【文章內(nèi)容簡(jiǎn)介】 .015) + ($70,000 180。 .06) + ($15,000 180。 .50) = $13,400. The current balance is $7,400. Thus, the balance of the allowance account is too low. Req. 2JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITDoubtfulAccount Expense……………..6,000 Allowance for Doubtful Accounts….6,000Allowance for Doubtful Accounts 7,4006,00013,400Req. 3BALANCE SHEETCurrent assets: Cash…………………………………………..$ XX Shortterm investments…………………...XX Accounts receivable, net of allowance for doubtful accounts of $13,400……..255,600*_____ *Another way to report accounts receivable is Accounts receivable……………………….$269,000 Less Allowance for doubtful accounts… (13,400)255,600(1520 min.) E 59Req. 12% is reasonable because for each year’s sales and for the entire threeyear period, the ratio of total writeoffs to sales is very close to 2%.(Dollars in thousands)20X420X520X6TotalWrite offs=$139$138$144$421Sales$6,800$7,000$7,100$20,900= .0204= .0197= .0203= .0201Req. 2 Thousands20X6Accounts Receivable……………………7,100 Sales Revenue………………………...7,100Recorded sales on account.20X6BadDebt Expense ($7,100 180。 .02)……...142 Allowance for Bad Debts……………142Recorded expense for the year.20X6Allowance for Bad Debts……………….144 Accounts Receivable………………...144Wrote off uncollectible receivables.(1015 min.) E 510JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITNov. 1Note Receivable — Al Sperry………… 40,000 Cash…………………………………….40,000Dec. 3Note Receivable — Acura, Inc……….. 5,000 Service Revenue……………………..5,00016Note Receivable — Vanguard Co……. 2,000 Accounts Receivable — Vanguard Co.2,00031Interest Receivable…………………….. 656* Interest Revenue……………………..656_____($40,000 180。 .09 180。 2/12) + ($5,000 180。 .12 180。 28/365) + ($2,000 180。 .12 180。 15/365**) = $645 $600 $46 $10**Fraction can also be stated as .5/12Harrison earned interest revenue of $656 this year.(15 min.) E 51120X820X9BALANCE SHEET Current assets: Note receivable…………………………….…$100,000$ — Interest receivable ($100,000 180。 .08 180。 9/12).6,000 —INCOME STATEMENT Interest revenue…………………………………6,0002,000*_____ *$100,000 180。 .08 180。 3/12 = $2,000(10 min.) E 5121. Stockton Bank has interest receivable and interest revenue. California Company has interest payable and interest expense. Interest for one month ($100,000 180。 .06 180。 1/12)……… $5002. Stockton Bank: Assets = Liabilities + Equity Affected By 0 Interest revenue California Company: 0 Interest expense3. True4. The net amount of receivables — the amount the pany expects to collect — is more interesting because the pany will probably collect this amount in cash.5.Accounts receivable…………………….$XXXLess Allowance for uncollectibles…… (X)Accounts receivable, net……………….$ XX BALANCE SHEET Current assets: Cash Shortterm investments Accounts receivable, net6. False. The direct writeoff method overstates assets because it fails to show the amount of the receivables the pany expects to collect.(1015 min.) E 513Amounts in millions of dollars Shortterm Net current(a)Acidtest=Cash + investments + receivablesratioTotal current liabilities=$137 + $30 + $37$40 + $158=$204$198= An acidtest ratio of is normal.(b)OneSales andday39。s=service revenue=$415=$sales365 365Days’ salesAverage netin average=accounts receivable=($37 + $42) / 2receivablesOne day’s sales$=35 days35 days’ sales in average receivables is okay relative to credit terms of net 30 days.(1015 min.) E 514Req. 1Average collection period:Millions of dollars One day’s sales=$256,329=$365 Days’ sales in average receivables=($1,254 + $1,569) / 2=2 days (average collection period)$Req. 2WalMart’s collection period is short because WalMart sells for cash and on credit cards and bank cards. Receivables are very low.(1520 min.) E 515Actual without Bank CardsExpected with Bank CardsSales revenue ……………………...$400,000$440,000* Cost of goods sold… …………….$210,000$231,000** Uncollectibleaccount expense…6,000 — Bankcard discount expense……4,800*** Other expenses…………………… 68,000 66,000****Total expenses……………………. 284,000 301,800 Net ine………………………….$116,000$138,200 Decision: Accept bank cards because of the expected increase in net ine._____ *$400,000 180。 = $440,000 **$210,000 180。 = $231,000 ***$440,000 – $200,000 = $240,000 180。 .02 = $4,800The switch to bank cards should produce bankcard discount expense on only the portion of sales that are made on bank cards. ****$68,000 – $2,000 = $66,000(1520 min.) E 516Analysis of Taccounts is helpful, as follows (in millions):AllowancesBeg. bal.68(a)Writeoffs351Expense354End. bal.71(b) Total revenue = $35,400 ($354 ) .01)Trade ReceivablesBeg. bal. ($2,269 + $68)2,337Total revenue35,400Writeoffs351Collections34,729(c)End. bal. ($2,586 + $71)2,657(1015 min.) E 517ReceivablesBeg. bal.