(3) other receivables.
3. Contra asset, credit balance
4. The accounts receivable and allowance for doubtful accounts may be reported at a net
amount of $661,500 ($673,400 – $11,900) in the Current Assets section of the balance sheet.
(2) A substantial volume of old uncollectible accounts is still being carried in the accounts
receivable account.
7. a. Sailfish Company
b. Notes Receivable
8. The interest will amount to $5,100 ($85,000 × 6%) only if the note is payable one year from
9. Debit Accounts Receivable for $243,600
10. Cash 245,427
CHAPTER 8
RECEIVABLES
DISCUSSION QUESTIONS
8-1
CHAPTER 8 Receivables
PE 8–1A
June 2 Cash 1,200
Bad Debt Expense 4,000
Accounts Receivable—Melissa Crone 5,200
PE 8–1B
Oct. 2 Cash 600
Bad Debt Expense 1,350
Accounts Receivable—Rachel Elpel 1,950
PE 8–2A
June 2 Cash 1,200
Allowance for Doubtful Accounts 4,000
Accounts Receivable—Melissa Crone 5,200
PRACTICE EXERCISES
8-2
CHAPTER 8 Receivables
PE 8–2B
Oct. 2 Cash 600
Allowance for Doubtful Accounts 1,350
Accounts Receivable—Rachel Elpel 1,950
PE 8–3A
a. $214,125 ($28,550,000 × 0.0075)
b.
Accounts Receivable……………………………………………
…
PE 8–3B
a. $231,500 ($46,300,000 × 0.0050)
b.
Accounts Receivable……………………………………………
…
Adjusted Balance
$1,975,000
Adjusted Balance
$3,460,000
8-3
CHAPTER 8 Receivables
PE 8–4A
a. $205,330 ($225,000 – $19,670)
b.
Accounts Receivable……………………………………………
…
PE 8–4B
a. $257,500 ($245,000 + $12,500)
b.
Accounts Receivable……………………………………………
…
…
PE 8–5A
a. The due date for the note is September 10, determined as follows:
July …………………………………………………………….……
…
19 days (31 – 12)
August …………………………………………………………….
…
31 days
Adjusted Balance
$1,975,000
Adjusted Balance
$3,460,000
…
CHAPTER 8 Receivables
PE 8–5B
a. The due date for the note is August 7, determined as follows:
April…………………………………………………………………
…
21 days (30 – 9)
May…………………………………………………………………
…
31 days
b. $462,000 [$450,000 + ($450,000 × 8% × 120 ÷ 360)]
c. Aug. 7 Cash 462,000
PE 8–6A
a.
Sales……………………………
…
Accounts receivable:
Beginning of year…………
b.
Sales……………………………
…
Average daily sales……………
$ 7,978.1 $ 8,104.1
Number of Days’ Sales
in Receivables 2016 2015
$2,912,000 $2,958,000
$ 300,000 $ 280,000
Turnover 2016 2015
$2,912,000 $2,958,000
8-5
CHAPTER 8 Receivables
PE 8–6B
a.
Sales…………………………………
…
Accounts receivable:
Beginning of year………………
$ 600,000 $ 540,000
Accounts Receivable Turnover 2016 2015
$7,906,000 $6,726,000
8-6
…
CHAPTER 8 Receivables
Ex. 8–1
Accounts receivable from the U.S. government are significantly different from
receivables from commercial aircraft carriers such as Delta and United. Thus,
Ex. 8–2
a. MGM Resorts International: 17.1% ($101,207,000 ÷ $592,937,000)
b. Johnson & Johnson: 4.0% ($466,000,000 ÷ $11,775,000,000)
Ex. 8–3
Feb. 3 Accounts Receivable—Dr. Jill Hall 17,340
Sales 17,340
3 Cost of Merchandise Sold 9,500
Merchandise Inventory 9,500
EXERCISES
8-7
CHAPTER 8 Receivables
Ex. 8–4
Apr. 2 Accounts Receivable—Peking Palace Co. 41,900
Sales 41,900
2 Cost of Merchandise Sold 24,850
Merchandise Inventory 24,850
Ex. 8–5
a. Bad Debt Expense 11,750
Accounts Receivable—Wil Treadwell 11,750
Ex. 8–6
a. $115,125 ($15,350,000 × 0.0075) c. $76,750 ($15,350,000 × 0.0050)
Ex. 8–7
Avalanche Auto
Bales Auto
84 (23 + 30 + 31)
20 (31 – 11)
Account Due Date
August 8
October 11
Number of Days Past Due
8-8
CHAPTER 8 Receivables
Ex. 8–8
a.
Customer
Builders Industries
b.
