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Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 9
Chapter 9
Accounting for Receivables
QUESTIONS
1. When customers use credit cards, the selling companies can avoid having to directly
evaluate the credit standing of their customers. They also avoid the risk of bad debts and
2. Revenues and expenses usually are not matched under the direct write-off method because
3. The accounting constraint of materiality suggests that the requirements of accounting
4. Creditors prefer notes receivable to accounts receivable because the notes can be more
5. Writing off a bad debt against the Allowance account does not reduce the estimated
realizable value of a company’s accounts receivable because the write-off reduces the
6. The adjusted balances of Bad Debts Expense and Allowance for Doubtful Accounts are
virtually never equal because the expense amount reflects only the events of the current
7. Apple lists its accounts receivable as “Accounts receivable, less allowances of $82 and $86,
8. Google uses the allowance method to account for doubtful accounts as evidenced by the
receivables being reduced by an allowance of $296 million on the December 31, 2015,
578
9. Samsung titles its accounts receivable as “Trade Receivables.” Samsung reports its Trade
Receivables (in KRW millions) at ₩25,168,026 as of December 31, 2015.
10. Samsung titles its accounts receivable as “Trade Receivables” and it reports them as part of
current assets. There is no allowance listed on the face of the balance sheet.
QUICK STUDIES
Quick Study 9-1 (15 minutes)
1.
Cash ...............................................................................
19,000
2.
Cash ...............................................................................
4,800
579
Quick Study 9-2 (10 minutes)
Quick Study 9-3 (10 minutes)
Oct. 30
Accounts Receivable—P.Moore ................................
50,000
Quick Study 9-4 (15 minutes)
1. DW direct write-off method
580
Quick Study 9-5 (15 minutes)
1.
2.
Mar. 9
Accounts Receivable—C. Green* ............................
300
Quick Study 9-6 (15 minutes)
Quick Study 9-7 (15 minutes)
581
Quick Study 9-8 (15 minutes)
1. Maturity date is October 31, which is computed as follows:
Days in August ................................................................ 31
2.
Quick Study 9-9 (10 minutes)
Oct. 31 Cash .................................................................... 6,180
Quick Study 9-10 (15 minutes)
Dec. 31 Interest Receivable ............................................ 50
Quick Study 9-11 (10 minutes)
May 1
Cash .......................................................................
121,875
Quick Study 9-12 (10 minutes)
Interpretation: An accounts receivable turnover of 5.9 implies that the
Quick Study 9-13 (10 minutes)
a. Both U.S. GAAP and IFRS have similar asset criteria that apply to
recognition of receivables. Further, receivables that arise from revenue-
generating activities are subject to broadly similar criteria for U.S. GAAP
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 9
583
EXERCISES
Exercise 9-1 (25 minutes)
Part 1
GENERAL LEDGER
Accounts Receivable
Sales
Sales Returns and
Allowances
Nov. 5
4,615
Nov. 21
209
Nov. 5
4,615
Nov. 21
209
ACCOUNTS RECEIVABLE LEDGER
Ski Shop
Welcome Enterprises
Zia Natara
Part 2
Vail Company
Schedule of Accounts Receivable
November 30, 2017
Exercise 9-2 (20 minutes)
Apr. 8
Cash .........................................................................
8,064
Exercise 9-3 (10 minutes)
Apr. 30
Accounts Receivable .............................................
1,000
Exercise 9-4 (15 minutes)
March 11
Bad Debts Expense ....................................................
45,000
Accounts Receivable—Leer Co. ..........................
45,000
585
Exercise 9-5 (20 minutes)
Dec. 31
Bad Debts Expense .....................................................
4,875
Allowance for Doubtful Accounts........................
4,875
Exercise 9-6 (15 minutes)
a.
Dec. 31
Bad Debts Expense ......................................................
685
Exercise 9-7 (30 minutes)
a. Computation of the estimated balance of the allowance for uncollectibles:
Not due:
$396,000 x 0.01 =
$ 3,960
Exercise 9-7 (Concluded)
b.
Dec. 31
Bad Debts Expense ..............................................
8,220
Allowance for Doubtful Accounts ................
8,220
Record estimated bad debts.*
Exercise 9-8 (25 minutes)
a. Computation of the estimated balance of the allowance for uncollectibles:
b.
Dec. 31
Bad Debts Expense ..............................................
13,650
Exercise 9-9 (20 minutes)
Feb. 1
Allowance for Doubtful Accounts ..............................
6,800
Accounts Receivable—Oakley Co .......................
900
Exercise 9-10 (25 minutes)
a. Expense is 3.0% of credit sales
Dec. 31
Bad Debts Expense ...............................................
9,000
Allowance for Doubtful Accounts .................
9,000
Record estimated bad debts
Exercise 9-11 (10 minutes)
2016
Exercise 9-12 (15 minutes)
2017
Jan. 27
Cash .......................................................................
9,595
Interest Revenue* ............................................
57
Interest Receivable .........................................
38
589
Exercise 9-13 (15 minutes)
Nov. 1
Notes Receivable—K. White .............................
6,000
Accounts Receivable—K. White .................
6,000
Record receipt of note on account.
Exercise 9-14 (20 minutes)
590
Exercise 9-15 (20 minutes)
July 4
Accounts Receivable ............................................
7,245
591
Exercise 9-16 (15 minutes)
Year 2016 accounts receivable turnover:
Exercise 9-17 (25 minutes)
(¥ in millions)
a. Expense is 0.4% of total revenues
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 9
592
PROBLEM SET A
Problem 9-1A (30 minutes)
June 4
Accounts Receivable—N. Morris .............................
650
Sales .....................................................................
650
Record sales on credit.
Problem 9-2A (35 minutes)
Part 1
a. Expense is 1.5% of credit sales
Dec. 31
Bad Debts Expense ...............................................
85,230
Part 2
Current assets
594
Problem 9-3A (35 minutes)
Part 1
Calculation of the estimated balance of the allowance for uncollectibles
Not due:
$830,000 x .0125 =
$10,375
Part 2
Part 3
Writing off the account receivable in 2018 will not directly affect year 2018
595
Problem 9-4A (35 minutes)
2016
a.
Accounts Receivable .........................................
1,345,434
