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Accounting 23rd Edition Carl S. Warren - Solutions

=+31. Received $7,575 on note of July 1.Aug.14. Received $40,700 on note of May 16.Instructions Journalize the entries to record the transactions.
=+ following data relate to notes receivable and interest for Vidovich Co., a financial services company. (All notes are dated as of the day they are received.)Mar. 3. Received a $72,000, 9%, 60-day note on account.25. Received a $10,000, 8%, 90-day note on account.May 2. Received $73,080 on note
=+obj. 6✔1. Note 2: Due date, Sept. 13;Interest due at maturity, $150
=+12 PR 9-4A Details of notes receivable and related entries
=+2. Experience during the first four years of operations indicated that the receivables were either collected within two years or had to be written off as uncollectible. Does the estimate of % of sales appear to be reasonably close to the actual experience with uncollectible accounts originating
=+✔ 3. $67,210 Chapter 9 Receivables 433 Instructions 1. Assemble the desired data, using the following column headings:Bad Debt Expense Expense Expense Increase (Decrease) Balance of Actually Based on in Amount Allowance Account, Year Reported Estimate of Expense End of Year
=+1 23 45 30 31 Alpha Beauty Blonde Wigs Zahn’s Beauty Subtotals 20,000 11,000 2,900 900,000 29,950 11,000 98,750 20,000 498,600 2,900 217,250 33,300 1–30 31–60 61–90 Not Due Past Customer Balance 91–120 Days Past Due A B CD E F G H 22,150 Over 120 PR 9-2A Aging of receivables;estimating
=+4. Assume that the allowance for doubtful accounts for Wigs Plus has a credit balance of $1,710 before adjustment on December 31, 2009. Journalize the adjustment for uncollectible accounts.
=+3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
=+2. Complete the aging of receivables schedule.
=+1. Determine the number of days past due for each of the preceding accounts.
=+Wigs Plus has a past history of uncollectible accounts by age category, as follows:Percent Age Class Uncollectible Not past due 2%1–30 days past due 4 31–60 days past due 10 61–90 days past due 15 91–120 days past due 35 Over 120 days past due 80 Instructions
=+The following accounts were unintentionally omitted from the aging schedule:Customer Due Date Balance Sun Coast Beauty May 30, 2009 $2,850 Paradise Beauty Store Sept. 15, 2009 6,050 Helix Hair Products Oct. 17, 2009 800 Hairy’s Hair Care Oct. 20, 2009 2,000 Surf Images Nov. 18, 2009 700 Oh The
=+Wigs Plus Company supplies wigs and hair care products to beauty salons throughout California and the Pacific Northwest. The accounts receivable clerk for Wigs Plus prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2009:
=+12 PR 9-3A Compare two methods of accounting for uncollectible receivables objs. 3, 4, 5✔ 1. Year 4: Balance of allowance account, end of year,$13,350
=+what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts:Year of Origin of Accounts Receivable Written Uncollectible Accounts Off as Uncollectible Year Sales Written Off 1st 2nd 3rd 4th 1st $1,300,000 $
=+an annual provision of % of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know
=+bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the firm is considering changing to the allowance method. Information is requested as to the effect that
=+EX 9-31 Accounts receivable turnover 432 Chapter 9 Receivables J. J. Technology Company, which operates a chain of 30 electronics supply stores, has just completed its fourth year of operations. The direct write-off method of recording
=+c. Expected net realizable value of the accounts receivable as of December 31.
=+b. Balance in the allowance account after the adjustment of December 31.
=+a. Bad debt expense for the year.
=+4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of 3/4 of 1% of the net sales of $6,000,000 for the year, determine the following:
=+3. Determine the expected net realizable value of the accounts receivable as of December 31.
=+2. Journalize the transactions. Post each entry that affects the following T accounts and determine the new balances:Allowance for Doubtful Accounts Bad Debt Expense
=+1. Record the January 1 credit balance of $40,000 in a T account for Allowance for Doubtful Accounts.
