Wednesday, 22 July 2015

ACC 557 Week 5, Chapter 8 (E8-3, E8-5, E8-14, P8-7A)

 

EXERCISE 8-3

(a)           Dec. 31     Bad Debt Expense...............................      1,400
                                      Accounts Receivable—T.Thum....                       1,400

(b)   (1)   Dec. 31     Bad Debt Expense
                                    [($840,000 – $28,000) X 1%]...........      8,120
                                          Allowance for Doubtful
                                            Accounts...................................                       8,120

        (2)   Dec. 31     Bad Debt Expense...............................      8,900
                                       Allowance for Doubtful Accounts
                                            [($110,000 X 10%) – $2,100]...                       8,900

(c)   (1)   Dec. 31     Bad Debt Expense
                                    [($840,000 – $28,000) X .75%]........      6,090
                                          Allowance for Doubtful
                                            Accounts...................................                       6,090

        (2)   Dec. 31     Bad Debt Expense...............................      6,800
                                       Allowance for Doubtful Accounts
                                                  [($110,000 X 6%) + $200]        
EXERCISE 8-5

Allowance for Doubtful Accounts........................................ 14,100
        Accounts Receivable..................................................................       14,100

Accounts Receivable................................................................ 1,800
        Allowance for Doubtful Accounts............................................          1,800

Cash.............................................................................................. 1,800
        Accounts Receivable..................................................................          1,800

Bad Debt Expense................................................................... 16,300
        Allowance for Doubtful Accounts
            [$19,000 – ($15,000 – $14,100 + $1,800)].............................       16,300
EXERCISE 8-14

(a)   Beginning accounts receivable........................................      $   100,000
        Net credit sales....................................................................        1,000,000
        Cash collections..................................................................          (920,000)
        Accounts written off............................................................            (30,000)
        Ending accounts receivable.............................................      $   150,000

(b)   $1,000,000/[($100,000 + $150,000)/2] = 8

(c)   365/8 = 45.6 days

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PROBLEM 8-7A


Jan.   5     Accounts Receivable—Zwingle Company......... 24,000
                           Sales Revenue.............................................................     24,000

         20     Notes Receivable..................................................... 24,000
                           Accounts Receivable— Zwingle
                             Company...................................................................     24,000

Feb. 18     Notes Receivable....................................................... 8,000
                           Sales Revenue.............................................................        8,000

Apr. 20     Cash ($24,000 + $540)............................................ 24,540
                           Notes Receivable.........................................................     24,000
                           Interest Revenue
                             ($24,000 X 9% X 3/12).............................................           540

         30     Cash ($30,000 + $1,200)......................................... 31,200
                           Notes Receivable.........................................................     30,000
                           Interest Revenue
                             ($30,000 X 12% X 4/12)...........................................        1,200

May  25     Notes Receivable....................................................... 4,000
                           Accounts Receivable— Isabella Inc........................        4,000

Aug. 18     Cash ($8,000 + $360)................................................. 8,320
                           Notes Receivable.........................................................        8,000
                           Interest Revenue
                             ($8,000 X 8% X 6/12)...............................................           320

         25     Accounts Receivable—Isabella Inc.
                     ($4,000 + $70)......................................................... 4,070
                           Notes Receivable.........................................................        4,000
                           Interest Revenue
                             ($4,000 X 7% X 3/12)...............................................             70

Sept.  1     Notes Receivable..................................................... 12,000
                           Sales Revenue.............................................................     12,000



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