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1. Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card, Levine receives an immediate credit to its account when it deposits sales receipts. Suntrust assesses a 4% service charge for credit card sales. The second credit card that Levine accepts is the Continental Card. Levine sends its accumulated receipts to Continental on a weekly basis and is paid by Continental about a week later. Continental assesses a 2.5% charge on sales for using its card. Apr. 8 Sold merchandise for $7,800 (that had cost $5,764) and accepted the customer's Suntrust Bank Card. The Suntrust receipts are immediately deposited in Levine's bank account. 12 Sold merchandise for $9,100 (that had cost $5,897) and accepted the customer's Continental Card. Transferred $9,100 of credit card receipts to Continental, requesting payment. 20 Received Continental's check for the April 12 billing, less the service charge. Prepare journal entries to record t11e above selected credit card transactions of Levine Company.

General Jour11111

llllte Apr. 8

Cash Credit card expense

Debit 7,488.I 312.I

Credit

Sales Apr. 8

t=

7,800.I

Cost of goods sold

5,764.I

Merchandise inventory --<--=

Apr. 12

Accounts receivable- Continental

8,872.I

Credit card expense

228.I

__,___

Sales Apr. 12

Cost of goods sold Merchandise inventory

5,897.I

L__ Apr. 20

9, 100.1

5,897.I

---1

1--

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Gash Accounts receivable- Continental

8,872.I 8,872.I --~-

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• ,,..,. IQuestion #2(of 14)

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award:

8.74 out of 10.00 The following selected transactions are from Ohlmeyer Company.

2012 Dec. 16 Accepted a $10,800, 60-
2013 Feb. 14 Received Todd's payment of principal and interest on the note dated December 16. Mar. 2 Accepted an $6, 100, 8%, 90-
Total through maturity Principal Rate(%)

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Interest recognized December 31

10,800_.I $

10,800_.I

8%_.I

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Required: First, complete the table below to calculate the interest amount at December 31. D.Todd Note . December 16. 2012

Interest recognized maturity December 31 10,800_.I 10,800_.I $

Total through Principal

$

IRate(%) Time Total interest

8%_.I

8%_.I

601360_.I

15/360,/

144_.I $

$

36,/

Use the calculated value to prepare your journal entries for 20 12 transactions.

General Journal

Date

t=-l Dec 16

Debit

Notes receivable- D. Todd

"'

10,800_.I

x

x

Interest receivable

36_.I 36_.I

Interest revenue

First, complete the table below to calculate the interest amounts. Midnk!ht Co. Note . March 2. 2013

Midnight

Total through

t<:oimpiiny Note Principal Rate(%) Time Total interest

Credit

maturity

$

6, 100_.I 8%_.I 901360_.I 122_.I

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IQuestion #2 (of 14) Principal

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6,100./

$

Rate(%)

8%./

Time

90/360./

!Total interest

122./

$

A. Privet Note . March 17 2013

Total through maturity

Privet note

Principal

--

f$

2,400./

Rate(%)

7%./

Time

30/360./

[Total interest

14.,I

$

Mulan Mote . August 7 2013


ulan Co. note

Principal

--

7,450./

$

Rate(%)

10%./

Time f

90/360./

Total interest

186./

$

Midnight Co. Note • June 2 2013

idnightCo.

Principal

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6,222./ ID

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Midniaht Co. Mote . June 2. 2Q13

Additional

night Co.

IPrincipal

Interest 6,222.,i

$

%)

8%.,i

me 1Total interest

461360.,i

64.,i

$

N. Carson Note . September 3 2013


tarson note Principal

$

I-

Rate(%) ,__

10%.,i

ITime Total interest

2, 100.,I 601360.,i

$

35.,i

Use those calculated values to prepare your journal entries for 20 13 transactions.

General Journal

Date Feb 14

Gash Interest revenue Notes receivable- 0. Todd

Debit

.I .I .I

10,944.,i 108.,i 10,800.,i

x Mar02

L

Notes receivable- Midnight Co

.I

x

Credit

x 6, 100.,i

x T

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General Journal

Date

Feb 14

Gash Interest revenue Notes receivable- 0. Todd

Mar 02


L

Debit

./

t=_ Apr 16

Notes receivable- A. Privet

./ ./

10,800./

x

x

./

108./

6,100./

Notes receivable- A. Privet Interest revenue Jun 02

-

Accounts receivable- Midnight Co

---!

