Problem 6-5 a. Accounts receivable Notes receivable Installments receivable Advances to suppliers Advances to subsidiary Claim receivable Subscriptions receivable Accrued interest receivable Customer's credit balances Advances from customers Receivables
b.
Accounts receivable Allowance for doubtful accounts Notes receivable Installments receivable Advances to suppliers Claim receivable Subscriptions receivable Accrued interest receivable Total trade and other receivables
c.
77 5, 00 0 10 0, 00 0 30 0, 00 0 15 0 , 00 0 40 0, 00 0 1 5 , 00 0 30 0, 00 0 1 0 , 00 0 3 0 ,0 0 0 2 0 ,0 0 0 2 ,0 0 0 ,0 0 0 7 7 5 ,0 0 0 ( 5 0 ,0 0 0 ) 1 0 0 ,0 0 0 3 0 0 ,0 0 0 1 5 0 ,0 0 0 1 5 ,0 0 0 3 0 0 ,0 0 0 1 0 ,0 0 0 1 ,6 0 0 , 0 0 0
The advances to subsidiary should be classified as noncurrent and presented as long-term investment. The customers' credit balances and advances from customers should be classified as current liabilities and included as part of "trade and other payables".
Problem 6-6 a. Accounts receivable - January 1 Charge sales
6 0 0 ,0 0 0 6 ,0 0 0 , 0 0 0
Total Less: Collections from customers Writeoff Merchandise returns Allowances to customers
6 ,6 0 0 , 0 0 0
5 ,3 0 0 , 0 0 0 3 5 ,0 0 0 4 0 ,0 0 0 2 5 ,0 0 0
Accounts receivable - December 31 b.
c.
d.
Subscriptions receivable Deposit on contract Claim receivable Advances to employees Advances to affiliates Advances to supplier Accounts receivable
5,400,000 1 ,2 0 0 ,0 0 0
1 5 0 ,0 0 0 1 2 0 ,0 0 0 6 0 ,0 0 0 1 0 ,0 0 0 1 0 0 ,0 0 0 5 0 ,0 0 0 4 9 0 ,0 0 0
Accounts receivable Claim receivable Advances to employees Advances to supplier
1 ,2 0 0 ,0 0 0 6 0 ,0 0 0 1 0 ,0 0 0 5 0 ,0 0 0
Total trade and other receivables
1 ,3 2 0 ,0 0 0
The subscriptions receivable should be deducted from subscribed share capital The deposit on contract should be classified as noncurrent and presented non-current asset. The advances to affiliates should be classified as noncurrent and presented as long-term inve
stment.
Problem 6-7
Requirement 1 1.
2.
3.
4.
5.
6.
Accounts receivable Sales Notes receivable Accounts receivable
3,600,000 3,600,000 400,000 400,000
Doubtful accounts Allowance for doubtful accounts
90,000
Allowance for doubtful accounts Accounts receivable
20,000
Sales return Accounts receivable
15,000
Cash
90,000
20,000
15,000 2,450,000
Accounts receivable 7.
8.
Sales discount Accounts receivable Cash
2,450,000 45,000 45,000 150,000
Notes receivable
150,000
Requirement 2 Notes receivable
250,000
Requirement 3 Accounts receivable Less: Allowance for doubtful accounts
670,000 (70,000)
Net realizable value
600,000
Problem 6-8
FOB destination and freight collect 1. Accounts receivable Freight out Sales Allowance for freight charge 2. Cash Sales discount Allowance for freight charge Accounts receivable FOB destination and freight prepaid 1. Accounts receivable Freight out Sales Cash
FOB shipping p 1. Accounts r
500,000 10,000 500,000 10,000
2.
475,000 15,000 10,000 500,000 FOB shipping p 1. Accounts r
500,000 10,000 500,000 10,000
2. 2. Cash Sales discount Accounts receivable
Cash Sales disco
485,000 15,000 500,000
Cash Sales disco
oint and freight collect eceivable Sales
unt Accounts receivable
oint and freight prepaid eceivable Sales Cash
unt Accounts receivable
500,000 500,000 485,000 15,000 500,000
510,000 500,000 10,000 495,000 15,000 510,000
Problem 6-9
1.