=+31. Based on an analysis of the $960,750 of accounts receivable, it was estimated that $42,000 will be uncollectible. Journalized the adjusting entry.Instructions
=+Dec. 31. Wrote off the following accounts as uncollectible (compound entry):Jacoba Co., $8,390; Garcia Co., $2,500; Summit Furniture, $6,400; Jill DePuy,$1,800.
=+Sept. 2. Reinstated the account of Sheryl Capers, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,170 cash in full payment.
=+July 19. Wrote off the $11,150 balance owed by Rancho Rigging Co., which is bankrupt.Aug. 13. Received 35% of the $20,000 balance owed by Santori Co., a bankrupt business, and wrote off the remainder as uncollectible.
=+The following transactions were completed by The Bronze Gallery during the current fiscal year ended December 31:June 6. Reinstated the account of Ian Netti, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,945 cash in full payment of Ian’s
=+c. Explain the logic underlying your answer in (b).Chapter 9 Receivables 431 Problems Series A
=+b. Does The Limited or H.J. Heinz Company have the higher average accounts receivable turnover ratio?
=+9-28 Accounts recei average accounts receivable turnover ratio for The Limited, Inc., and H.J. Heinz Company for the years shown in Exercises 9-29 and 9-30.
=+Use the data in Exercises 9-29 and 9-30 to analyze the accounts receivable turnover ratios of H.J. Heinz Company and The Limited, Inc.a. Compute thecounts and days’sales in receivables
=+EX 9-30 sales in receivables
=+Assume that accounts receivable (in millions) were $128 on January 29, 2005.
=+ Limited, Inc., sells women’s and men’s clothing through specialty retail stores. The Limited sells women’s intimate apparel and personal care products through Victoria’s Secret and Bath & Body Works stores. The Limited reported the following (in millions):For the Period Ending Feb. 3,
=+EX 9-29 Accounts receivable turnover and days’sales in receivables✔a. 2007: 9.0
=+. What conclusions can be drawn from these analyses regarding Heinz’s efficiency in collecting receivables?
=+b. Compute the days’ sales in receivables at the end of 2007 and 2006. Round to one decimal place.
=+Assume that the accounts receivable (in thousands) were $1,092,394 at the beginning of 2006.
=+H.J. Heinz Company was founded in 1869 at Sharpsburg, Pennsylvania, by Henry J.Heinz. The company manufactures and markets food products throughout the world, including ketchup, condiments and sauces, frozen food, pet food, soups, and tuna. For the fiscal years 2007 and 2006, H.J. Heinz reported
=+June 29. Received the amount due on the dishonored note plus interest for 30 days at 12% on the total amount charged to Gymboree Company on May 30.Appendix EX 9-27 Entries for receipt and discounting of note receivable and dishonored notes
=+31. Discounted the note at Security Credit Bank at 10%.May 30. The note is dishonored by Gymboree Company; paid the bank the amount due on the note, plus a protest fee of $200.
=+Journalize the following transactions in the accounts of Zion Theater Productions:Mar. 1. Received a $40,000, 90-day, 8% note dated March 1 from Gymboree Company on account.
=+c. What conclusions can be drawn from these analyses regarding Ralph Lauren’s efficiency in collecting receivables?430 Chapter 9 Receivables
=+b. Compute the days’ sales in receivables for 2007 and 2006. Round to one decimal place.
=+a. Compute the accounts receivable turnover for 2007 and 2006. Round to one decimal place.
=+Assume that accounts receivable (in millions) were $530,503 at the beginning of the 2006 fiscal year.
=+EX 9-26 Discounting notes receivable✔a. $61,800 Polo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The company’s products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren,
=+. Journalize the entry to record the discounting of the note on October 6.Appendix
=+d. Determine the amount of the proceeds.
=+c. Determine the amount of the discount.
=+b. Determine the number of days in the discount period.
