CHAPTER 8 Receivables
Ex. 8–28
a. and b.
Sales………………………………
Accounts receivable…………
…
Average accts. receivable……
…
Accts. receivable turnover……
…
$10,364 $9,613
$ 269 $ 267
Year 2 Year 1
38.7
$ 258$ 268
[($269 + $267) ÷ 2] [($267 + $249) ÷ 2]
37.3
8-21
CHAPTER 8 Receivables
Ex. 8–29
a. The average accounts receivable turnover ratios are as follows:
The Limited Brands Inc.: 38.0 [(38.7 + 37.3) ÷ 2]
H.J. Heinz Company: 9.8 [(10.3 + 9.3) ÷ 2]
Note: For computations of the individual ratios, see Ex. 8–27 and Ex. 8–28.
8-22
CHAPTER 8 Receivables
Prob. 8–1A
2.
Feb. 8 Cash 7,200
Allowance for Doubtful Accounts 10,800
Accounts Receivable—DeCoy Co. 18,000
May 27 Accounts Receivable—Seth Nelsen 7,350
Allowance for Doubtful Accounts 7,350
27 Cash 7,350
Accounts Receivable—Seth Nelsen 7,350
PROBLEMS
8-23
CHAPTER 8 Receivables
Prob. 8–1A (Concluded)
1. and 2.
Feb. 8 10,800 Jan. 1 Balance 26,000
Aug. 13 6,400 May 27 7,350
4. a. $45,500 ($18,200,000 × 0.0025)
Allowance for Doubtful Accounts
8-24
CHAPTER 8 Receivables
Prob. 8–2A
1.
Customer
Adams Sports & Flies
Blue Dun Flies
Cicada Fish Co.
2. and 3.
Not
Past Over
Customer Balance Due 1–30 31–60 61–90 91–120 120
AAA Outfitters 20,000 20,000
Brown Trout Fly Shop 7,500 7,500
Zigs Fish Adventures 4,000 4,000
Subtotals 1,300,000 750,000 290,000 120,000 40,000 20,000 80,000
Adams Sports & Flies 5,000 5,000
Oct. 10, 2015
Sept. 29, 2015
Days Past Due
Due Date
May 22, 2015
Number of Days Past Due
223 days (9 + 30 + 31 + 31 + 30 + 31 + 30 + 31)
December 31, 2015
Aging of Receivables Schedule
82 days (21 + 30 + 31)
93 days (1 + 31 + 30 + 31)
8-25
CHAPTER 8 Receivables
Prob. 8–2A (Concluded)
4. Bad Debt Expense 124,600
5. On the balance sheet, assets would be overstated by $124,600 because the
allowance for doubtful accounts would be understated by $124,600. In
8-26
CHAPTER 8 Receivables
Prob. 8–3A
1.
Increase Balance of
Expense Expense (Decrease) Allowance
2. Yes. The actual write-offs of accounts originating in the first two years are
reasonably close to the expense that would have been charged to those years
Bad Debt Expense
8-27
CHAPTER 8 Receivables
Prob. 8–4A
1.
Note
2. 360
4. 945
6. Jan. 29 300
2. Nov. 17 Accounts Receivable 42,840
3. Dec. 31 Interest Receivable 154
Interest Revenue 154
4. Jan. 28 Cash 27,270
Notes Receivable 27,000
Interest Receivable 144
Interest Due at Maturity
(b)
($72,000 × 30 ÷ 360 × 5%)
($24,000 × 60 ÷ 360 × 9%)
($54,000 × 90 ÷ 360 × 7%)
Due Date
(a)
June 22
Dec. 5
8-28
CHAPTER 8 Receivables
Prob. 8–5A
Apr. 10 Notes Receivable 144,000
Accounts Receivable 144,000
May 15 Notes Receivable 270,000
Accounts Receivable 270,000
June 9 Cash 145,200
Sept. 12 Cash 276,300
Notes Receivable 270,000
Interest Revenue 6,300
30 Notes Receivable 210,000
Accounts Receivable 210,000
8-29
CHAPTER 8 Receivables
Prob. 8–6A
Jan. 3 Notes Receivable 18,000
Cash 18,000
14 Notes Receivable 60,000
Accounts Receivable—Dry Creek Co. 60,000
Apr. 3 Notes Receivable 18,000
Cash 360
Notes Receivable 18,000
8-30
CHAPTER 8 Receivables
Prob. 8–6A (Concluded)
Aug. 1 Cash 18,540
Notes Receivable 18,000
Interest Revenue 540
($18,000 × 9% × 120 ÷ 360).
8-31
CHAPTER 8 Receivables
Prob. 8–1B
2.
Jan. 19 Accounts Receivable—Arlene Gurley 2,660
Allowance for Doubtful Accounts 2,660
19 Cash 2,660
Accounts Receivable—Arlene Gurley 2,660
Apr. 3 Allowance for Doubtful Accounts 12,750
Accounts Receivable—Premier GS Co. 12,750
8-32
CHAPTER 8 Receivables
Prob. 8–1B (Concluded)
1. and 2.
Apr. 3 12,750 Jan. 1 Balance 50,000
July 16 16,500 Jan. 19 2,660
Dec. 31 24,000 Nov. 23 4,000
4. a. $79,000 ($15,800,000 × 0.005)
Allowance for Doubtful Accounts
8-33