...Jan. 6 Accounts Receivable—Jackie Inc 7,000 Sales Revenue 7,000 16 Cash ($7,000 – $140) 6,860 Sales Discounts (2% X $7,000) 140 Accounts Receivable—Jackie Inc 7,000 (b) Jan. 10 Accounts Receivable—C. Bybee 9,000 Sales Revenue 9,000 Feb. 12 Cash 6,000 Accounts Receivable—C. Bybee 6,000 Mar. 10 Accounts Receivable—C. Bybee 60 Interest Revenue [2% X ($9,000 – $6,000)] 60 EXERCISE 8-4 (a) | Accounts Receivable | | Amount | | % | | Estimated Uncollectible | | | | | | | | | | 1–30 days31–60 days61–90 daysOver 90 days | | $65,000 17,600 8,500 7,000 | | 2.0 5.030.050.0 | | $1,300 880 2,550 3,500$8,230 | (b) Mar. 31 Bad Debt Expense 7,330 Allowance for Doubtful Accounts ($8,230 – $900) 7,330 EXERCISE 8-7 (a) Mar. 3 Cash ($620,000 – $18,600) 601,400 Service Charge Expense (3% X $620,000) 18,600 Accounts Receivable 620,000 (b) May 10 Cash ($3,500 – $175) 3,325 Service Charge Expense (5% X $3,500) 175 Sales Revenue 3,500 EXERCISE 8-10 (a) 2014 Nov. 1 Notes Receivable 15,000 Cash 15,000 Dec. 11 Notes Receivable 6,750 Sales Revenue 6,750 16 Notes Receivable 4,400 ...
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...D.E.A.L.O.R Divdends Expenses Assets Debit Liabilities Owners' equity Revenues Credit Debit Credit General Form Date Account name Debit Account name Credit Initial Investment in a Company Date Cash Assets Debit Common Stock Liabilities + + Cash Owners' Equity + Common Stock Credit Purchase Building with a Loan Date Buildings Assets Debit Notes Payable = +Buildings Liabilities + Owners' Equity + Note Payable Credit Purchase Equipment for Cash Date Equipment Assets Debit Cash Credit Pay one year's Rent Date Prepaid Rent = Debit Provide Business Services on Credit Date Accounts Recievable Debit Service Revenue Credit Liabilities + Owners' Equity = Liabilities + Owners' Equity = Liabilities + Owners' Equity +Buildings -Cash Assets Cash = +Prepaid Rent -Cash Assets +Accounts Recievable Credit +Service Revenue (Revenue increases NI increases RE) Provide Business Services for Cash Date Cash Assets Debit Service Revenue = Liabilities + +Cash +Service Revenue (Revenue increases NI increases RE) Credit Pay for Advertising with Cash Date Advertising Expense Cash Assets Debit = Liabilities + -Cash Purchase Supplies on Account Assets Debit Accounts Payable = +Supplies Liabilities + Purchase Supplies Assets Debit Cash Credit ...
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...CHAPTER 8 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises 1. Identify the different types of receivables. 1, 2 1 2. Explain how companies recognize accounts receivable. 3 2 3. Distinguish between the methods and bases companies use to value accounts receivable. 4, 5, 6, 7, 8 3, 4, 5, 6, 7 4. Describe the entries to record the disposition of accounts receivable. 9, 10, 11 5. Compute the maturity date of and interest on notes receivable. 12, 13, 14, 15, 16 6. Explain how companies recognize notes receivable. 7. Describe how companies value notes receivable. 8. Describe the entries to record the disposition of notes receivable. 17 9. Explain the statement presentation and analysis of receivables. 18, 19 Do It! Exercises A Problems B Problems 1, 2 1A, 3A, 4A, 1B, 3B, 4B, 6A, 7A 6B, 7B 1 3, 4, 5, 6 1A, 2A, 3A, 1B, 2B, 3B, 4A, 5A 4B, 5B 8 2 7, 8, 9 6A, 7A 6B, 7B 9, 10 3 10, 11, 12, 13 6A, 7A 6B, 7B 10, 11, 12 7A 7B 7A 7B 11 3 3, 12 12, 13 6A, 7A 6B, 7B 4 14 1A, 6A 1B, 6B Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only) 8-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description 1A 2A Simple 15–20 Compute bad debt amounts. Moderate 20–25 3A Journalize entries to record transactions related to bad debts. Moderate 20–30 4A Journalize transactions related to bad debts. Moderate 20–30...
