Problem 1

1 BININBIN
Merchandise Purchased 850,000.00
Ending Merchandise Inventory 300,000.00
Collections from Customers 275,000.00
Profit Margin 30%

Required a What is the accounts receivable balance at the end

a Merchandise Purchased
Ending Merchandise Inventory
Cost of Goods Sold

COGS
Profit Margin
Net Profit
COGS
Sales
Cash Collections
Accounts Receivable

2 MOIR
Bad Debt Expense 20x9 350,000.00
Uncollectible accounts written off during 20x9 50,000.00
Net realizable value of accounts receivable 1,050,000.00

Required a What is the accounts receivable balance at Decemb

a Net realizable value of accounts receivable

Allowance for Doubtful Accounts
Accounts Receivable, December 31

3 MORISSETTE
Accounts Receivable 1,150,000.00
Allowance for Bad Debts (115,000.00)
Accounts Receivable, net 1,035,000.00

Sales Revenue, net 40,800,000.00

 Sales Return 1,200,000.00
Sales Discount 250,000.00
Cash Collection 36,080,000.00
Bad Debt Expense % 1.50%
Uncollectible Accounts Receivable 243,500.00

Required a What is the accounts receivable balance at Decemb

b What is the December 31, 20x9, balance of the Allo

a Accounts Receivable
1,150,000.00
42,250,000.00

43,400,000.00
5,626,500.00

b Allowance for Bad Debts

243,500.00

243,500.00

4 LISA,
Credit Sales during 20x9 6,450,000.00
Recovery of accounts written off in prior periods 270,000.00
Accounts receivable deemed worthless in 20x9 305,000.00
Allowance for doubtful accounts, Jan. 1, 20x9 155,000.00
Doubtful Accounts 2%

Required a What is the balance of the allowance for doubtful

a Allowance for Doubtful Accounts

305,000.00
5 SOUMA C
Accounts Receivable 1,500,000.00
Accounts estimated to be uncollectible (per aging) 125,000.00
Allowance for bad debts (per books) 95,000.00

Required a What is the net realizable value of SOUMA's receiv

a Accounts Receivable
Accounts estimated to be uncollectible (per aging)
Net realizable value, Accounts Receivable

6 ERINA
20x4
Accounts Receivable ?
Allowance for Bad Debts 75,000.00
Net Sales 3,600,000.00
Cost of Goods Sold 1,800,000.00
AR Turnover 5

Required a What is the accounts receivable balance at Decemb

a Net Sales
AR Turnover
Average
Total
Accounts Receivable
Accounts Receivable, 20X4

7 LELOUC
Year Sales

20x6 10,000,000.00
20x7 8,950,000.00
20x8 12,200,000.00
20x9 13,400,000.00
Required a What are the amounts of accounts written off in 20

Ending Allowance for Bad Debts

Beginning Allowance for Bad Debts
Bad Debts Expense
Accounts Written Off
 BININBIN CORP.

receivable balance at the end of the company's first year of operations?

850,000.00
(300,000.00)
550,000.00

550,000.00
30%
715,000.00
550,000.00
1,265,000.00
(275,000.00)
990,000.00

MOIRA CO.

receivable balance at December 31, 20x9?

f accounts receivable 1,050,000.00

ul Accounts 300,000.00
December 31 1,350,000.00

MORISSETTE COMPANY
 Gross Sales

receivable balance at December 31, 20x9?

r 31, 20x9, balance of the Allowance for Bad Debts account?

counts Receivable
1,200,000.00 Sales Revenue, net 40,800,000.00
250,000.00 Sales Return 1,200,000.00
36,080,000.00 Sales Discount 250,000.00
243,500.00 Gross Sales 42,250,000.00
37,773,500.00 Bad Debt Expense % 1.50%
Bad Debt Expense 633,750.00

wance for Bad Debts

115,000.00
633,750.00
748,750.00
505,250.00

LISA, INC.