2.
3.
Accounts receivable Sales
4,000,000
Cash Sales discount Accounts receivable
1,470,000 30,000
Cash
1,000,000
4,000,000
1,500,000
Accounts receivable 4.
5.
Sales return Accounts receivable Sales return Allowance for sales return
1,000,000 100,000 100,000 20,000 20,000
Problem 6-10
July
1
2
12
30
Gross method Accounts receivable Sales
50,000
200,000
Cash Sales discount Accounts receivable
196,000 4,000
Accounts receiv Sales
2
Accounts receiv Sales
200,000 12
Cash Accounts r
200,000 50,000
Accounts receivable
1
50,000
Accounts receivable Sales
Cash
July
30 50,000
Cash Accounts r Sales disco
Net method ble
49,000 49,000
ble
196,000 196,000 196,000
eceivable
196,000
50,000 eceivable unt forfeited
49,000 1,000
Problem 6-11
a. Credit sales (75% x 5M)
3,750,000
Doubtful accounts (2% x 3.75M)
75,000
Doubtful accounts expense Allowance for doubtful accounts
75,000
b. Doubtful accounts expense (1% x 5M) Allowance for doubtful accounts
50,000
75,000
50,000
c. Required allowance Less: Credit balance of allowance
80,000 (20,000)
Doubtful accounts expense Doubtful accounts expense Allowance for doubtful accounts
60,000 60,000 60,000
d. Required allowance (10% x 500,000) Less: Credit balance of allowance
50,000 (20,000)
Doubtful accounts expense Doubtful accounts expense Allowance for doubtful accounts
30,000 30,000 30,000
Problem 6-12
a.
Required allowance (5% x 600,000) Add: Debit balance in allowance account
30,000 10,000
Doubtful accounts expense
40,000
Doubtful accounts Allowance for doubtful accounts b.
c.
40,000 40,000
Required allowance Add: Debit balance in allowance account
50,000 10,000
Doubtful accounts expense
60,000
Doubtful accounts Allowance for doubtful accounts
60,000
Doubtful accounts (2% x 1.9M) Allowance for doubtful accounts
38,000
60,000
38,000
Problem 6-13
a.
b.
Doubtful accounts (3% x 8M) Allowance for doubtful accounts
240,000
Doubtful accounts Allowance for doubtful accounts
170,000
Allowance - January 1 Doubtful accounts (squeeze) Recovery
100,000 170,000 20,000
Total Accounts written off
c.
240,000
170,000
290,000 (130,000)
Allowance - December 31 (8% x 2M)
160,000
Doubtful accounts Allowance for doubtful accounts
210,000
Allowance - January 1 Doubtful accounts (squeeze) Recovery
100,000 210,000 20,000
Total Accounts written off Allowance - December 31
210,000
330,000 (130,000) 200,000
Problem 6-14
Requirement a 1.
2.
3.
Accounts receivable Sales
7,000,000
Cash Sales discount Accounts receivable (2.45M / 98%)
2,450,000 50,000
Cash
3,900,000
7,000,000
2,500,000
Accounts receivable 4.
5.
3,900,000
Allowance for doubtful accounts Accounts receivable
30,000
Accounts receivable Allowance for doubtful accounts
10,000
Cash
10,000
30,000
10,000
Accounts receivable 6.
Sales return Accounts receivable
Requirement b Doubtful accounts Allowance for doubtful accounts
10,000 70,000 70,000
40,000 40,000
Rate = 40,000 /1M =4% Allowance for doubtful accounts - December 31 (4% x 1.5M) Less: Allowance before adjustment Doubtful accounts expense Requirement c Accounts receivable - December 31 Allowance for doubtful accounts Net realizable value
60,000 (20,000) 40,000
1,500,000 (60,000) 1,440,000
Problem 6-15
Requirement a 1.
2.
3.