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...CHAPTER 9 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Brief Exercises 1 A Problems B Problems Study Objectives 1. Identify the different types of receivables. Explain how companies recognize accounts receivable. Distinguish between the methods and bases companies use to value accounts receivable. Describe the entries to record the disposition of accounts receivable. Compute the maturity date of and interest on notes receivable. Explain how companies recognize notes receivable. Describe how companies value notes receivable. Describe the entries to record the disposition of notes receivable. Explain the statement presentation and analysis of receivables. Questions 1, 2 Exercises 2. 3 2 1, 2, 14 1A, 3A, 4A, 6A, 7A 1B, 3B, 4B, 6B, 7B 3. 4, 5, 6, 7, 8 3, 4, 5, 6, 7 3, 4, 5, 6 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B 4. 9, 10, 11 8 7, 8, 9, 14 6A, 7A 6B, 7B 5. 12, 13, 14, 15, 16 9, 10 10, 11, 12, 13 6A, 7A 6B, 7B 6. 11 10, 11, 12 7A 7B 7. 7A 7B 8. 17 12, 13 6A, 7A 6B, 7B 9. 18, 19 3, 12 14, 15 1A, 6A 1B, 6B 9-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description 1A 2A 3A 4A 5A 6A 7A 1B 2B 3B 4B 5B 6B 7B Prepare journal entries related to bad debts expense. Compute bad debts amounts. Journalize entries to record transactions related to bad debts. Journalize transactions related to bad debts. Journalize entries to record...
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...CHAPTER 9 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Brief Exercises 1 A Problems B Problems Study Objectives 1. Identify the different types of receivables. Explain how companies recognize accounts receivable. Distinguish between the methods and bases companies use to value accounts receivable. Describe the entries to record the disposition of accounts receivable. Compute the maturity date of and interest on notes receivable. Explain how companies recognize notes receivable. Describe how companies value notes receivable. Describe the entries to record the disposition of notes receivable. Explain the statement presentation and analysis of receivables. Questions 1, 2 Exercises 2. 3 2 1, 2, 14 1A, 3A, 4A, 6A, 7A 1B, 3B, 4B, 6B, 7B 3. 4, 5, 6, 7, 8 3, 4, 5, 6, 7 3, 4, 5, 6 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B 4. 9, 10, 11 8 7, 8, 9, 14 6A, 7A 6B, 7B 5. 12, 13, 14, 15, 16 9, 10 10, 11, 12, 13 6A, 7A 6B, 7B 6. 11 10, 11, 12 7A 7B 7. 7A 7B 8. 17 12, 13 6A, 7A 6B, 7B 9. 18, 19 3, 12 14, 15 1A, 6A 1B, 6B 9-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description 1A 2A 3A 4A 5A 6A 7A 1B 2B 3B 4B 5B 6B 7B Prepare journal entries related to bad debts expense. Compute bad debts amounts. Journalize entries to record transactions related to bad debts. Journalize transactions related to bad debts. Journalize entries to record...
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...CHAPTER 8 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE | | | | |Brief | | | |Learning | |Questions | |Exercises | |Do It! | |Objectives | | | | | | | | | | | | | | | |1A | |Prepare journal entries related to bad debt expense. | |Simple | |15–20 | | | | | | | | | |2A | |Compute bad debt amounts. | |Moderate | |20–25 | | | | | | | | | |3A | |Journalize entries to record transactions related to bad debts. | |Moderate | |20–30 | | | | ...