Jul 17

2,400./

./

x 2,414./

./ ./ ./

2,400./ 14./ 6,222./


./

6,100./

Interest revenue

./

122./

Gash Interest revenue Accounts receivable- Midnight Co

Aug07

./

x

x Accounts receivable- A. Privet

Notes receivable- Mulan

./ ./ ./

6,286./

./

7,450./

64./ 6,222./

x ~p03

Credit

10,944./

x Mar 17

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Notes receivable- N. Carson

./

x

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x

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l ouestion#2 (of 14) Jun 02

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Accounts receivable- Midnight Co

6,222./ --~


6,100./

Interest revenue Jul 17

t=

122./

cash

6,286./

Interest revenue

64./

Accounts receivable- Midnight Co --+--

Aug 07

6,222./


./

L

7,450./

x

x Sep03

Notes receivable- N. carson

./

x

c

Nov 02

2,100./

---

cash

x

2,135./

Notes receivable- N. Carson

2,100./

Interest revenue

t=

Nov 05

---!

t=

Dec 01

35./

Cash

./

7,636./


./

7,450./

Interest revenue

./

186./

+---

Allowance for doubtful accounts

2,414./

Accounts receivable- A. Privet

2,414./ --~-

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Learning: Objective: 09-C2 Describe a note receivable, the computation of rts maturity Learning Objective: 09-P3 Record tile honoring and disllon-oring of a note and

Worksheet

date, and the recording of tts existenc·e.

Learning Objective: 09-C3 Explain hovt receivables can be converted to cash before maturity.

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adjustments for interest.

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award:

10 out of 10.00 Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system). 1. Sold $20,000 of merchandise, that cost $15,000, on MasterCard cred it cards. The net cas11 receipts from sales are immediately deposited in the seller's bank account. MasterCard charges a 5% fee.

General Journal

Event

1

Cash Credit card expense Sales

2


Debit

Credit

.I .I .I

19,000./

.I .I

15.000./

1,000./ 20,000./

15,000./

2. Sold $5,000 of merchandise, that cost $3,000, on an assortment of credit cards. Net cash receipts are received 5 d ays later, and a 4% fee is charged.

General Journal

Event 1

Accounts receivable- Credit card cos. Credit card expense Sales

2

Debit

.I .I .I

Cost of goods sold

4,800./ 200./ 5,000./

3,000./

Merchandise inventory

3

3,000./

Cash Accounts receivable- Credit card cos.

~}

.I .I

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II

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4,800./ 4,800./

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4.

@ uestion #4 (of 14)

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10 out of 10.00 Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off a $800 account of a customer, C. Green. On March 9, it receives a $300 payment from Green. 1. Prepare the journal entry for January 31. Date

-

Jan 31

General Journal Allowance for doubtful accounts Accounts receivable- C. Green

Debit

./

Credit

800./ 800./

./ --~

2. Prepare the entries for March 9; assume no additional money is expected from Green. Dllte

Mar09

Mar09

1

~

General Journal Accounts receivable- C. Green

Debit

./ ./

300./

Allowance for doubtful accounts Cash Accounts receivable- C. Green

./ ./

300./

Credit 300./

300./

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Worksheet

Difficulty: Medium

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Learning Objective: 09--P2 Appty tile allowance method and estimate uneolleetibies based on sales and ac.<:ounts receivable.

instructions I help

Home work chapter 9 Acctg for Receivables •

• I"•• IQuestion #5 (of 14)

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138.74 outof140points (99. 10%)

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5. Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 0.5% of sales. Prepare the December 31 year-end adjusting entry for uncollectibles.

General Journal

Date Dec. 31

Debit

Bad debts expense

./

I-


Credit

1,400./ 1,400./

./

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Worksheet

Diff1tuJty: Medium

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Learning Objective: 09-P2 Apply the allowance method and estimate uncollectibles

based on sales aod a-ceounts receivable.

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6. Liang Company began operations on January 1, 20 12. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows:

2012 a. Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30. b. Wrote off $18,300 of uncollectible accounts receivable. c. Received $669,200 cash in payment of accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible. 2013 e. Sold $1,525,634 of merchandise (that had cost $1,250,000) on credit, terms n/30. t. Wrote off $27,800 of uncollectible accounts receivable. g. Received $1,204,600 cash in payment of accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible. Required: Prepare journal entries to record Liang's 20 12 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)

Transaction a(l)

t=

Debit

Accounts receivable

1,345,434.I

yl

Cost of good sold

975,000yl

yl


b.

