Chap009 Solution Manual(1)

Credit unadjusted allowance balance 15750 debit

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credit Unadjusted allowance balance ............ 15,750 debit Adjusted balance .................................. $54,930 credit Part 3 Current assets: Accounts receivable ..................................... $1,070,100 Less allowance for doubtful accts .............. (53,505 )** $1,016,595 Or : Accounts receivable (net of $53,505** uncollectible accounts) .............................. $1,016,595 ** See computations in Part 1c. 9-20
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Chapter 09 - Accounting for Receivables Problem 9-4A (35 minutes) Part 1 Calculation of the estimated balance of the allowance for uncollectibles Not due: $730,000 x .0125 = $ 9,125 1 to 30: 354,000 x .0200 = 7,080 31 to 60: 76,000 x .0650 = 4,940 61 to 90: 48,000 x .3275 = 15,720 Over 90: 12,000 x .6800 = 8,160 $45,025 Credit Part 2 Dec. 31 Bad Debts Expense ........................................ 31,625 Allowance for Doubtful Accounts ............ 31,625 To record estimated bad debts. * * Unadjusted balance ............................ $13,400 credit Estimated balance .............................. 45,025 credit Required adjustment .......................... $31,625 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. 9-21
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Chapter 09 - Accounting for Receivables Problem 9-5A (75 minutes) Part 1 2010 Dec. 16 Notes Receivable—T. Duke ............................. 9,600 Accounts Receivable—T. Duke ................. 9,600 To record note received on account. 31 Interest Receivable .......................................... 36 Interest Revenue ........................................ 36 To record interest earned [$9,600 x .09 x 15/360]. 2011 Feb. 14 Cash .................................................................. 9,744 Interest Revenue ........................................ 108 Interest Receivable ..................................... 36 Notes Receivable—T. Duke ....................... 9,600 To record cash received on note with interest. Mar. 2 Notes Receivable—Mare Co ............................ 4,120 Accounts Receivable—Mare Co ................ 4,120 To record note received on account. 17 Notes Receivable—J. Halaam ......................... 2,400 Accounts Receivable—J. Halaam ............. 2,400 To record note received on account. Apr. 16 Accounts Receivable—J. Halaam ................... 2,414 Interest Revenue ........................................ 14 Notes Receivable—J. Halaam .................... 2,400 To record receivable for dishonored note plus interest [$2,400 x .07 x 30/360]. June 2 Accounts Receivable—Mare Co ...................... 4,202* Interest Revenue ........................................ 82 Notes Receivable—Mare Co ...................... 4,120 To record receivable for dishonored note [$4,120 + ($4,120 x .08 x 90/360)] = $4,120 + $82.40 = $4,202.40 * Rounded to nearest dollar 9-22
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Chapter 09 - Accounting for Receivables Problem 9-5A (Concluded) July 17 Cash ................................................................. 4,245 Interest Revenue ....................................... 43 Accounts Receivable—Mare Co ............... 4,202 To record cash received on account plus additional interest [$4,202 x .08 x 46/360 = $43 (rounded)]. Aug. 7 Notes Receivable—Birch and Byer ................ 5,440 Accounts Receivable—Birch and Byer ..... 5,440 To record note received on account. Sept. 3 Notes Receivable—York ................................. 2,080 Accounts Receivable—York ..................... 2,080 To record note received on account. Nov. 2 Cash ................................................................. 2,115 Interest Revenue ....................................... 35 Notes Receivable—York ........................... 2,080 To record cash received on note plus interest ($2,080 x .10 x 60/360 = $35 rounded). 5 Cash ................................................................. 5,576 Interest Revenue ....................................... 136 Notes Receivable—Birch and Byer .......... 5,440 To record cash received on note plus interest ($5,440 x .10 x 90/360 = $136).
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