Cash Accounts receivable Sales (800,000 / 10%)
800,000 7,200,000 8,000,000
Cash Sales discount (5% x 720,000) Accounts receivable (10% x 7.2M)
684,000 36,000 720,000
Cash
5,940,000 Accounts receivable
4.
5.
6.
5,940,000
Sales discount Allowance for sales discount
10,000
Sales return Accounts receivable
80,000
Allowance for doubtful accounts Accounts receivable
60,000
Accounts receivable Allowance for doubtful accounts
10,000
Cash
10,000
10,000
80,000
60,000
10,000
Accounts receivable 7.
10,000
Doubtful accounts Allowance for doubtful accounts
70,000 70,000
Required Allowance - December 31 (5% x 2.4M) Less: Allowance before adjustment
120,000 (50,000)
Doubtful accounts expense
70,000
Rate = 100,000 /2M = 5% Requirement b Accounts receivable Less: Allowance for doubtful accounts Allowance for sales discount Net realizable value
2,400,000
120,000 10,000
(130,000) 2,270,000
Problem 6-16
Requirement a 1.
2.
3.
4.
5.
Accounts receivable Sales (3,070,000 - 470,000)
2,600,000
Cash (2,455,000 - 1,455,000) Accounts receivable
1,000,000
Cash Sales discount Accounts receivable (1,455,000 / 97%)
1,455,000 45,000
2,600,000
1,000,000
1,500,000
Allowance for doubtful accounts Accounts receivable
20,000 20,000
Cash
470,000 Sales
6.
7.
8.
470,000
Sales returns and allowances Accounts receivable
55,000
Sales returns and allowances Cash
10,000
55,000
10,000
Accounts receivable Allowance for doubtful accounts
5,000
Cash
5,000
5,000
Accounts receivable 9.
5,000
Doubtful accounts expense Allowance for doubtful accounts Credit Sales Less: Sales discount Sales returns and allowances Net credit sales
50,000 50,000 2,600,000
45,000 55,000
(100,000) 2,500,000
Doubtful accounts (2.5M x 2%)
50,000
Requirement b Accounts receivable Less: Allowance for doubtful accounts
625,000 (60,000)
Net realizable value
565,000
Problem 6-17 A.
1. Accounts Receivable Sales
7,935,000
2. Cash Sales Discount Accounts Receivable
4,410,000 90,000
3. Cash Sales Discount Accounts Receivable
2,475,000 25,000
7,935,000
4,500,000
2,500,000
4. Accounts Receivable Allowance for Doubtful Accounts
15,000
Cash
15,000
15,000
Accounts Receivaable 5. Cash
15,000 900,000
Accounts Receivable
900,000
6. Allowance for Doubtful Accounts Accounts Receivable
55,000
7. Sales Return Accounts Receivable
30,000
55,000
30,000
B. Accounts Rec. Jan 1 Sales Recovery Collections Sales discount Writeoff Sales return Accounts Rec. Dec 1
1,500,000 7,935,000 15,000 (8,000,000) (115,000) (55,000) (30,000) 1,250,000
Rate: 60,000/1,500,000= 0.004 Allowance for Doubtful Accounts 1,250,000 x 0.004 Less: Allowance before adjustment Doubful accounts expense
50,000 (20,000) 30,000
C. Accounts Rec. Dec. 31 Allowance for Doubful Accounts Net Realizable value
1,250,000 (50,000) 1,200,000
Problem 6-18
Amount 1. Not yet due 1 - 30 days past due 31 - 60 days past due 61 - 90 days past due Over 90 days past due
1,700,000 1,200,000 100,000 150,000 120,000
3,270,000
2. Allowances - January 1 Receivables Doubtful accounts (squeeze) Total Less: writeoff (235,000 + 30,000) Required allowance - December 31 3. Accounts receivable Less: Allowance for doubtful accounts Net realizable value
Percent of Uncollectible 5% 25% 50% 100%
Required Allowance 60,000 25,000 75,000 120,000 280,000 170,000 30,000 345,000 545,000 (265,000) 280,000 3,270,000 (280,000) 2,990,000
Problem 6-19 1. 1,000,000 400,000 300,000 200,000 60,000
2.