Credit Sales

of the allowance for doubtful accounts at December 31, 20x9?

e for Doubtful Accounts 6,450,000.00

155,000.00 2%
270,000.00 Bad Debt Expense 129,000.00
129,000.00
249,000.00
 SOUMA COMPANY

able value of SOUMA's receivables at December 31, 20x9?

1,500,000.00
o be uncollectible (per aging) (125,000.00)
Accounts Receivable 1,375,000.00

ERINA CO.
20x3
470,000.00
10,000.00
2,400,000.00
1,500,000.00

receivable balance at December 31, 20x4?

3,600,000.00
5
720,000.00
1,440,000.00
(470,000.00)
970,000.00

LELOUCH, INC.
Ending Allowance for
Bad Debts Policy: 5% of sales - bad debt expense
250,000.00
450,000.00
360,000.00
275,000.00
s of accounts written off in 20x7, 20x8, and 20x9?

20X7 20X8

450,000.00 360,000.00
or Bad Debts 250,000.00 450,000.00
447,500.00 610,000.00
247,500.00 700,000.00
20X9

275,000.00
360,000.00
670,000.00
755,000.00
Problem 2

Entity Asuna Inc.

Required a Correct balance of allowance for doubtful account as of December 31, 20x9
b Correct bad debt expense in 20x9
c Net realizable value of the accounts receivable as of December 31, 20x9

Book Audit
a Current 1,200,000.00 1,200,000.00
0 to 30 800,000.00 800,000.00
31 to 60 550,000.00 125,000.00 675,000.00
61 to 90 250,000.00 250,000.00
91 to 360 105,000.00 105,000.00
Over 360 100,000.00 (25,000.00) 75,000.00
3,005,000.00 3,105,000.00

b Bad Debt Expense

135,000.00 201,500.00

66,500.00

c Accounts Receivable 3,105,000.00

Allowance for Doubtful Accounts (143,500.00)
NRV 2,961,500.00
 Est. Credit Loss
0.01 6,000.00
0.02 12,000.00
0.04 27,000.00
0.09 21,250.00
0.20 21,000.00
0.75 56,250.00
143,500.00
Problem 3

Entity Reona Corporation

Required a ACCOUNTS RECEIVABLE CONTROL ACCOUNT as at December 31, 20x9

b Correct balance of allowance for doubtful account as of December 31, 20x9
c Correction to bad debt expense in 20x9
d Net realizable value of the accounts receivable as of December 31, 20x9
e Adjusting journal entries

DEC
Customer Invoice date Amount 0-30 days
12/18/x9 50,000.00 50,000.00
ASUNA CORP. 11/04/x9 125,000.00
09/15/x9 75,000.00
12/05/x9 112,500.00 112,500.00
09/18/x9 92,000.00
KIRITO INC.
06/19/x9 75,000.00
04/18/x9 32,250.00
11/06/x9 82,500.00
ALICE CO.
06/15/x9 52,150.00
12/23/x9 87,500.00 87,500.00
10/11/x9 122,500.00
SINON CORP.
08/09/x9 95,000.00
03/12/x9 43,350.00
11/11/x9 185,000.00
SUGUHA LTD.
07/12/x9 125,000.00
12/05/x9 153,500.00 153,500.00
09/05/x9 85,500.00
KLEIN COMPANY
05/06/x9 53,850.00
02/14/x9 101,100.00
12/15/x9 118,400.00 118,400.00
SILICA INC.
12/01/x9 83,500.00 83,500.00
AGIL ALGADE BAR 02/12/x8 43,500.00
LIZ CORPORATION (12,500.00) (12,500.00)
UNADJUSTED 1,981,000.00 592,900.00