=+a. Determine the maturity value of the note.
=+EX 9-25 Receivables on the balance sheet obj. 7 D. Stoner Co., a building construction company, holds a 120-day, 9% note for $60,000, dated August 7, which was received from a customer on account. On October 6, the note is discounted at the bank at the rate of 12%.
=+Notes receivable $250,000 Less interest receivable 15,000 235,000 ________ Accounts receivable $398,000 Plus allowance for doubtful accounts 36,000 434,000
=+List any errors you can find in the following partial balance sheet:Jennett Company Balance Sheet December 31, 2010 Assets Current assets:Cash $ 95,000
=+EX 9-24 Entries for receipt and dishonor of notes receivable objs. 4, 6
=+May 17 for the dishonored note dated March 18.
=+July 29. Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 8% on the total amount debited to Bradshaw Co.on April 30.Aug.23. Wrote off against the allowance account the amount charged to Soto Co. on
=+Apr. 30. The note dated March 1 from Bradshaw Co. is dishonored, and the customer’s account is charged for the note, including interest.May 17. The note dated March 18 from Soto Co. is dishonored, and the customer’s account is charged for the note, including interest.
=+18. Received a $25,000, 60-day, 9% note dated March 18 from Soto Co. on account.
=+EX 9-23 Entries for receipt and dishonor of note receivable obj. 6 Journalize the following transactions in the accounts of Lemon Grove Co., which operates a riverboat casino:Mar. 1. Received a $30,000, 60-day, 6% note dated March 1 from Bradshaw Co. on account.
=+10% on the total amount charged to Mystic Mermaid Company on October 6.
=+EX 9-22 Entries for notes receivable, including year-end entries obj. 6 Journalize the following transactions of Funhouse Productions:July 8. Received a $120,000, 90-day, 8% note dated July 8 from Mystic Mermaid Company on account.Oct. 6. The note is dishonored by Mystic Mermaid Company.Nov. 5.
=+Mar. 12. Received payment of note and interest from Penick Clothing & Bags Co.Journalize the transactions.
=+31. Recorded the closing entry for interest revenue.2010
=+31. Recorded an adjusting entry for accrued interest on the note of December 13.
=+EX 9-21 Entries for notes receivable obj. 6 Chapter 9 Receivables 429 The following selected transactions were completed by Alcor Co., a supplier of Velcro™for clothing:2009 Dec. 13. Received from Penick Clothing & Bags Co., on account, an $84,000, 90-day, 9% note dated December 13.
=+(7) 30,750 MERCHANDISE INVENTORY COST OF MERCHANDISE SOLD(4) 3,000 (2) 21,000 (2) 21,000 (4) 3,000 SALES INTEREST REVENUE(1) 35,000 (6) 750(7) 205
=+EX 9-20 Entries for notes receivable obj. 6✔b. $40,600 The series of seven transactions recorded in the following T accounts were related to a sale to a customer on account and the receipt of the amount owed. Briefly describe each transaction.CASH NOTES RECEIVABLE(7) 30,955 (5) 30,000 (6)
=+c. Journalize the entries to record the following: (1) receipt of the note by Miami Furniture and (2) receipt of payment of the note at maturity.
=+EX 9-19 Determine due date and interest on notes obj. 6✔d. May 5, $225 South Bay Interior Decorators issued a 90-day, 6% note for $40,000, dated April 15, to Miami Furniture Company on account.a. Determine the due date of the note.
=+Date of Note Face Amount Interest Rate Term of Notea. October 1 $10,500 8% 60 daysb. August 30 18,000 10 120 daysc. May 30 12,000 12 90 daysd. March 6 15,000 9 60 dayse. May 23 9,000 10 60 days
=+EX 9-18 Entries for bad debt expense under the direct write-off and allowance methods obj. 5
=+b. Journalize the write-offs and the year-end adjusting entry for 2010 under the allowance method, assuming that the allowance account had a beginning balance of$22,500 on January 1, 2010, and the company uses the analysis of receivables method.
