Financial statement data for years ending December 31 for Robinhood Company follow:

Financial statement data for years ending December 31 for Robinhood Company follow:

                                         20Y9 | 20Y8

Sales                      $7,906,000 | $6,726,000

Accounts receivable:

Beginning of year        600,000 | 540,000

End of year                 580,000 | 600,000

a. Determine the accounts receivable turnover for 20Y9 and 20Y8.

b. Determine the days’ sales in receivables for 20Y9 and 20Y8. Use 365 days and round to one decimal place.

c. Does the change in accounts receivable turnover and the days’ sales in receivables from 20Y8 to 20Y9 indicate a favorable or unfavorable change?

Answer:

a. Sales.......................................... Accounts receivable:

Beginning of year..................  

End of year...........................  

Average accts. receivable............ 

Accts. receivable turnover............ b. Sales..........................................  Average daily sales.....................  Average accts. receivable............  Days’ sales in receivables............ $ 600,000 $ 540,000 Accounts Receivable Turnover 20Y9 20Y8 $7,906,000 $6,726,000 Days’ Sales in Receivables $7,906,000 $6,726,000 13.4 11.8 ($7,906,000 ÷ $590,000) ($6,726,000 ÷ $570,000)20Y9 27.2 days 30.9 days ($7,906,000 ÷ 365 days) ($6,726,000 ÷ 365 days) $ 590,000 $ 570,000 [($600,000 + $580,000) ÷ 2] [($540,000 + $600,000) ÷ 2] $ 580,000 $ 600,000 $ 590,000 $ 570,000 20Y8 $ 21,660.3 $ 18,427.4 ($590,000 ÷ $21,660.3) ($570,000 ÷ $18,427.4) c. The increase in the accounts receivable turnover from 11.8 to 13.4 and the decrease in the days’ sales in receivables from 30.9 days to 27.2 days indicate favorable changes in the efficiency of collecting receivables. 

Financial statement data for years ending December 31 for Chiro-Solutions Company follow:

Financial statement data for years ending December 31 for Chiro-Solutions Company follow:

                                    20Y2 | 20Y1

Sales                 $2,912,000 | $2,958,000

Accounts receivable:

Beginning of year   300,000 | 280,000

End of year             340,000 | 300,000

a. Determine the accounts receivable turnover for 20Y2 and 20Y1.

b. Determine the days’ sales in receivables for 20Y2 and 20Y1. Use 365 days and round to one decimal place.

c. Does the change in accounts receivable turnover and the days’ sales in receivables from 20Y1 to 20Y2 indicate a favorable or unfavorable change?

Answer:

a. Sales.................................... Accounts receivable: Beginning of year...............  End of year........................  Average accts. receivable......  Accts. receivable turnover......  b. Sales....................................  Average daily sales...............  Average accts. receivable......   Days’ sales in receivables......  9.1 [($280,000 + $300,000) ÷ 2] 10.2 $ 290,000 [($300,000 + $340,000) ÷ 2] $ 340,000 $ 300,000 $ 320,000 $ 320,000 $ 290,000 $ 7,978.1 $ 8,104.1 ($2,912,000 ÷ 365 days) ($2,958,000 ÷ 365 days) ($320,000 ÷ $7,978.1) ($290,000 ÷ $8,104.1) c. The decrease in the accounts receivable turnover from 10.2 to 9.1 and the increase in the days’ sales in receivables from 35.8 days to 40.1 days indicate unfavorable changes in the efficiency of collecting receivables.

Lundquist Company received a 60-day, 9% note for $28,000, dated July 23, from a customer on account.

Lundquist Company received a 60-day, 9% note for $28,000, dated July 23, from a customer on account.

a. Determine the due date of the note.

b. Determine the maturity value of the note.

c. Journalize the entry to record the receipt of the payment of the note at maturity.

Answer:

a. The due date for the note is September 21, determined as follows:

July ............................................................................... 8 days (31 – 23) August  ......................................................................... 31 days September ..................................................................... 21 Total.............................................................................. 60 days b. $28,420 [$28,000 + ($28,000 × 9% × 60 ÷ 360)] c. Sept. 21 Cash 28,420 Notes Receivable 28,000 Interest Revenue 420

Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9, from a customer on account.

Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9, from a customer on account.

a. Determine the due date of the note.

b. Determine the maturity value of the note.

c. Journalize the entry to record the receipt of the payment of the note at maturity.

Answer:

a. The due date for the note is August 7, determined as follows: April.............................................................................. 21 days (30 – 9) May.............................................................................. 31 days June.............................................................................. 30 days July.............................................................................. 31 days August......................................................................... 7 days Total.............................................................................. 120 days b. $462,000 [$450,000 + ($450,000 × 8% × 120 ÷ 360)] c.  Aug. 7 Cash 462,000 Notes Receivable 450,000 Interest Revenue 12,000

At the end of the current year, Accounts Receivable has a balance of $3,460,000, Allowance for Doubtful Accounts

At the end of the current year, Accounts Receivable has a balance of $3,460,000, Allowance for Doubtful Accounts has a debit balance of $12,500, and sales for the year total $46,300,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $245,000.

