
Requirement 1
($ in thousands)
2009 2008
Accounts receivable, net $837,010 $758,200
Requirement 2
($ in thousands)
Analysis of allowance for doubtful accounts
Balance, beginning of year $8,915
Requirement 3
($ in thousands)
Analysis of allowance for sales returns
Balance, end of year $12,128
Requirement 4
($ in thousands)
Accounts receivable analysis:
Balance, beginning of year $ 781,514
page-pf10
Problem 76
Requirement 1
Total face value of notes = $300,000 + 150,000 + 200,000 = $650,000
Balance sheet carrying value = 645,000
Requirement 2
Total accrued interest receivable $16,000
Less: Interest accrued on note 1:
Requirement 3
Note 1 $10,000
page-pf11
Problem 77
Requirement 1
Alternative a:
To record the borrowing of $500,000 and signing of a note payable:
July 1, 2016
Alternative b:
To record the transfer of receivables:
July 1, 2016
Requirement 2
Alternative a:
July, 2016
page-pf12
758 Intermediate Accounting, 8/e
Problem 77 (concluded)
Alternative b:
$550 of accounts receivable are now held by the bank, and presumably the bank
has collected .8 x $550 = $440 during July. Lonergan still holds accounts receivable
of ($780 550 = $230), so should have collected .8 x $230 = $184 during July.
July 31, 2016
Requirement 3
Alternative a. Note disclosure is required for the assignment of accounts
Problem 78
Cash (90% x $800,000) ....................................................... 720,000
page-pf13
Problem 79
WALKEN COMPANY
Balance Sheet
December 31, 2016
Current Assets
Casha 35,000
aWalken would net the €40,000 and (€5000) cash balances, yielding a balance of
€35,000.
bNet accounts receivable would be affected as follows:
Beginning balance: € 25,000
Credit sales 85,000
page-pf14
Problem 710
Requirement 1
February 28, 2016
Note receivable................................................................ 10,000
Sales revenue ............................................................... 10,000
March 31, 2016
Note receivable (face amount) ............................................ 8,000
April 3, 2016
April 11, 2016
April 17, 2016

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.