3.
1% 5% 10% 25% 100%
= = = = =
1,960,000
170,000
Allowance - January 1 Recoveries Doubtful accounts (unknown)
90,000 20,000 200,000
Total Less: writeoff (100,000 + 40,000)
310,000 140,000
Allowance - December 31
170,000
Doubtful accounts Allowance for doubtful accounts Correct amount Recorded (2% x 9M) Understatement
4.
10,000 20,000 30,000 50,000 60,000
20,000 20,000 200,000 180,000 20,000
Accounts receivable - December 31 Less: Allowance for doubtful accounts
1,960,000 170,000
Net realizable value
1,790,000
Problem 6-20
1.
Writeoff Less: Recoveries
2011 2012 2013 26,000 29,000 30,000 (2,000) (3,000) (4,000)
Net writeoff
24,000
26,000
26,000
Total 85,000 (9,000) 76,000
Percentage to be used in computing the allowance = 76,000 / 3.8M = 2% 2.
Credit sales for 2013 Multiply by bad debt percentage Provision for doubtful accounts
3.
Accounts receivable - January 1, 2013 Add: Credit sales for 2013 Recoveries Total Less:
3,000,000 2% 60,000 250,000 3,000,000 5,000
3,255,000 Collections in 2013 Writeoff
2,615,000 40,000
Accounts receivable - December 31, 2013 4.
3,005,000
Allowance for doubtful - Jan.1 Add: Doubtful accounts 2013 Recoveries Total Less: Writeoff Allowance for doubtful - Dec.31
2,655,000 600,000 20,000
60,000 5,000
65,000 85,000 (40,000) 45,000
Requirement 1
Accounts Receivable-Dec 31, 2012 Add: Sales for 2013 Recovery of written off accounts Total Less: Collections from Customers Accounts written off Accounts settled by note Accounts Receivable-Dec 31, 2013
Requirement 4
600,000 5,000,000 10,000 4,360,000 50,000 200,000
5,010,000 5,610,000
Requirement 5
4,610,000 1,000,000
Requirement 2
Allowance for doubtful accounts-Dec 31,2012 Add: Recovery of written off accounts
30,000 10,000
Total Less: Accounts written off
40,000 50,000
Allowance before adjustment- Dec. 31, 2013 Requirement 3
Required Allowance for doubtful accounts-Dec 31,2013 On Current Account 35,000 (700000 x 5%) On Past Due Accounts 60,000 (300000 x 20%) Total Required Allowance 95,000
Required Allowance- Dec Add: Debit Balance befor Total Increase in Allowa
(10,000)
Doubtful Accounts Allowance for doubtful
. 31 2013 e adjustments ce
95,000 10,000 105,000
105,000 accounts
105,000
Problem 6-23
1.
Allowance - January 1, 2013 Doubtful accounts recorded (2% x 20M) Recovery Total Less: Writeoff (300,000 + 100,000)
2.
950,000 (400,000)
Allowance before adjustment
550,000
5,000,000 x 5% 2,000,000 x 10% 1,000,000 x25% 500,000 -100,000 x 75%
250,000 200,000 250,000 300,000
Required allowance - December 31, 2013 3.
500,000 400,000 50,000
Doubtful account Allowance for doubtful accounts (1M - 550,000)
1,000,000 450,000 450,000
Problem 6-24
1.
Allowance - 1/1/2013 (1% x 2.8M)
28,000
2.
Allowance - 1/1/2013 Doubtful accounts recorded in 2013 (1% x 3M) Recovery
28,000 30,000 7,000
Total Writeoff
65,000 (27,000)
Allowance before adjustment 3.
4.
38,000
300,000 x 1% 80,000 x 5% 60,000 x 20% 25,000 x80%
3,000 4,000 12,000 20,000
Required allowance - 12/31/2013
39,000
Doubtful account Allowance for doubtful accounts (39,000 - 38,000)
1,000 1,000