Not Past Over
Customer Balance Due 1–30 31–60 61–90 90
Acme Industries Inc. 3,000 3,000
Alliance Company 4,500 4,500
Zollinger Company 5,000 5,000
Ex. 8–9
Not Past Over
Balance Due 1–30 31–60 61–90 90
Days Past Due
Days Past Due
Due Date
May 1
Number of Days Past Due
122 days (30 + 30 + 31 + 31)
Aging of Receivables Schedule
August 31
8-9
CHAPTER 8 Receivables
Ex. 8–10
Aug. 31 Bad Debt Expense 136,465
Allowance for Doubtful Accounts 136,465
Ex. 8–11
Balance Percent Amount
Not past due $1,250,000 0.75% $ 9,375
31–60 days past due 190,000 5.00% 9,500
91–180 days past due 36,000 40.00% 14,400
Over 180 days past due 24,000 80.00% 19,200
Total $2,060,000 $76,475
Ex. 8–12
2016
Dec. 31 Bad Debt Expense 83,675
Estimated
Uncollectible Accounts
Age Interval
8-10
CHAPTER 8 Receivables
Ex. 8–13
a. Apr. 13 Bad Debt Expense 8,450
Accounts Receivable—Dean Sheppard 8,450
May 15 Cash 500
Bad Debt Expense 6,600
8-11
CHAPTER 8 Receivables
Ex. 8–13 (Concluded)
b. Apr. 13 Allowance for Doubtful Accounts 8,450
Accounts Receivable—Dean Sheppard 8,450
May 15 Cash 500
Allowance for Doubtful Accounts 6,600
Accounts Receivable—Dan Pyle 7,100
July 27 Accounts Receivable—Dean Sheppard 8,450
8-12
CHAPTER 8 Receivables
Ex. 8–14
a. June 8 Bad Debt Expense 8,440
Accounts Receivable—Kathy Quantel 8,440
Aug. 14 Cash 3,000
Bad Debt Expense 9,500
Accounts Receivable—Rosalie Oakes 12,500
Oct. 16 Accounts Receivable—Kathy Quantel 8,440
8-13
CHAPTER 8 Receivables
Ex. 8–14 (Continued)
b. June 8 Allowance for Doubtful Accounts 8,440
Accounts Receivable—Kathy Quantel 8,440
Aug. 14 Cash 3,000
Allowance for Doubtful Accounts 9,500
Accounts Receivable—Rosalie Oakes 12,500
Computations:
Percent Amount
0–30 days 1% $ 3,200
61–90 days 10% 2,400
91–120 days 33% 5,940
More than 120 days 75% 32,250
$320,000
24,000
18,000
43,000
Past Due)
Accounts
Estimated DoubtfulReceivables
Balance on
Aging Class
(Number of Days
December 31
8-14
CHAPTER 8 Receivables
Ex. 8–14 (Concluded)
c. Bad debt expense under:
Allowance method……………………………………………………………
…
$45,545
Ex. 8–15
$482,800 [$487,500 + $27,800 – ($3,250,000 × 1%)]
Ex. 8–16
Ex. 8–17
a. Bad Debt Expense 30,000
Accounts Receivable—Shawn Brooke 4,650
Accounts Receivable—Eve Denton 5,180
Accounts Receivable—Art Malloy 11,050
Accounts Receivable—Cassie Yost 9,120
b. Allowance for Doubtful Accounts 30,000
Accounts Receivable—Shawn Brooke 4,650
Accounts Receivable—Eve Denton 5,180
8-15
CHAPTER 8 Receivables
Ex. 8–18
a. Bad Debt Expense 102,500
Accounts Receivable—Kim Abel 21,550
Accounts Receivable—Lee Drake 33,925
Accounts Receivable—Jenny Green 27,565
Computations:
Percent Amount
31–60 days 2% 6,200
91–120 days 30% 22,800
More than 120 days 60% 58,200
Total receivables $109,650
Unadjusted debit balance of Allowance for Doubtful Accounts
($102,500 – $95,000)………………………………………………………………… $ 7,500
Estimated balance of Allowance for Doubtful Accounts
Past Due)
Accounts
Estimated DoubtfulAging Class
(Number of Days
$1,300,000
Receivables
Balance on
December 31
310,000
76,000
97,000
8-16
CHAPTER 8 Receivables
Ex. 8–19
Interest
a. $1,600 [$80,000 × 0.06 × (120 ÷ 360)]
b. March 21 90 [$27,000 × 0.04 × (30 ÷ 360)]
Ex. 8–20
a. November 10 (17 + 30 + 31 + 31 + 30 + 31 + 10)
b. $77,250 [($75,000 × 6% × 180 ÷ 360) + $75,000]
c. (1) Notes Receivable 75,000
Accounts Rec.—Master Designs Decorators 75,000
(2) Cash 77,250
Ex. 8–21
1. Sale on account.
3. A sale return or allowance.
5. Note received from customer on account.
7. Payment received from customer for dishonored note plus interest earned
after due date.
Due Date
May 2
8-17
CHAPTER 8 Receivables
Ex. 8–22
2015
Dec. 3 Notes Receivable 36,000
Accounts Receivable—Chicago Clothing &
Bags Co. 36,000
2016
Mar. 2 Cash 36,540
Notes Receivable 36,000
Interest Receivable 168
Interest Revenue 372
($36,000 × 0.06 × 62 ÷ 360).
Ex. 8–23
June 23 Notes Receivable 48,000
Accounts Receivable—Radon Express Co. 48,000
8-18
CHAPTER 8 Receivables
Ex. 8–24
Apr. 18 Notes Receivable 60,000
Accounts Receivable—Glenn Cross 60,000
30 Notes Receivable 42,000
Accounts Receivable—Rhoni Melville 42,000
Ex. 8–25
2. The allowance for doubtful accounts should be deducted from accounts
receivable.
A corrected partial balance sheet would be as follows:
Current assets:
NAPA VINO COMPANY
Balance Sheet
December 31, 2016
Assets
8-19
CHAPTER 8 Receivables
Ex. 8–26
a. and b.
c. The accounts receivable turnover indicates a slight increase in the efficiency of
collecting accounts receivable by increasing from 10.5 to 10.7, a favorable trend.
The days’ sales in receivables also indicates an increase in the efficiency of
Ex. 8–27
a. and b.
Sales……………………………
…
Accounts receivable…………
…
Average accts. receivable……
c. The accounts receivable turnover indicates an increase in the efficiency of
collecting accounts receivable by increasing from 9.3 to 10.3, a favorable trend.
compared with those of past years, industry averages, and similar firms.
Year 2 Year 1
$11,649,079 $10,706,588
$1,155,185
$993,510 $1,265,032
$1,129,271
Year 2 Year 1
8-20
…
…