Chap009 Solution Manual(1)

Quick study 9 12 10 minutes a both us gaap and ifrs

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Quick Study 9-12 (10 minutes) a. Both U.S. GAAP and IFRS have similar asset criteria that apply to recognition of receivables. Further, receivables that arise from revenue- generating activities are subject to broadly similar criteria for U.S. GAAP and IFRS. Specifically, both refer to the realization principle and an earnings process. However, while these criteria are broadly similar, differences do exist, and they arise mainly from industry-specific guidance under U.S. GAAP, which is very limited under IFRS. b. Both U.S. GAAP and IFRS require receivables to be reported net of estimated uncollectibles. Further, both systems require that the expense for estimated uncollectibles be recorded in the same period when revenues from those receivables are recorded. This means that in the case of accounts receivable, both U.S. GAAP and IFRS require the allowance method for uncollectibles (unless immaterial). 9-5 Net sales Average accounts receivable $754,200 ($152,900 + $133,700) / 2
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Chapter 09 - Accounting for Receivables EXERCISES Exercise 9-1 (20 minutes) Apr. 8 Cash 8,832 Credit Card Expense* ...................................... 368 Sales ........................................................... 9,200 To record credit card sales less 4% fee. *($9,200 x .04) Cost of Goods Sold .......................................... 6,800 Merchandise Inventory .............................. 6,800 To record cost of sales. 12 Accounts Receivable—Continental Bank ....... 5,265 Credit Card Expense* ...................................... 135 Sales ............................................................. 5,400 To record credit card sales less 2.5% fee. *($5,400 x .025) Cost of Goods Sold .......................................... 3,500 Merchandise Inventory .............................. 3,500 To record cost of sales. 20 Cash .................................................................. 5,265 Accounts Receivable— Continental Bank .... 5,265 To record cash received on credit sales less fees. 9-6
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Chapter 09 - Accounting for Receivables Exercise 9-2 (25 minutes) Part 1 GENERAL LEDGER Accounts Receivable Sales Sales Returns and Allowances Nov. 5 4,417 Nov. 21 189 Nov. 5 4,417 Nov. 21 189 10 1,250 10 1,250 13 733 13 733 30 2,606 30 2,606 Bal. 8,817 ACCOUNTS RECEIVABLE LEDGER Surf Shop Yum Enterprises Matt Albin Nov. 5 4,417 Nov. 10 1,250 Nov. 13 733 Nov. 21 189 30 2,606 Bal. 7,023 Bal. 544 Part 2 Sami Company Schedule of Accounts Receivable November 30, 2011 Surf Shop ......................................................................... $7,023 Yum Enterprises .............................................................. 1,250 Matt Albin ......................................................................... 544 Total ................................................................................. $8,817 Comparison: The total of the Schedule of Accounts Receivable ($8,817) is proved with the balance of the Accounts Receivable controlling T-account from Part 1 ($8,817). 9-7
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Chapter 09 - Accounting for Receivables Exercise 9-3 (20 minutes) June 11 Bad Debts Expense ............................................. 9,000 Accounts Receivable—Chaffey Co ............... 9,000 To write off an account. June 29 Accounts Receivable—Chaffey Co ..................... 9,000 Bad Debts Expense ....................................... 9,000 To reinstate an account previously written off. June 29 Cash ..................................................................... 9,000 Accounts Receivable—Chaffey Co ............... 9,000 To record cash received on account. Exercise 9-4 (20 minutes) Dec. 31 Bad Debts Expense .............................................. 4,375 Allowance for Doubtful Accounts ................. 4,375 To record estimated bad debts expense (.005 x $875,000). Feb. 1 Allowance for Doubtful Accounts ....................... 420 Accounts Receivable—P. Coble ................... 420 To write off an account. June 5 Accounts Receivable—P. Coble ......................... 420 Allowance for Doubtful Accounts ................. 420 To reinstate an account. June 5 Cash ..................................................................... 420 Accounts Receivable—P. Coble ................... 420 To record cash received on account.
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