RECONCILIATION
GL SL 0-30 DAYS
UNADJUSTED 2,080,800.00 1,981,600.00 592,900.00
CORRECTION 1 12,500.00 12,500.00 12,500.00
CORRECTION 2 (43,500.00) (43,500.00)
CORRECTION 3 (43,350.00)
 CORRECTION 4 27,000.00
CORRECTION 5 115,550.00 115,550.00
ADJUSTED 2,049,800.00 2,049,800.00 720,950.00
LOSS RATE 0.01
CREDIT LOSSES 392,282.00 392,282.00 3,605.00

a Accounts receviable control account 2,049,800.00

b Allowance for bad debts

43,500.00 450,000.00
14,218.00
392,282.00

c 14,218.00 Credit

d 1,657,518.00

e
PARTICULARS DEBIT CREDIT
Accounts Receivable 12,500.00
Accounts Payable 12,500.00

Allowance for Bad Debts 43,500.00

Accounts Receivable 43,500.00

Allowance for bad debts 14,218.00

Bad Debt Expense 14,218.00
 NOV OCT JAN-SEPT Before 20x9
31-60 days 61-90 days 91-360 days Over 360 days

75,000.00

92,000.00
75,000.00
32,250.00
82,500.00
52,150.00

122,500.00
95,000.00
43,350.00
185,000.00
125,000.00

85,500.00
53,850.00
101,100.00

43,500.00

392,500.00 122,500.00 830,200.00 43,500.00

31-61 DAYS 61-90 DAYS 91-360 DAYS OVER 360 DAYS

392,500.00 122,500.00 830,200.00 43,500.00

(43,500.00)
(43,350.00)
 27,000.00

392,500.00 122,500.00 813,850.00 -

0.10 0.10 0.40 0.50
39,250.00 23,888.00 325,540.00 -
Problem 4

Entity Anohana Company

Required a What is the net overstatement (understatement) of ANOHANA's sales for the year ended December 31, 20x
b What adjusting entry is necessary to correct ANOHANA's financial statements for the year ended December
c Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the
A. Rights and obligations
B. Completeness
C. Existence
D. Valuation and allocation
d Tracing shipping documents to pre-numbered sales invoices provides evidence that
A. No duplicate shipments or billings occurred
B. Shipments to customers were properly invoiced
C. All goods ordered by customers were shipped
D. All pre-numbered sales invoices were accounted for
e An auditor most likely would review an entity's periodic accounting for the numerical sequence of shipping d
A. Existence
B. Rights and obligations
C. Valuation and allocation
D. Completeness

a AMOUNT CORRECTION
30 7,326.00 50,588.00
30 7,329.00 118,994.00 (118,994.00)
31 7,327.00 17,893.00
31 7,328.00 32,312.00 (32,312.00)
31 7,330.00 41,860.00

AMOUNT
1 7,332.00 252,151.00 252,151.00
1 7,331.00 11,693.00 11,693.00
1 7,333.00 78,205.00
2 7,335.00 122,040.00
2 7,334.00 62,856.00

Net Understatement 112,538.00

b Accounts Receivable 112,538.00

Sales 112,538.00
nded December 31, 20x9?
e year ended December 31, 20x9?
e been recorded in the subsequent year provide assurance about management's assertion of

l sequence of shipping documents and invoices to support management's financial statement assertion of
Problem 5

Entity Polgeist Corporation

Required a The amount to be reported as noncurrent receivables in the statement of financial position at December 31
b The current portion of notes receivable on December 31, 20x9, should be
c The accrued interest receivable on December 31, 20x9, should be
d On December 31, 20x9, the unamortized discount on note receivable from sale of furniture should be.
e The total interest income for the year ended December 31, 20x9, should be

a Machinery 2,000,000.00
NR from Officer 800,000.00
Furniture 807,647.50
Patent 1,875,195.00
Non-Current Portion 5,482,842.50

b Machinery 1,000,000.00
NR from Officer -
Furniture -
Patent 524,805.00
Current Portion 1,524,805.00

c Machinery 225,000.00
NR from Officer -
Furniture -
Patent 108,000.00
Accrued Interest 333,000.00

d Furniture 1,000,000.00
Carrying Amount (807,647.50)
Unamortized Discount 192,352.50

e Machinery 325,000.00
NR from Officer 96,000.00
Furniture 56,347.50
Patent 108,000.00
Interest Income 585,347.50
ement of financial position at December 31, 20x9, is

able from sale of furniture should be.

