Chap009 Solution Manual(1)

# F cash 890220 accounts receivable 890220 to record

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f. Cash ............................................................... 890,220 Accounts Receivable ............................... 890,220 To record cash received on account. g. Allowance for Doubtful Accounts ................. 10,090 Accounts Receivable ............................... 10,090 To record write-off of accounts. h. Bad Debts Expense ....................................... 10,388 Allowance for Doubtful Accounts ........... 10,388 To record estimated bad debts. * *Beginning receivables ................. \$ 227,910 Credit sales ................................... 930,100 Collections .................................... (890,220) Write-offs ....................................... (10,090 ) Ending receivables ....................... 257,700 Percent uncollectible ................... x 1.0% Required ending allowance ......... 2,577 Cr. Unadjusted balance Beginning (credit) ....................... \$ 2,279 Write-offs (debit) ......................... 10,090 7,811 Dr. Adjustment to the allowance ...... \$ 10,388 Cr. 9-27

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Chapter 09 - Accounting for Receivables **See computations in Part 1c. 9-29

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Chapter 09 - Accounting for Receivables Problem 9-4B (35 minutes) Part 1 Calculation of the estimated balance of the allowance Not due: \$296,400 x .020 = \$ 5,928 1 to 30: 177,800 x .040 = 7,112 31 to 60: 58,000 x .085 = 4,930 61 to 90: 7,600 x .390 = 2,964 Over 90: 3,700 x .820 = 3,034 \$23,968 Part 2 Dec. 31 Bad Debts Expense ..................................... 28,068 Allowance for Doubtful Accounts ........ 28,068 To record estimated bad debts. * * Unadjusted balance .............. \$ 4,100 debit Estimated balance ................ 23,968 credit Required adjustment ............ \$28,068 credit Part 3 Writing off the account receivable in 2012 will not directly affect Year 2012 net income. The entry to write off an account involves a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable, both of which are balance sheet accounts. Net income is affected only by the annual recognition of the estimated bad debts expense, which is journalized as an adjusting entry. Net income for Year 2011 (the year of the original sale) included an estimated expense for write-offs such as this one. 9-30
Chapter 09 - Accounting for Receivables Problem 9-5B (75 minutes) Part 1 2010 Nov. 1 Notes Receivable—J. Stephens ......................... 4,800 Accounts Receivable—J. Stephens ............ 4,800 To record note received on account. Dec. 31 Interest Receivable ............................................. 64 Interest Revenue ........................................... 64 To record interest earned [\$4,800 x .08 x 60/360]. 2011 Jan. 30 Cash .................................................................... 4,896 Interest Revenue ........................................... 32 Interest Receivable ....................................... 64 Notes Receivable—J. Stephens ................... 4,800 To record cash received on note with interest.

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