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...CHAPTER 9 RECEIVABLES DISCUSSION QUESTIONS 1. Receivables are normally classified as (1) accounts receivable, (2) notes receivable, or (3) other receivables. 2. Dan’s Hardware should use the direct write-off method because it is a small business that has a relatively small number and volume of accounts receivable. 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. In this case, the amount of the allowance for doubtful accounts should be shown separately in a note to the financial statements or in parentheses on the balance sheet. Alternatively, the accounts receivable may be shown at the gross amount of $673,400 less the amount of the allowance for doubtful accounts of $11,900, thus yielding net accounts receivable of $661,500. 5. (1) The percentage rate used is excessive in relationship to the accounts written off as uncollectible; hence, the balance in the allowance is excessive. (2) A substantial volume of old uncollectible accounts is still being carried in the accounts receivable account. 6. An estimate based on analysis of receivables provides the most accurate estimate of the current net realizable value. 7. a. b. 8. The interest will amount to $5,100 ($85,000 × 6%) only if the note is payable one year from the date it was created. The usual practice...
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...Chapter 10 1. Receivables Chapter Opening Vignette Critical Thinking Challenge Questions* How are Sun-Rype’s customers different from CIBC’s? - Sun-Rype’s customers are mainly companies (grocery stores/chains/distribution centres) who buy Sun-Rype’s food and beverage products. CIBC’s customers are individuals as well as companies who purchase CIBC’s financial services/products. - There may be less risk associated with Sun-Rype’s credit customers than with CIBC’s customers since the dollar amount of CIBC’s transactions are significantly larger than Sun-Rype’s 2. Why would CIBC experience a higher rate of uncollectible accounts than SunRype does? - Sun-Rype’s primary customers would likely be in the habit of making regular purchases; they would have to pay their accounts to ensure that subsequent purchases are delivered. CIBC’s customers may include individuals or companies of a higher risk category such as car loans for individuals or companies borrowing funds for a major expansion. *The Chapter 10 Critical Thinking Challenge questions are asked on page 496 of the text. Students are reminded at the conclusion of Chapter 10, page 515 of the text, to refer to the Critical Thinking Challenge questions at the beginning of the chapter. The solutions to the Critical Thinking Challenge questions are available here in the Solutions Manual and accessible to students on the Online Learning Centre. Copyright © 2010 by McGraw-Hill Ryerson Limited. All rights reserved. 809 Fundamental...
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...Jan 1,2012 Accounts Receivable – Sather Company 54,200 Sales Revenue 54,200 (to record sales on account) Jan 1,2012 Bad Debt Expense 3,700 Allowance for Doubtful Accounts 3,700 (adjust account to estimate uncollected monies) Jan 5,2012 Accounts Receivable – Noel Company 4,000 Sales Revenue 4,000 (record sales on account) Feb 2, 2012 Note Receivable 4,000 Accounts Receivable – Noel Company 4,000 (record acceptance of Noel Company note) Feb 12, 2012 Accounts Receivable – Lima Company 12,000 Sales Revenue 12,000 (record sales on account) Feb 12, 2012 Note Receivable 12,000 Accounts Receivable – Lima Company 12,000 (record acceptance of Lima Company note) Feb 26, 2012 Accounts Receivable – Hubbard Company 5,200 Sales Revenue 5,200 (record sales on account) April 5, 2012 Note Receivable 5,200 Accounts Receivable – Hubbard Company 5,200 (record acceptance of Hubbard Company note) April 12, 2012 Cash 12,199.20 Note receivable – Lima Company 12,000 Interest Revenue 199.20 (record collection of note and interest) June 2, 2012 Cash 4,119.88 Note receivable – Noel Company 4,000 Interest Revenue 119.88 (record collection of note and interest) June 15, 2012 Accounts Receivable 2,000 Sales Revenue 2,000 June 15, 2012 Note Receivable 2,000 Account Receivable 2,000 E9-8 ...
