ACCOUNTS RECEIVABLEProblem: 01 The information below pertaining to the Selker Company’s first year of operations is to be used in testing the accuracy of Account Receivables, which has a balance of $33,000 at December 31, 2010. a. b. c. d. e. Collections from customers $50,000. Merchandise purchased $80,000. Ending Merchandise Inventory $20,000. Goods sell at 50% above cost. All sales are on account. Compute the balance that A/R should show and determine the amount of any shortage or overage. Problem: 02 Account Receivable of the Falker Manufacturing Company on December 31, 2010, had a balance of $150,000. The allowance for doubtful accounts had a $4,500 debit balance. Sales in 2010 were $11,25,000 less sales discounts taken of $9,000. Give the adjusting entry for estimated doubtful accounts expense, assuming: a. One half of 1% of 2010 net sales will probably never be collected. b. 2% of outstanding A/R are doubtful. c. An aging schedule shows that $7,500 of the outstanding A/R are doubtful. Problem: 03 Wille,s Gas Station had a sales of $605,000 during 2010, 30% of which were on credit. A/R outstanding at December 31, 2010, totaled $30,000 and the allowance for doubtful accounts had a $500 credit balance. Wille had cash discounts of $10,000. He also had $5,000 of merchandise returned by dissatisfied customers, 30% of which were by credit customers. Give the adjusting entries for estimating doubtful account expenses, assuming: a. 1% of net credit sales will be uncollectible. b. 2.5% of current A/R are doubtful. Problem: 04 G.C Larsen sold Andersen Farm Machinery a used tractor and received a 90-day, 10% note for 000 on May 13. Problem: 05 B. Record the entries for the above events on Larsen’s books. Larsen discounted the note at 11%.24 Received a $1. d. May. Harman. It decides to improve its cash position by factoring one-third of it’s a/R and pledging one-half of the remaining receivables on a loan from the local bank.000. 2010. the bank notified Larsen that the note was not paid and charged Larsen $10 as protest fee. a 90-day.$5. c. Silva as settlement for unpaid balance of $1. and (b) pledging the A/R. 60-day. the note was collected with interest at 14% from the maturity date on the A/R balance. Parker. 4. 2010 is $3. The bank protested nonpayment of the note and charged the endorser with protest fees of $10 in addition to the amount of the note. a customer. dated June 6. On July 6. Richmond received from J. (Before financing) Allowance for doubtful accounts.752. What entries would appear on Richmond’s books as a result of the foregoing? Problem: 06 Live Wire Electric supply Company has run into financial difficulties. e. 2010 is $420. Details of these arrangemens were as follows: a. b. 2010. Had Silva’s note discounted at the bank at 15%. Factoring expense is 20% of gross receivables financed. Larsen collected the note plus 12% interest from the maturity date on the account receivable balance. On August 11.000 (Credit) Estimated uncollectible at December 31. Prepare the journal entries to record the receipt of cash from (a) factoring. 2.05 Received a $5. 10% note dated May-5 from C. December 31.I.000. . 3. among others: May. What entry would be made on the company books of Live-Wire Electric Supply Company when factored accounts have been collected? Problem: 07 Parco Marketing Corporation completed the following transactions. Account receivable at December 31. May-25 June-07 Had Parker’s note discounted at the bank at 13%. Prepare the A/R section of the balance sheet as it would appear after these transactions. a customer.000. Note payable to bank is $100. Richmond had Harman’s note discounted at 10% and recorded the contingent liability. 90-day. no interest bearing note dated May-23 from E. 2010 is 3% of A/R balance. On September 28.800. Instructions: 1. 12% note for $4. Prepare the journal entries to record the necessary adjustment to Allowance for Doubtful Accounts. 2010. On May 29. On September 1.000 @15% interest. . c..000 $90.000..150.. Cash of $35. 2009. Customer’s notes of $50. d...000 being ..090. a customer.000 $86. Uncollectible accounts are estimated to be 5% of the December 31.000 was borrowed from the bank. which included interest and protest fees. 3. Recoveries of doubtful accounts written off in prior years were $1. 12% note dated June-5.500 Account receivables Less: Allowance for d/a …. which included accounts of $97.. June-29 Received a $3. N/R collected during the year totaled $26. Give the journal entries to record the above transactions. 