, should be

Principal 1,000,000.00
PV 0.7513
Present Value 751,300.00
Amortization 751,300.00
% 10%
Months 9 56,347.50
Carrying Amount 807,647.50

Patent 2,400,000.00
% 9%
Interest (216,000.00)
Annual Payment 740,805.00
Current 524,805.00
Non-current 1,875,195.00
Problem 6

Entity Piggy Bank & Yobab Company

Required a What is the loan impairment loss on December 31, 20x0?

b What is the interest income to be reported by PIGGY Bank in 20x1?
c What is the carrying value of the loan receivable on December 31, 20x2?
d What is the interest income in 20x2?
e What is the interest income in 20x3?

a Face Value 12/31/20x0 6,000,000.00

Accrued Interest 720,000.00
Carrying Value of the Loan 6,720,000.00

20X1 1,750,000.00
PV 1.00000
Present Value 1,750,000.00

20X2 1,800,000.00
PV 0.89285
Present Value 1,607,130.00

20X3 1,250,000.00
PV 0.79719
Present Value 996,487.50
4,353,617.50

Loan Impairment Loss, December 31 2,366,382.50

b
20X1 1,750,000.00
20X2 1,800,000.00 312,434.10
20X3 1,250,000.00 133,926.19

Interest Income 20X1 312,434.10

c Principal 20X2 1,116,051.60

Interest 20X2 133,926.19
Carrying Amount 1,249,977.79 1,250,000.00
roundup
d Interest Income 20X2 133,926.19

e Interest Income 20X3 -

 4,353,617.50
1,750,000.00 2,603,617.50
1,487,565.90 1,116,051.60
1,116,051.60 -
Problem 7

Entity Cardigan Inc. & Exile Comp.

Required a What is the loan impairment loss on December 31, 20x9?

b What is the interest income to be reported by CARDIGAN in 20x0?
c What is the carrying value of the loan receivable on December 31, 20x1?
d What is the interest income in 20x1?
e What is the interest income in 20x3?

20X9 1,000,000.00 500,000.00

20X0 1,000,000.00 400,000.00
20X1 1,000,000.00 300,000.00
20X2 1,000,000.00 200,000.00
20X3 1,000,000.00 100,000.00

Fair Value 20X8 5,123,372.08

Effective Interest Income 461,103.48
Nominal Interest Income (500,000.00)
Carrying Value 20X9 5,084,475.56

20X1 750,000.00 0.84168

20X3 1,200,000.00 0.70843
20X5 1,450,000.00 0.5963
3,400,000.00

Perceived Loss 2,738,517.94

Percentage of loss over carrying value 54%
Is there an Acutal Impairment? YES

Loan Impairment Loss 2,738,517.94

20X9
20X0 211,136.22
20X1 750,000.00 230,138.48
20X2 183,350.97
20X3 1,200,000.00 199,853.00
20X4 109,839.00
20X5 1,450,000.00 119,724.75
 0.09
1,500,000.00 0.91743119 1,376,146.79
1,400,000.00 0.84167999 1,178,351.99
1,300,000.00 0.77218348 1,003,838.52
1,200,000.00 0.70842521 850,110.25
1,100,000.00 0.64993139 714,924.52
5,123,372.08

631,260
850,110
864,588
2,345,958

2,345,958.00
(211,136.22) 2,557,094.22
519,861.52 2,037,233.00
(183,350.97) 2,220,583.00
1,000,147.00 1,220,436.00
(109,839.00) 1,330,275.00
1,330,275.00 -