Problem 4-1

a) Accounts Receivable 775,000

Notes Receivable 100,000
Installment Receivable 300,000
Advances to Suppliers 150,000
Advances to Subsidiary 400,000
Claims Receivable 15,000
Subscriptions Receivable, due 60 days 300,000
Accrued Interest Receivable 10,000
Customers' accounts with credit balances 30,000
Advances from Customers 20,000
Receivables 2,000,000

b) Accounts Receivable 775,000

Allowance for Doubtful Accounts (50,000)
Notes Receivable 100,000
Installment Receivable 300,000
Advances to Suppliers 150,000
Claims Receivable 15,000
Subscriptions Receivable, due 60 days 300,000
Accrued Interest Receivable 10,000
Total Trade and Other Receivables 1,600,000

c) Advances to Subsidiary Noncurrent Assets- Long Term Investments

Customers' accounts with credit balances Current Liability
Advances from Customers Current Liability
Problem 4-2

a)Accounts Receivable,beginning 600,000

Charge Sales 6,000,000
Total 6,600,000
Less : Collections from customers 5,300,000
Writeoff 35,000
Merchandise Returns 40,000
Allowances to customers 25,000 (5,400,000)
Accounts Receivable,Ending 1,200,000

b) Subscription Receivable (Shareholder's Subscription 200,000 - Subscription Collection 50,000) 150,000

Deposit on Contract 120,000
Claim Receivables (Claims against common carrier 100,000 - Collection on carrier claims 40,000) 60,000
Advances to Employees 10,000
Advances to Affiliates 100,000
Advances to Suppliers 50,000
Accounts Receivable 490,000

c) Accounts Receivable, December 31 1,200,000

Claim Receivable 60,000
Advances to Employees 10,000
Advances to Suppliers 50,000
Total Trade and Other Receivables 1,320,000

d) Deposit on Contract - Non-current assets

Advances to Affiliates - Long term Investments
Problem 4-3
1) FOB destnation and freight collect 2) FOB destination and freight prepaid

Accounts Receivable 500,000 Accounts Receivable 500,000

Freight Out 10,000 Freight Out 10,000
Sales 500,000 Sales 500,000
Allowance for Freight Charge 10,000 Cash 10,000

Cash 480,000 Cash 490,000

Sales Discount (.02 x500,000) 10,000 Sales Discount (.02 x500,000) 10,000
Allowance for Freight Charge 10,000 Accounts Receivable 500,000.0
Accounts Receivable 500,000

3) FOB shipping point and freight collect 4) FOB Shipping point and Freight prepaid

Accounts Receivable 500,000 Accounts Receivable 510,000

Sales 500,000 Sales 500,000
Cash 10,000

Cash 490,000 Cash 500,000

Sales Discount (.02 x500,000) 10,000 Sales Discount (.02 x500,000) 10,000
Accounts Receivable 500,000 Accounts Receivable 510,000
Problem 4-4
1) Accounts Receivable 4,000,000
Sales 4,000,000

2) Cash 1,470,000
Sales Discount 30,000
Accounts Receivable (1,470,000/.98) 1,500,000

3) Cash 1,000,000
Accounts Receivable 1,000,000

4) Sales Returns 100,000

Accounts Receivable 100,000

5) Sales Returns 20,000

Allowance for Sales Returns 20,000
Problem 4-5

1) Accounts Receivable 4,500,000

Sales 4,500,000

2) Cash 4,410,000
Sales Discount 90,000
Accounts Receivable 4,500,000

3) Cash 4,500,000
Accounts Receivable 4,500,000
Problem 4-6

1) Accounts Receivable 2,450,000

Sales

2) Cash 2,450,000
Accounts Receivable

3) Cash 2,500,000
Accounts Receivable
Sales Discount Forfeited
2,450,000

2,450,000

2,450,000
50,000
Problem 4-7

1) Accounts Receivable 4,000,000

Sales 4,000,000

2) Sales Returns 300,000

Accounts Receivable 300,000

3) Sales Returns 100,000

Allowance For Sales Returns 100,000
Problem 5-1
a) Sales
x
Credit Sales
x Rate of
Doubtful Accounts

2021
Dec 31 Doubtful Accounts
Allowance For Doubtful Accounts

b) Sales
x Rate of Loss

31 Doubtful Accounts
Allowance For Doubtful Accounts

c) Required Allowance
Less : Recorded Allowances
Doubtful Accounts

31 Doubtful Accounts
Allowance For Doubtful Accounts

d) Accounts Receivable
x Rate of Loss
Required Allowance
Less : Recorded Allowance
Doubtful Accounts
5,000,000
0.75
3,750,000
0.02
75,000

75,000
75,000

5,000,000
0.01
50,000

50,000
50,000

80,000
20,000
60,000

60,000
60,000

500,000
0.10
50,000
20,000
30,000
 A B C D E F G H I J K
1 Problem 5-3
2 1) Cash ( 10 % of Gross Sales ) 800,000
3 Accounts Receivable (8,000,000 x 90%) 7,200,000
4 Sales ( 800,000/ .10 ) 8,000,000
5

