Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 7, Problem 10SE
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(Learning Objective 5: Apply GAAP for uncollectible receivables) AtDecember 31, 2018, Concord Travel Agency has an Accounts Receivable balance of $87,000.Allowance for Uncollectible Accounts has a credit balance of $880 before the year-end adjustment. Service revenue (all on account) for 2018 was $800,000. Concord estimates that itsuncollectible-account expense for the year is 3% of service revenue. Make the year-end entryto record uncollectible-account expense. Show how Accounts Receivable and Allowance forUncollectible Accounts are reported on the balance sheet at December 31, 2018
(Learning Objectives 1, 4, 5, 6: Apply GAAP for revenue, receivables,collections, and uncollectibles using the percent-of-sales method; account for notesreceivable) Hopewell Shipping Corporation is an overnight shipper. Since it sells on credit, thecompany cannot expect to collect 100% of its accounts receivable. At October 31, 2018, and2019, respectively, Hopewell reported the following on its balance sheet (in millions of dollars):October 31,2019 2018Accounts receivable.................................................. $4,200 $4,000Less: Allowance for uncollectible accounts...............Accounts receivable, net........................................... $4,030 $3,840(170) (160)During the year ended October 31, 2019, Hopewell earned service revenue and collected cashfrom customers. Assume uncollectible-account expense for the year was 5% of service revenueon account and Hopewell wrote off uncollectible receivables and made other adjustments as necessary (see below). At year-end,…
(Learning Objectives 4, 5: Account for accounts receivable and uncollectibleaccounts) Perform the following accounting for the receivables of Andrews and Johnson, a lawfirm, at December 31, 2018.Requirements1. Set up T-accounts and start with the beginning balances for these T-accounts:■ Accounts Receivable, $100,000■ Allowance for Uncollectible Accounts, $14,000Post the following 2018 transactions to the T-accounts:a. Service revenue of $697,000, all on accountb. Collections on account, $714,000c. Write-offs of uncollectible accounts, $8,000d. Uncollectible-account expense (allowance method), $11,0002. What are the ending balances of Accounts Receivable and Allowance for UncollectibleAccounts?3. Show how Andrews and Johnson will report accounts receivable on its balance sheet atDecember 31, 2018.
Chapter 7 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8BPCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Aging of accounts receivable allowance method...Ch. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Accounting for notes receivable (Learning...Ch. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Financial Analysis Purpose: To help familiarize...Ch. 7 - Industry Analysis Purpose: To help you understand...Ch. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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- (Learning Objectives 4, 5: Account for accounts receivable and uncollectibleaccounts) Perform the following accounting for the receivables of Hawkins and Harris, a CPAfirm, at December 31, 2018.Requirements1. Set up T-accounts and start with the beginning balances for these T-accounts:■ Accounts Receivable, $104,000■ Allowance for Uncollectible Accounts, $12,000Post the following 2018 transactions to the T-accounts:a. Service revenue of $695,000, all on accountb. Collections on account, $720,000c. Write-offs of uncollectible accounts, $8,000d. Uncollectible-account expense (allowance method), $15,0002. What are the ending balances of Accounts Receivable and Allowance for UncollectibleAccounts?3. Show how Hawkins and Harris will report accounts receivable on its balance sheet atDecember 31, 2018.arrow_forwardE5-18A. (Learning Objective 5: Apply GAAP for uncollectible receivables) At December 31,2018, Waco Travel Agency has an Accounts Receivable balance of $93,000. Allowance forUncollectible Accounts has a credit balance of $870 before the year-end adjustment. Servicerevenue (all on account) for 2018 was $800,000. Waco estimates that its uncollectible-accountexpense for the year is 1% of service revenue. Make the year-end entry to record uncollectibleaccount expense. Show how Accounts Receivable and Allowance for Uncollectible Accountsare reported on the balance sheet at December 31, 2018.arrow_forwardLearning Objective 6: Apply GAAP for notes receivable) Garrett Meals completedthe following selected transactions:2018Oct 31 Sold goods to Rose Foods, receiving a $32,000, three-month 5.5% note. (You dodo not need to make the cost of goods sold journal entry for this transaction.)Dec 31 Made an adjusting entry to accrue interest on the Rose Foods note.2017Jan 31 Collected the Rose Foods note.Nov 11 Loaned $15,800 to Franklin Shops, receiving a 90-day, 9.75% note.Dec 31 Accrued the interest on the Franklin Shops note.Requirements1. Record the transactions in Garrett Meals’ journal. Assume that no sales returns areexpected. Round all amounts to the nearest dollar. Explanations are not required.2. Show what Garrett Meals will report on its comparative classified balance sheet atDecember 31, 2019, and December 31, 2018, for Notes Receivable and Interest Receivablearrow_forward
- Learning Objective 6: Apply GAAP for notes receivable) Markley Foodscompleted the following selected transactions.2018Oct 31 Sold goods to Basic Foods, receiving a $30,000, three-month, 5.25% note. (Youdo not need to make the cost of goods sold journal entry for this transaction.)Dec 31 Made an adjusting entry to accrue interest on the Basic Foods note.2019Jan 31 Collected the Basic Foods note.Nov 11 Loaned $15,800 cash to Straord Shops, receiving a 90-day, 10.0% note.Dec 31 Accrued the interest on the Straord Shops note.Requirements1. Record the transactions in Markley Foods’ journal. Assume that no sales returns areexpected. Round all amounts to the nearest dollar. Explanations are not required.2. Show what Markley Foods will report on its comparative classified balance sheet atDecember 31, 2019, and December 31, 2018, for Notes Receivable and Interest Receivable.arrow_forward(Learning Objectives 1, 4, 5, 6: Apply GAAP for revenue, receivables, collections,and uncollectibles using the percent-of-sales method; account for notes receivable) LincolnDelivery Corporation is an overnight shipper. Since it sells on credit, the company cannotexpect to collect 100% of its accounts receivable. At December 31, 2018, and 2019,respectively, Lincoln reported the following on its balance sheet (in millions of dollars):December 31,2019 2018Accounts receivable.................................................. $4,300 $3,900Less: Allowance for uncollectible accounts...............Accounts receivable, net........................................... $4,110 $3,690(190) (210)During the year ended December 31, 2019, Lincoln earned service revenue and collected cashfrom customers. Assume uncollectible-account expense for the year was 3% of service revenueon account and that Lincoln wrote off uncollectible receivables and made other adjustmentsas necessary (see below). At year-end,…arrow_forward(Learning Objectives 1, 2, 3, 4, 5: Apply GAAP for proper revenue recognition;account for sales allowances; account for sales discounts; account for accounts receivable;write off account; estimate uncollectible account expense)Bowerston Variety Store had the following balances as of November 1:Accounts Receivable $5,100Allowance for Uncollectible Accounts $360The following selected transactions occurred at Bowerston Variety Store during the month ofNovember:November 3 Sold $300 of merchandise to Martino’s Inc., which paid for the items in cash.The items cost Bowerston $120.Sold $600 of merchandise to Liberty Co., which paid by credit card. The creditcard company charges Bowerston a fee of 2% on credit card sales. Bowerston’scost of this merchandise was $245.November 5Sold $900 of merchandise to Black River Inc., on account. Terms were 2/10,net 30. Bowerston’s cost of this merchandise was $387.November 12November 18 Willow Creek reported that some of the merchandise received was in a…arrow_forward
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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License