2010. proceeds from their sale being $48... 9% note dated June 29 from P. Of this total $34.. showing contingent liabilities in the accounts. Instructions: a. gave the customer credit for the maturity value of the note less discount at 13%.. On December 31.950 $32. Upon endorsement.. Edwards.. Notes received in payment of accounts totaled $84. includes the following receivable balances: Interest receivable ……. b. Avery.000 note on which the company had to pay $8.800.. July-05 Received notice from the bank that Parker’s note was not paid at maturity. b. 90-day.500 Less: N/R discounted ……… 15.. were paid at maturity with the exception of one $8. j.000 were discounted during the year. Protest fees of $15 were charged by the bank..June-25 Received from B.. including interest at 16% on the A/R balance from maturity date. Sales on account were $767.500. k.000.420 were written off during the year as worthless.500 matured during the year without notice of protest... 2009. a $7..L.. accounts receivable of $42.. Cash collected on accounts totaled $571. Notes receivable …………… $47. i. July-21 Received payment from Parker on the dishonored note.500. Problem: 08 The Balance Sheet for the Ashley Cosmetic Corporation on December 31. h..000 and interest collected was $2. It is expected that recovery will be made on this note in 2012.. accrued interest on N/R was $635. Give the adjusting entries required on July 31.050 $ 325 Transaction during 2010 included the following: a. payable to B.000. g. e. 60-day. A/R balance. N/R discounted as of December 31. Avery and signed by the Barlow Corporation. f. a customer.020.000 on which cash discounts of 2% were allowed. Customers’ accounts of $8. 600.8% 49.100 83. 2010.400 $767.900. and the balance to partial payment of the loan. Year 2009 2008 2007 2006 2005 Year-end receivable 785. 210. 2010. a wholesaler.500 had been made on these receivables (included in the total given in transaction [b]) and this amount was applied on December 31.400 680.9% 10. Prepare journal entries summarizing the transactions and information given above.200 196.4% 0.5% 0. to payment of accrued interest on the loan of $500.900 698. The following schedule of aged accounts receivable was prepaid at December 31. uses the aging method to estimate bad debt losses. Collection of $19. Instructions: 1.5% 0.697. 2. Prepare a summary of current receivables for Balance Sheet presentation. Instructions: Compute the correct balance for the allowance account based on the average loss experience for the last five years and prepare the appropriate end-of-year adjusting entry. Subsidiary ledger .500 8.200 719.9% 91-120 days 49.500 0-30 days 31-60 days 61-90 days 0.7% 48.1% 51.1% 1.3% 79.2% Over 120 day 77.0% 78.8% 11.800 The following schedule shows the year-end receivable balance and uncollectible account experience for the previous five years.5% 77.6% 77. Problem: 10 The account receivable control account for the Brix Corporation shows a debit balance of $113.4% 1. Age of Accounts 00 – 30 days 31 – 60 days 61 – 90 days 91 – 120 days More than 120 days Total Amount $461.2% 0.1% 8.700 750. is $30.0% 1.6% The unadjusted allowance for Doubtful Accounts balance on December 31.2% 51.0% 10.600 18.7% 0. Allowance for doubtful accounts shows a credit balance of $7.8% 0. Problem: 09 Starr Company.pledged on the loan.2% 9. Mahmodur Rahman.000 Interest receivable on bonds 3. E-mail:
[email protected] Show how this information would be reported on the balance sheet.detail reveals the following: Trade account receivable (accounts pledged to secure bank loan $16.000 Customers’ accounts reporting credit balances arising from advance payments 1.750 Installment receivable due 1-18 months hence (including unearned finance charge of $1.000 Subscription receivable for common stock due in 60 days 45.500 Accounts known to be worthless 900 Trade accounts on which post-dated checks are held (no entries were made on receipts of checks) Advances to affiliated companies 700 15. Department of Finance & Banking. .000 Trade receivables from officers.000) $24. University Chittagong.com Mobile: 01710-220992.000) 6. due currently 800 Customers’ accounts reporting credit balances arising from sales returns 250 Advance payments to creditors on purchase orders 7.500 Advance payments to creditors on orders for machinery 12.