6 2) Cash ( 720,000 x 95% ) 684,000

7 Sales Discount ( 720,000 x 5% ) 36,000
8 Accounts Receivable ( 7,200,000 x 10% ) 720,000
9

10 3) Cash 5,940,000
11 Accounts Receivable 5,940,000
12

13 4) Sales Discount 10,000

14 Allowance For Sales Discount 10,000
15

16 5) Sales Return 80,000

17 Accounts Receivable 80,000
18

19 6) Allowance For Doubtful Accounts 60,000

20 Accounts Receivable 60,000
21

22 Accounts Receivable 10,000

23 Allowance For Doubtful Accounts 10,000
24

25 Cash 10,000
26 Accounts Receivable 10,000
27

28

29 Accounts Receivable, Beginning 2,000,000

30 Add : Sales on Account 7,200,000
31 Recoveries 10,000 7,210,000
32 Total 9,210,000
33 Less: Collections within the discount period 720,000
34 Collection beyond the discount period 5,940,000
35 Sales Returns 80,000
36 Write-offs 60,000
37 Collection of Recoveries 10,000 6,810,000
38 Accounts Receivable, Ending 2,400,000
39 x Rate of Loss ( 100/2,000 ) 0.05
40 Required Allowance 120,000 Allowance,Beginning
41 Less : Recorded Allowance Add : Provisions for Doubtful Account
42 Allowance for Doubtful Accounts,Beginning 100,000 Recoveries
43 Recoveries 10,000 Total
44 Write-Offs (60,000) 50,000 Less : Write-Offs
45 Doubtful Accounts 70,000 Allowance,Ending
46

47 2021
48 Dec 31 Doubtful Accounts 70,000
49 Allowance for Doubtful Accounts 70,000
50

51 b) Accounts Receivable,Ending 2,400,000

 L M N O
1

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40
Allowance,Beginning 100,000
41 for Doubtful Accounts
Add : Provisions 70,000
42 10,000 80,000
43 180,000
44 60,000
45
Allowance,Ending 120,000
46

47

48

49

50

51
Problem 5-4

a)
b)

2021
Dec-31

c)
Problem 5-4

Accounts Receivable
Sales ( 3,070,000 - 470,000 )

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

Accounts Receivable

Cash
Sales Discount
Accounts Receivable ( 1,455,000/.97 ) The solution for 97%(100% - 3% discount)

Allowance For Doubtful Accounts

Accounts Receivable

Cash
Sales

Sales Returns and Allowances

Accounts Receivable

Sales Returns and Allowances

Cash

Accounts Receivable
Allowance for Doubtful Accounts

Cash
Accounts Receivable
Credit Sales
Less: Sales Returns
Sales Discount
Net Credit Sales

Doubtful Accounts
Allowance for Bad Debts

Accounts Receivable,Beginning
Add : Sales On Credit
Recoveries
Total
Less : Collection Beyond The Discount Period
Collection Within The Discount Period
Write-Offs
Sales Returns
Collection of Recoveries
Accounts Receivable,Ending
Less : Allowance For Doubtful Accounts, Ending
Allowance,Beginning
Recoveries
Write-Offs
Net Realizable Value
2,600,000
2,600,000

1,000,000
1,000,000

1,455,000
45,000
1,500,000

20,000
20,000

470,000
470,000

55,000
55,000

10,000
10,000

5,000
5,000

5,000
5,000
 2,600,000
55,000
45,000 100,000
2,500,000

50,000
50,000

600,000
2,600,000
5,000 2,605,000
3,205,000
1,000,000
1,500,000
20,000
55,000
5,000 2,580,000
625,000

25,000
5,000
(20,000) 10,000
615,000
Problem 5-5
a)
1) Accounts Receivable 7,935,000
Sales

2) Cash 4,410,000
Sales Discount 90,000
Accounts Receivable ( 4,410,000 / .98 )

3) Cash 2,475,000
Sales Discount 25,000
Accounts Receivable ( 2,475,000/.99 )

4) Accounts Receivable 15,000

Allowance for Doubtful Accounts

5) Cash 1,000,000
Accounts Receivable (8,000,000 - 4,500,000 - 2,500,000 )

6) Allowance For Doubtful Accounts 55,000

Accounts Receivable

7) Sales Return 30,000

Accounts Receivable
7,935,000

4,500,000

2,500,000

15,000

1,000,000

55,000

30,000
Problem 5-6
1) AR Rate of Loss
Not yet due 1,700,000 0%
1-30 days 1,200,000 0.05
31-60 days 100,000 0.25
61-90 days 150,000 0.5
Over 90 days 120,000 1
Required Allowance (Allow, end)

Allowance for Doubtful Accounts, end

Add: Write-offs
Total
Less: Allowance for DA, beg 170,000
Recoveries 30,000
Provisions for doubtful accounts

2020
Dec 31 Doubtful Accounts 345,000
Allowance for Doubtful Accounts
Required Allowance
0
60,000
25,000
75,000
120,000
280,000

280,000
265,000
545,000

200,000
345,000

345,000