Chap06 Problems - Accounting

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
Accrued interest receivable
Total trade and other receivables
c.
775,000
100,000
300,000
150,000
400,000
15,000
300,000
10,000
30,000
20,000
2,000,000
775,000
(50,000)
100,000
300,000
150,000
15,000
300,000
10,000
1,600,000
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
Total
Less: Collections from customers
Writeoff
Merchandise returns
5,300,000
35,000
40,000
Allowances to customers
25,000
Accounts receivable - December 31

b.
c.
Deposit on contract
Claim receivable
Advances to employees
Advances to affiliates
Advances to supplier
Accounts receivable
Accounts receivable
Claim receivable
Advances to employees
Advances to supplier
Total trade and other receivables
d.
150,000
120,000
60,000
10,000
100,000
50,000
490,000
1,200,000
60,000
10,000
50,000
1,320,000
The subscriptions receivable should be deducted from subscribed share capital
The deposit on contract should be classified as noncurrent and presented non-current ass
The advances to affiliates should be classified as noncurrent and presented as long-term i
600,000
6,000,000
6,600,000
5,400,000
1,200,000
ubscribed share capital
nt and presented non-current asset.
rent and presented as long-term investment.
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
90,000

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
670,000
Less: Allowance for doubtful accounts
(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

Freight out
Sales
Cash
2.
Cash
Sales discount
Accounts receivable
500,000
10,000
500,000
10,000
475,000
15,000
10,000
500,000
500,000
10,000
500,000
10,000
485,000
15,000
500,000
FOB shipping point and freight collect

Sales
2.
Cash
Sales discount
Accounts receivable
FOB shipping point and freight prepaid

Sales
Cash
2.
Cash
Sales discount
Accounts receivable
500,000
485,000
15,000
510,000
495,000
15,000
500,000
500,000
500,000
10,000
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
Gross method
1 Accounts receivable
Sales
Sales
12 Cash
Sales discount
Accounts receivable
30 Cash
50,000
July
50,000
200,000
200,000
196,000
4,000
200,000
50,000
Accounts receivable
50,000
Net method
Sales
Sales
12 Cash
49,000
49,000
196,000
196,000
196,000
Accounts receivable
30 Cash
196,000
50,000
Accounts receivable
Sales discount 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

75,000
b. Doubtful accounts expense (1% x 5M)

50,000
75,000
50,000
c. Required allowance
80,000
Less: Credit balance of allowance
(20,000)

60,000
60,000
60,000
d. Required allowance (10% x 500,000)
50,000
Less: Credit balance of allowance
(20,000)

30,000
30,000
30,000
Problem 6-12
a.
Required allowance (5% x 600,000)
30,000
Add: Debit balance in allowance account
10,000
40,000
Doubtful accounts
b.
c.
40,000
40,000
Required allowance
50,000
Add: Debit balance in allowance account
10,000
60,000
Doubtful accounts
60,000
Doubtful accounts (2% x 1.9M)

38,000
60,000
38,000
Problem 6-13
a.
b.
Doubtful accounts (3% x 8M)

240,000
Doubtful accounts
170,000
Allowance - January 1
Doubtful accounts (squeeze)
100,000
170,000
Recovery
Total
20,000
290,000
Accounts written off
c.
240,000
170,000
(130,000)
Allowance - December 31 (8% x 2M)
160,000
Doubtful accounts
210,000
100,000
210,000
Recovery
Total
20,000
330,000

Allowance - December 31
210,000
(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

Accounts receivable
30,000
Accounts receivable
10,000
Cash
10,000
30,000
10,000
Accounts receivable
6.
10,000
Sales return
Accounts receivable
70,000
70,000
Requirement b
Doubtful accounts
40,000
40,000
Rate = 40,000 /1M =4%

Allowance for doubtful accounts - December 31 (4% x 1.5M)
Less: Allowance before adjustment
(20,000)

Requirement c
60,000
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%)
Cash
Sales discount (5% x 720,000)
Accounts receivable (10% x 7.2M)
Cash
800,000
7,200,000
8,000,000
684,000
36,000
720,000
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

Accounts receivable
60,000
Accounts receivable
10,000
Cash
10,000
10,000
80,000
60,000
10,000
Accounts receivable
7.
Doubtful accounts
10,000
70,000
70,000
Required Allowance - December 31 (5% x 2.4M)
120,000
(50,000)
70,000
Rate = 100,000 /2M = 5%

Requirement b
Accounts receivable
Allowance for sales discount
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

Accounts receivable
Cash
2,600,000
1,000,000
1,500,000
20,000
20,000
470,000
Sales
6.
7.
8.
470,000
Sales returns and allowances

Accounts receivable
55,000

Cash
10,000
55,000
10,000
Accounts receivable
5,000
Cash
5,000
5,000
Accounts receivable
9.