=+The company prepared the following aging schedule for its accounts receivable on December 31, 2010:Aging Class (Number Receivables Balance Estimated Percent of of Days Past Due) on December 31 Uncollectible Accounts 0–30 days $480,000 1%31–60 days 100,000 3 61–90 days 40,000 20 91–120
=+✔c. $7,000 higher 428 Chapter 9 Receivables OK International wrote off the following accounts receivable as uncollectible for the year ending December 31, 2010:Customer Amount Eva Fry $ 6,500 Lance Landau 11,200 Marcie Moffet 3,800 Jose Reis 3,500 _______ Total $25,000 _______ _______
=+EX 9-17 Entries for bad debt expense under the direct write-off and allowance methods obj. 5
=+c. How much higher (lower) would Isner Company’s 2010 net income have been under the direct write-off method than under the allowance method?
=+b. Journalize the write-offs for 2010 under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $2,400,000 of credit sales during 2010. Based on past history and industry averages, 13⁄4% of credit sales are expected to be uncollectible.
=+Isner Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2010:Customer Amount L. Hearn $10,000 Carrie Murray 9,500 Kelly Salkin 13,100 Shana Wagnon 2,400 _______ Total $35,000 _______ _______a. Journalize the write-offs
=+c. How much higher (lower) would Burrito’s 2010 net income have been under the direct write-off method than under the allowance method?
=+Aging Class (Number Receivables Balance Estimated Percent of of Days Past Due) on December 31 Uncollectible Accounts 0–30 days $200,000 2%31–60 days 75,000 8 61–90 days 24,000 25 91–120 days 9,000 40 More than 120 days 12,000 80 ________ Total receivables $320,000 ________ ________
=+EX 9-16 Effect of doubtful accounts on net income obj. 5✔b. $24,750 credit balance Rai Quinn $1,200 P. Newman 750 Ned Berry 2,900 Mary Adams 1,675 Nichole Chapin 480 Dec. 31. The company prepared the following aging schedule for its accounts receivable:
=+b. Determine what the balance of the allowance for doubtful accounts would have been at the end of the second year if the allowance method had been used in both the first and second years.
=+⁄4% of net sales) had been used in both the first and second years.
=+a. Determine what net income would have been in the second year if the allowance method (using 13
=+EX 9-15 Effect of doubtful accounts on net income obj. 5 Using the data in Exercise 9-15, assume that during the second year of operations Master Plumbing Supply Co. had net sales of $4,200,000, wrote off $60,000 of accounts as uncollectible using the direct write-off method, and reported net
=+13⁄4% of net sales would be uncollectible.
=+EX 9-14 Entries for bad debt expense under the direct write-off and allowance methods obj. 5✔c. $17,200 higher Chapter 9 Receivables 427 During its first year of operations, Master Plumbing Supply Co. had net sales of$3,500,000, wrote off $50,000 of accounts as uncollectible using the direct
=+Nov. 23. Wrote off the following accounts as uncollectible (record as one journal entry):
=+July 9. Received the $4,200 from B. Hall, which had been written off on March 13.Reinstated the account and recorded the cash receipt.
=+EX 9-13 Entries for bad debt expense under the direct write-off and allowance methods obj. 5✔c. $6,025 higher The following selected transactions were taken from the records of Burrito Company for the year ending December 31, 2010:Mar. 13. Wrote off account of B. Hall, $4,200.Apr. 19. Received
=+c. How much higher (lower) would Lights of the West Company’s net income have been under the direct write-off method than under the allowance method?
=+b. Journalize the transactions for 2010 under the allowance method.
=+a. Journalize the transactions for 2010 under the direct write-off method.
=+Dec. 31. Lights of the West Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, 11⁄2% of credit sales are expected to be uncollectible. Lights of the West Company recorded $975,000 of credit sales during

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