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Chap009 Solution Manual(1)

27 cash 10000 notes payable 10000 to record cash from

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27 Cash ................................................................. 10,000 Notes Payable ........................................... 10,000 To record cash from a loan. Note to Financial Statements : Accounts receivable in the amount of $13,000 are pledged as security for a $10,000 note payable to Center Bank. Exercise 9-11 (15 minutes) Nov. 1 Notes Receivable—M. Allen ........................... 5,000 Accounts Receivable—M. Allen ............... 5,000 To record receipt of note on account. Dec. 31 Interest Receivable ......................................... 50 Interest Revenue ....................................... 50 To record interest earned [$5,000 x .06 x 60/360]. Apr. 30 Cash ................................................................. 5,150 Notes Receivable—M. Allen ..................... 5,000 Interest Revenue ....................................... 100 Interest Receivable ................................... 50 To record cash received on note plus interest earned [$5,000 x .06 x 120/360]. 9-13
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Chapter 09 - Accounting for Receivables Exercise 9-12 (20 minutes) Mar. 21 Notes Receivable—S. Hernandez .................. 3,100 Accounts Receivable—S. Hernandez ...... 3,100 To record receipt of note on account. Sept. 17 Accounts Receivable—S. Hernandez ............ 3,255 Interest Revenue ....................................... 155 Notes Receivable—S. Hernandez ............ 3,100 To record note dishonored plus interest earned [$3,100 x .10 x 180/360 = $155]. Dec. 31 Allowance for Doubtful Accounts .................. 3,255 Accounts Receivable—S. Hernandez ...... 3,255 To write off an account. Exercise 9-13 (10 minutes) 2010 Dec. 13 Notes Receivable—L. Clark ............................ 10,000 Accounts Receivable—L. Clark ................ 10,000 To record receipt of note on account. 31 Interest Receivable ......................................... 40 Interest Revenue ....................................... 40 To record interest earned [$10,000 x .08 x 18/360]. 9-14
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Chapter 09 - Accounting for Receivables Exercise 9-14 (15 minutes) 2011 Jan. 27 Cash ................................................................. 10,100 Interest Revenue ...................................... 60 Interest Receivable ................................... 40 Notes Receivable—L. Clark ...................... 10,000 To record cash received on note plus interest. [$10,000 x .08 x (45-18)/360= $60] Mar. 3 Notes Receivable—Shandi Co ....................... 4,000 Accounts Receivable-Shandi Co ............. 4,000 To record receipt of note on account. 17 Notes Receivable—J. Torres .......................... 2,000 Accounts Receivable—J. Torres .............. 2,000 To record receipt of note on account. Apr. 16 Accounts Receivable—J. Torres ................... 2,015 Interest Revenue ....................................... 15 Notes Receivable—J. Torres .................... 2,000 To record receivable for dishonored note plus interest [$2,000 x .09 x 30/360]. May 1 Allowance for Doubtful Accounts .................. 2,015 Accounts Receivable—J. Torres .............. 2,015 To write off account. June 1 Cash ................................................................. 4,100 Interest Revenue ....................................... 100 Notes Receivable—Shandi Co ................. 4,000 To record cash received on note with interest [$4,000 x .10 x 90/360]. 9-15
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Chapter 09 - Accounting for Receivables Exercise 9-15 (15 minutes) Year 2010 accounts receivable turnover: = 12.4 times Year 2011 accounts receivable turnover: = 14.0 times Analysis : Waseem Company turned over its accounts receivable 1.6 (14.0 – 12.4) times more in 2011 than in 2010. This may indicate that the company has tightened its credit policy or has improved its collection efforts. Also, relative to competitors (turnover of 11), Waseem is performing better than average. Exercise 9-16 (25 minutes) a. Expense is 0.4% of total revenues Dec. 31 Bad Debts Expense ........................................... 40,001 Allowance for Doubtful Accounts .............. 40,001 To record estimated bad debts [10,000,369 x 0.004]. b. Allowance is 2.1% of trade receivables Dec. 31 Bad Debts Expense ........................................... 35,775 Allowance for Doubtful Accounts .............. 35,775 To record estimated bad debts. * * Unadjusted balance .................................... 10,000 credit Estimated balance (2,179,764 x 0.021) ...... 45,775 credit Required adjustment .................................. 35,775 credit PROBLEM SET A Problem 9-1A (30 minutes) June 4 Accounts Receivable—A. Cianci ......................... 750 Sales ................................................................. 750 To record sales on credit.
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