Credit

1,345,434.I

Sales

a(2)

t=

General Journal

yl


yl

Accounts receivable

975,000yl

18,300.I 18,300.I T

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b.

Allowance for doubtful accounts Accounts receivable

C

c

Cash Accounts receivable

d.

975,000 .,lj

.,I .,I

18,300.,I

.,I .,I

669,200.,I

18,300.,I

669,200J

Bad debts expense

28, 169.,I


28,169J

Prepare journal entries to record Liang's 20 13 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventor/ system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)

Transaction e(l)

General Journal

Debit

.,I

Accounts receivable

r=-

e(2)

f.

Cost of good sold Merchandise inventory Allowance for doubtful accounts

Cash Accounts receivable

t =h.

W Jcr II

.,I .,I

1,250,000.,I

.I

27,800./

Bad debts expense

.I .I

1,204,600./

.I

32,199.,I

":J

1,204,600.,I

.,I


1.525,634.,I

1,250,000./

.,I

Accounts receivable t= g.

1,525,634.,I

.,I} -

Sales

Credit

32,199J T

~

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=

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138.74 outof14llpoints (99.10%)

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7. At year-end (December 31), Chan Company estimates its bad debts as 0.50% of its annual credit sales of $604,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $302 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off.

Prepare the journal entries of Chan to record these transactions and events of December 31, February 1, and June 5.

General Journal

Date

Dec.3 1

Debit

Bad debts expense Allowance for doubtful accounts

---Feb. 1

Allowance for doubtful accounts Accounts receivable- P. Park

Jun 05

Accounts receivable- P. Park Allowance for doubtful accounts

Jun 05

Cash Accounts receivable- P. Park

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./ ./

3,020./

./ ./

302./

./ ./

302./

./ ./

302./

J

302./ •

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• P'•• IQuestion #8 (of 14)

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8. Following are selected transactions for Ridge Company. Mar. 21 Accepted a $3,400, 180-day, 8% note dated March 21 from Tamara Jackson in granting a time extension on her past-due account receivable. Sept. 17 Jackson dishonors her note when it is presented for payment. Dec. 31 After exhausting all legal means of collection, Ridge Company writes off Jackson's account against the Allowance for Doubtful Accounts. First, complete the table below to calculate the interest amounts at September 17. (Use 360 days year.)

a

Total through

maturity Principal

$

Rate(%)

8%_.I

----

!Time Total interest

3400_.I

180/360_.I

$

136_.I

Use the calculated value to prepare your journal entries.

Date Mar. 21

General Journal

Debit

Notes receivable- T. Jackson Accounts receivable- T. Jackson

Sept. 17

Accounts receivable- T. Jackson

.; .;

3,400_.I

./

3,536./

Credit 3,400_.I

Interest revenue

.;

136_.I

Notes receivable- T. Jackson

.;

3,400.,11 T

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Following are selected transactions for Ridge Company. Mar. 21 Accepted a $3,400, 180-
a

II Total through maturity Pnnctpal

=---1

$

3,400./

Rate(%)

8%./

Time

180/360./

Total interest

$

136./

Use the calculated value to prepare your journal entries.

General Journal

Dllte

Mar. 21

Debit


./ ./

3,400./

3,536./

Interest revenue

./ ./


./


./ ./


~t. 17

I

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136./ 3,400./ 3,536./ 3.536./

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Home work chapter 9 Acctg for Receivables •


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138.74 outof1 40points(99.10%)

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9. On August 2, 20 13, Jun Co. receives a $6,000, 90-
General Journal

Date Oct. 31

t=

Debit

./ ./ ./

cash Notes receivable- R. Albany Interest revenue

Credit

6, 180./ 6,000./ 180./

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Diff1tuJty: Medium

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Learning Objective: 09-P3 Record the honoring and
adjustments for interest.

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IQuestions #10 - 11 (of 14) • I

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Morales Company recorded the following selected transactions during November 20 13. General Journal Date Nov. 5 Accounts Receivable- Ski Shop Sales 10

13

21

30

10.

Debit 4,670

Credit 4,670

Accounts Receivable- Welcome Enterprises Sales

2,435

Accounts Receivable- Zia Natara Sales

1,428

2,435

1,428

Sales Returns and Allowances Accounts Receivable- Zia Natara

368 368

Accounts Receivable- Ski Shop Sales

5,076 5,076

S"o\'ard:

10 out of 10.00 1. Prepare a general ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns and Allowances. Also open an accounts receivable subsidiary ledger having a T-account for each customer. Post these entries to both the general ledger and the accounts receivable ledger.