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...above for McGregor a. If McGregor uses the Balance Sheet Approach and estimates its bad debt for the year to be 6% of the Accounts Receivable balance, prepare the adjusting journal entry as of December 31, 2014. [54,000 * .06 = 3,240] DR CR Bad Debt Expense 3,740 Allowance For Doubtful Accounts 3,740 b. What is the Net Realizable Value of Accounts Receivable that will be reported on the December 31, 2014 Balance Sheet after the adjusting entry is posted? Accounts Receivable 54,000 Allowance for Doubtful Accounts (3,240) Net Realizable Value of AR 50,760 c. Assume, on January 8, 2015, JD Rhimes Inc. contacts McGregor Inc and says they have declared bankruptcy and will not be able to pay their Accounts Receivable debt of $2,000. Prepare the journal entry to write-off this customer’s account. DR CR Allowance For Doubtful Accounts 2,000 Accounts Receivable 2,000 d. What is the Net Realizable Value of Accounts Receivable on January 8, 2015 after the customer write off? [Assume no other activity has affected those accounts since December 31, 2014.] Accounts Receivable 52,000 Allowance for Doubtful Accounts (1,240) Net Realizable Value of AR 50,760 e. Does the write off affect the Net Realizable Value of Accounts Receivable? No f. Does the write off affect Net Income? No 2. Assume instead, McGregor...
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...CHAPTER 9 … Receivables Introduction to Receivables A. Receivables are monetary claims against businesses and individuals. These claims arise from selling goods or services on credit or from lending money. 1. Each credit transaction involves a creditor who sells something and obtains a receivable, and a debtor who makes the purchase and has a payable. 2. Exhibit 9-1 is the asset portion of a balance sheet, with receivables highlighted. B. An account receivable or trade receivable represents an amount due from a customer. 1. An account receivable is an amount due from a customer for goods or services sold. 2. The account is classified as a current asset on the balance sheet. 3. A subsidiary ledger includes a separate account for each customer. C. A note receivable is more formal than an account receivable. 1. A note receivable is a written promise to receive cash; a promissory note is a negotiable document that serves as evidence of the receivable. 2. A note receivable may be classified as either current or long-term, depending on its maturity date. D. Other receivables may include loans to employees or subsidiary companies; these may be either current or long-term assets. Objective 1: Design internal controls for receivables A. Internal control over collections of cash on account is important. 1. Cash-handling duties should be separate from cash-accounting...
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...in return an interest-bearing note receivable from Easton Company. Pizzini Company will receive interest at the prevailing rate for note of this type. Both the principal and interest are due in one lump on March 31, 20X2. When should Pizzini Company report interest revenue from the note receivable? Discuss the rationale for your answer. A note receivable is a formal, written promise to receive a specific amount of cash from another party in the future. In this case, the party who receives payment under the terms of the note is Pizzini Company while the maker who is obligated to send funds to the payee is Easton Company. The amount of payment to be made, as determined in the terms of the note, is the principal amount. The principal is to be paid on the maturity date of the note, March 31, 20X2. Since Pizzini received an interest-bearing note, the company will also receive a stated rate of interest on the principal amount of the sold merchandise. The calculation of the interest earned on a note receivable is computed as: Principal * Interest rate * Time period = Interest earned. Generally, under the accrual basis of accounting, a business should record interest revenue even if it has not yet been paid in cash for the interest, as long as it has earned the interest. Contrarily, under the cash basis of accounting, interest revenue would only be recorded when a cash payment for interest is received by the entity. Companies will often record short-term notes at face value...