Credit Sales
Less: Sales discount
Net credit sales
Doubtful accounts (2.5M x 2%)
Requirement b
Accounts receivable
5,000
50,000
50,000
2,600,000
45,000
55,000
(100,000)
2,500,000
50,000
625,000
(60,000)
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
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
5%
25%
50%
60,000
25,000
75,000
120,000
100%
120,000
3,270,000
280,000
Allowances - January 1
Receivables
170,000
30,000

Total
345,000
545,000
Less: writeoff (235,000 + 30,000)

Required allowance - December 31
3.
Required
Allowance
1,700,000
1,200,000
100,000
150,000
Over 90 days past due
2.
Percent of
Uncollectible
Accounts receivable
(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
1%
5%
10%
25%
=
=
=
=
10,000
20,000
30,000
50,000
60,000
100%
60,000
1,960,000
2.
3.
Recoveries
90,000
20,000
Doubtful accounts (unknown)

Total
200,000
310,000
Less: writeoff (100,000 + 40,000)
140,000
Allowance - December 31
170,000
Doubtful accounts
20,000
20,000
Correct amount
200,000
Recorded (2% x 9M)
180,000
Understatement
4.
170,000

20,000
1,960,000
170,000
1,790,000
Problem 6-20
1.
Writeoff
2011
26,000
2012
29,000
2013
30,000
Total
85,000
Less: Recoveries
(2,000)
(3,000)
(4,000)
(9,000)
Net writeoff
24,000
26,000
26,000
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:
Collections in 2013
Writeoff
3,000,000
2%
60,000
250,000
3,000,000
5,000
2,615,000
40,000
Accounts receivable - December 31, 2013

4.
Allowance for doubtful - Jan.1

Add: Doubtful accounts 2013
Recoveries
Total
Less: Writeoff
Allowance for doubtful - Dec.31
3,005,000
3,255,000
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 settled by note
Accounts Receivable-Dec 31, 2013
600,000
5,000,000
10,000
4,360,000
50,000
200,000
5,010,000
5,610,000
4,610,000
1,000,000
Requirement 2
Allowance for doubtful accounts-Dec 31,2012
30,000
Add: Recovery of written off accounts

Total
10,000
40,000
Less: Accounts written off
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
(10,000)
Requirement 4
Required Allowance- Dec. 31 2013
Add: Debit Balance before adjustments
Total Increase in Allowance
95,000
10,000
105,000
Requirement 5
Doubtful Accounts
105,000
105,000
Problem 6-23
1.
Allowance - January 1, 2013

Doubtful accounts recorded (2% x 20M)
500,000
400,000
Recovery
Total
50,000
950,000
Less: Writeoff (300,000 + 100,000)
2.
Allowance before adjustment
550,000
5,000,000 x 5%
2,000,000 x 10%
1,000,000 x25%
250,000
200,000
250,000
500,000 -100,000 x 75%
300,000
Required allowance - December 31, 2013

3.
(400,000)
Doubtful account
(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)
28,000
30,000
Recovery
Total
7,000
65,000
Writeoff
(27,000)
Allowance before adjustment

3.
4.
38,000
300,000 x 1%
80,000 x 5%
60,000 x 20%
3,000
4,000
12,000
25,000 x80%
20,000
Required allowance - 12/31/2013
39,000
Doubtful account
(39,000 - 38,000)
1,000
1,000

Chap06 Problems - Accounting

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chap06 Problems - Accounting

Uploaded by

Copyright:

Available Formats

Problem 6-5

The advances to subsidiary should be classified as noncurrent and

Accounts receivable - December 31

The subscriptions receivable should be deducted from subscribed share capital

The advances to affiliates should be classified as noncurrent and presented as long-term i

ubscribed share capital

nt and presented non-current asset.

rent and presented as long-term investment.

Allowance for doubtful accounts

Less: Allowance for doubtful accounts

Net realizable value

FOB destination and freight prepaid

FOB shipping point and freight collect

FOB shipping point and freight prepaid

Doubtful accounts (2% x 3.75M)

Doubtful accounts expense

b. Doubtful accounts expense (1% x 5M)

Less: Credit balance of allowance

Doubtful accounts expense

d. Required allowance (10% x 500,000)

Less: Credit balance of allowance

Doubtful accounts expense

Required allowance (5% x 600,000)

Add: Debit balance in allowance account

Doubtful accounts expense

Add: Debit balance in allowance account

Doubtful accounts expense

Doubtful accounts (2% x 1.9M)

Doubtful accounts (3% x 8M)

Accounts written off

Allowance - December 31 (8% x 2M)

Accounts written off

Allowance for doubtful accounts

Rate = 40,000 /1M =4%

Doubtful accounts expense

Allowance for doubtful accounts

Required Allowance - December 31 (5% x 2.4M)

Less: Allowance before adjustment

Doubtful accounts expense

Rate = 100,000 /2M = 5%

Cash (2,455,000 - 1,455,000)

Allowance for doubtful accounts

Sales returns and allowances

Sales returns and allowances

Doubtful accounts expense

Net realizable value

6. Allowance for Doubtful Accounts

Rate: 60,000/1,500,000= 0.004

Not yet due

Doubtful accounts (squeeze)

Less: writeoff (235,000 + 30,000)

Over 90 days past due

Doubtful accounts (unknown)

Less: writeoff (100,000 + 40,000)

Recorded (2% x 9M)

Accounts receivable - December 31

Percentage to be used in computing the allowance = 76,000 / 3.8M = 2%

Credit sales for 2013

Accounts receivable - January 1, 2013

Accounts receivable - December 31, 2013

Allowance for doubtful - Jan.1

Add: Recovery of written off accounts

Less: Accounts written off

Allowance before adjustment- Dec. 31, 2013