W Jcr II

General Ledger

Sales

Accounts Receivable Nov. 5 Nov. 10 Nov. 13 Nov. 30

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10 out of 10.00 1. Prepare a g eneral ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns and Allowances. Also open an accounts receivable subsidiary ledger 11aving a T-account for each customer. Post these entries to both the g eneral ledger and the accounts receivable ledger. General Ledger

../ ../ ../ ../

Nov. 5 Nov. 10 Nov. 13 Nov. 30

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2,435../I

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1,42a..;1

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5,076../I

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Difficulty: Hard

Learnin.g Objective: 09-C1 Describe accounts receivable and how they occur and are recorded.

Difficulty: Hard

Learnin.g Objective: 09-C1 Oese-ribe accounts receivable and how they occur and are recorded.

award:

10 out of 10.00

2. Prepare a schedule of accounts receivable.

Morales Company Schedule of Accounts Receivable November 30, 2013 Ski Shop

./ $

9,746./

Welcome Enterprises

./ ./

2,435./

Zia Natara Total

a

\Ae\v Hint #1

1,060./

$

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• tx•• IQuestion # 12 (o f 14)

•I

138.74 outof14llpoints (99.10%)

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12. Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit}, and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.

Date Dec. 31

General Journal

Credit

Bad debts expense Allowance for doubtful accounts

885.I

2. What amount would have been used in the year-end adjusting entry if the allowance account had a year-end unadjusted debit balance of $300? mount used in the year-end adjusting entry

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$

1,785.I

ebook & resources

Difficulty: Medium

Worksheet

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Learni119 Objective: OO.P2 Apply the allowance method and estimate uncollectibles based on sales and accounts receivable.



• tx•• IQuestion # 13 (of 14)

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138.74 outof140points (99. 10%)

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13. The following data are taken from the comparative balance sheets of Ruggers Company. Accounts receivable, net Net sales

20 13 $153,400 86 1,105

20 12 $138,500 910,600

Complete the below table to calculate the accounts receivable turnover for the year 20 13.

Accounts receivable turnover Choose Denominator:

Choose Numerator: Net sales

$

+-----+Average accounts receivable, net

$

J

.I =

145,950./

Accounts receivable turnover Accounts receivable turnov er

=

5.9

!times

--~-

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Learning Objective: 09-A1 Compute ac.counts receivable turnover and use it to llelp assess financial condition.

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10 out of 10.00 Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 3% service charge for sales on its credit card and credits the bank account of Mayfair immediately when credit card receipts are deposited. Mayfair deposits the Zisa credit card receipts each business day. When customers use Access credit cards, Mayfair accumulates the receipts for several days before submitting them to Access for payment. Access deducts a 2% service charge and usually pays within one week of being billed. Mayfair completes the following transactions in June. (The terms of all credit sales are 2/15, n/30, and all sales are recorded at the gross price.) June 4 Sold $650 of merchandise (that had cost $400) on credit to Natara Morris. 5 Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards. 6 Sold $5,850 of merchandise (that had cost $3,800) to customers who used their Access cards. 8 Sold $4,350 of merchandise (that had cost $2,900) to customers who used their Access cards. 1O Submitted Access card receipts accumulated since June 6 to the credit card company for payment. 13 Wrote off the account of Abigail McKee against t11e Allowance for Doubtful Accounts. The $429 balance in McKee's account stemmed from a credit sale in October of last year. 17 Received the amount due from Access. 18 Received Morris's check in full payment for the purchase of June 4. Required : Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system.) (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

General Journal

Date

June 04

Debit

Accounts receivable- N. Morris Sales

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June 04


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400./

650./

400./

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Cash Credit card expense

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650./

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Sales ~

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Credit

6,693./ 207./ 6,900./

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Sales

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June 06

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Accounts receivable- Access Credit card expense Sales Cost of goods sold

June 06

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Merchandise inventory --i-~

June 08

Accounts receivable- Access

Creel it card expense Sales June 08

Cost of goods sold

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No journal entry required

June 13

Allowance for doubtful accounts Accounts receivable- A. McKee

1-L----June 17

429./ 429./

Gash

9,996./

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Accounts receivable- Access

t=--r~ June 18 Gash Sales discounts Accounts receivable- N. Morris

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9,996./

637./ 13./ 650./

t=-l - MGMT-026

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