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...Entry Accounting- each business transaction has dual effects. As a result, every transaction affects at least two accounts. One Debit and One Credit ACCOUNT | Debit | Credit | Assets | + | - | Expenses | + | - | Dividends or Withdrawals | + | - | Revenue | - | + | Liabilities | - | + | Capital | - | + | Retained Earnings | - | + | Normal Balance- side the account increases Contra Account- has a normal balance opposite of its companion account balance. Few examples of contra account – Allowance for doubt full account (ADA) for A/R - Sales Discount for Sales Revenue - Sales Return for Sales Revenue - Accumulated Depreciation for Capital Assets - etc. Accounting Equation- Assets = Liabilities + Owners Equity Assets | Liabilities | Equity | | | | -Cash- Accounts Receivable- Notes Receivable- Prepaid Expenses-Land- Building- Equipment- Furniture & Fixtures | -Accounts Payable- Notes Payable- Accrued Liabilities- Mortgage Payable | - Capital- Withdrawals- Revenue - Expense | 4 Financial Statements- Order Of Preparation 1) Income Statement – presents a summary of the revenues and expenses of a company for a specific period of time (ex: month or year). Net Income/ Net Loss = Revenue – Expense. I/S is for the month ended December 31,20XX 2) Statement of Owner’s Equity- presents a summary of the changes that occurred in the entity’s owner’s equity during a specific period of time (such as a month or a year). The statement is for...
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...Apr. 1, 2011 Accepted Wilson Company's 1-year, 12% note in settlement of a $19,300 account receivable. Dr Notes Receivable 19,300 Cr Accounts Receivable 19,300 July 1, 2011 Loaned $24,300 cash to Richard Dent on a 9-month, 11% note. Dr Notes Receivable 24,300 Cr Cash 24,300 Dec. 31, 2011 Accrued interest on all notes receivable. 19,300 x 12% x 9/12 = 1,737 And 24,300 x 11% x 6/12 = 1,336.50 Dr Interest Receivable 3,073.50 Cr Interest Revenue 3,073.50 Apr. 1, 2012 Received principal plus interest on the Wilson note. 19,300 x 12% x 3/12 = 579 accrued interest Dr Cash 21,616 Cr Notes Receivable 19,300 Cr Interest Receivable 1,737 Cr Interest Revenue 579 Apr. 1, 2012 Richard Dent dishonored its note; Singletary expects it will eventually collect. 24,300 x 11% x 3/12 = 668.25 accrued interest Dr Account Receivable 26,304.75 Cr Notes Receivable 24,300 Cr Interest Recivable 1,336.50 Cr Interest Revenue 668.25 Member since: June 02, 2011 Total points: 98,045 (Level 7) a) Maturity date: May 31 Total interest = [ $ 600,000 x 0.09 x (60/360) ] = $ 9,000 ------------ b) Maturity date: August 1 Interest = Principal x Rate x Time Rate = [ Interest / (Principal x Time) ] = [ 600 / (90,000 x (30/360) ] = [ 600 / 7,500 ] = 0.08 = 8% ------------------ c) Maturity date: September 7 Total interest = [ $ 120,000 x 0.10 x (180/360) ] = $ 6,000...
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...Accounts receivable are those amounting needed to be paid by customers on account, which usually results from the sale of goods and services. Notes receivable are claims for which formal instruments of credit are issued as proof of the debt. Trade receivable is more like a combination of accounts receivable and notes receivable. 2. Interest will be calculated as principle times annual interest rate and then times the period in years under notes receivable. 3. Net realizable value in accounts receivable is the net amount the company is willing to get in the amount of cash. 4. Under write-off method, it calculated as the loss to bad debts expense as the company considers the account will be uncollectable. On the other hand, every bad debt wire-off will be count under the allowance account by using the allowance method. 5. When the expenses matching well with revenue, the estimation of bad debt can be existed. 6. There are two common categories; percentage of sales, which is used as the estimation of what percentage of credit sales, will be uncollectible. 7. Percentage of receivable is the estimation of the amount on receivables that will result in losses from uncollectible accounts. 8. Accounts receivable turnover ratio is calculated by net credit sales divided by average net accounts receivable and that measures the average number of times that company collect accounts receivable in given time period. 9. Face value of note, annual interest rate and...
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