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Answer:

a. $257,500 ($245,000 + $12,500) b. Accounts Receivable......................................................  Allowance for Doubtful Accounts.................................... Bad Debt Expense.........................................................  c. Net realizable value ($3,460,000 – $245,000)........................ $3,215,000

At the end of the current year, Accounts Receivable has a balance of $3,750,000, Allowance for Doubtful Accounts

At the end of the current year, Accounts Receivable has a balance of $3,750,000, 

Allowance for Doubtful Accounts has a credit balance of $22,750, and sales for the year total $48,400,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $390,000.

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Answer:

a. $367,250 ($390,000 – $22,750) b. Accounts Receivable......................................................  Allowance for Doubtful Accounts.................................... Bad Debt Expense.........................................................  c. Net realizable value ($3,750,000 – $390,000)........................  $3,360,000

At the end of the current year, Accounts Receivable has a balance of $3,460,000, Allowance for Doubtful Accounts has a debit balance of $12,500

At the end of the current year, Accounts Receivable has a balance of $3,460,000, Allowance for Doubtful Accounts has a debit balance of $12,500, and sales for the year total $46,300,000. Bad debt expense is estimated at 1⁄2 of 1% of sales.

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Answer:

a. $231,500 ($46,300,000 × 0.0050) b. Accounts Receivable......................................................  Allowance for Doubtful Accounts ($231,500 – $12,500)...... Bad Debt Expense......................................................... c. Net realizable value ($3,460,000 – $219,000)....................... $3,241,000

At the end of the current year, Accounts Receivable has a balance of $3,750,000, Allowance for Doubtful Accounts has a credit balance

At the end of the current year, Accounts Receivable has a balance of $3,750,000, Allowance for Doubtful Accounts has a credit balance of $22,750, and sales for the year total $48,400,000. Bad debt expense is estimated at 3⁄4 of 1% of sales.

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Answer:

a. $363,000 ($48,400,000 × 0.0075) b.

Accounts Receivable......................................................  Allowance for Doubtful Accounts ($22,750 + $363,000)...... Bad Debt Expense......................................................... c. Net realizable value ($3,750,000 – $385,750)........................  Adjusted Balance $3,750,000 363,000 (385,750) Debit (Credit) $3,364,250

Journalize the following transactions, using the allowance method of accounting for uncollectible receivables

Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:

Oct. 2. Received $600 from Rachel Elpel and wrote off the remainder owed of $1,350 as uncollectible.

Dec. 20. Reinstated the account of Rachel Elpel and received $1,350 cash in full payment.

Answer:

Oct. 2 Cash 600 Allowance for Doubtful Accounts 1,350 Accounts Receivable—Rachel Elpel 1,950 Dec. 20 Accounts Receivable—Rachel Elpel 1,350 Allowance for Doubtful Accounts 1,350

20 Cash 1,350 Accounts Receivable—Rachel Elpel 1,350

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:

Oct. 2. Received $600 from Rachel Elpel and wrote off the remainder owed of $1,350 as uncollectible.

Dec. 20. Reinstated the account of Rachel Elpel and received $1,350 cash in full payment.

Answer:

Oct. 2 Cash 600 Bad Debt Expense 1,350 Accounts Receivable—Rachel Elpel 1,950 Dec. 20 Accounts Receivable—Rachel Elpel 1,350 Bad Debt Expense 1,350

20 Cash 1,350 Accounts Receivable—Rachel Elpel 1,350

Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:

Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:

Apr. 15. Received $800 from Jean Tooley and wrote off the remainder owed of $1,200 as uncollectible.

Aug. 7. Reinstated the account of Jean Tooley and received $1,200 cash in full payment.

Answer:

Apr. 15 Cash 800 Allowance for Doubtful Accounts 1,200 Accounts Receivable—Jean Tooley 2,000 Aug. 7 Accounts Receivable—Jean Tooley 1,200 Allowance for Doubtful Accounts1,200 7 Cash 1,200 Accounts Receivable—Jean Tooley 1,200

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:

Apr. 15. Received $800 from Jean Tooley and wrote off the remainder owed of $1,200 as uncollectible.

Aug. 7. Reinstated the account of Jean Tooley and received $1,200 cash in full payment.

Answer:

Apr. 15 Cash 800 Bad Debt Expense 1,200 Accounts Receivable—Jean Tooley 2,000 Aug. 7 Accounts Receivable—Jean Tooley 1,200 Bad Debt Expense 1,200 7 Cash 1,200 Accounts Receivable—Jean Tooley 1,200