Financial accounting
Financial accounting
3rd Edition
ISBN: 9780077506902
Author: David J Spieceland Wayne Thomas Don Herrmann
Publisher: Mcgraw-Hill
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Chapter 5, Problem 5.3AP

1.

To determine

To record: The transactions of Company U for each date.

1.

Expert Solution
Check Mark

Explanation of Solution

Accounts receivable:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is reported in the balance sheet.

Date Account Title and Explanation Debit ($) Credit ($)
June 12 ,2015 Accounts receivable 41,000
Service revenue 41,000
(To record the service  provided on account)
September 17, 2015 Cash 25,000
Accounts receivable 25,000
(To record the receipt of cash on account)
December 31, 2015 Bad debt expense (2) 7,200
Allowance for uncollectible accounts 7,200
(To record the estimation of future bad debts)
March 4, 2016 Accounts receivable 56,000
Service Revenue 56,000
(To record the services provided on account )
May 20, 2016 Cash 10,000
Accounts receivable 10,000
(To record receipt of cash on account)
July 2, 2016 Allowance for uncollectible accounts 6,000
Accounts receivable 6,000
(To record the writing-off of actual bad debts)
October 19, 2016 Cash 45,000
Accounts receivable 45,000
(To record the  receipt of cash from customer on account)
December 31, 2016 Bad debt expense (5) 3,750
Allowance for uncollectible accounts 3,750
(To record the estimation of future bad debts)

Table (1)

Working notes:

Calculate Estimate future bad debts On December 31, 2015:

Accounts receivable=[Providing services on account on June 12, 2015Received cash from customers on account on September 17, 2016]=$41,000$25,000=$16,000 (1)

Estimate future bad debts=[Accounts receivable×estimated percentage of uncollectible accounts]=$16000(1)×45%=$7,200 (2)

Calculate Estimate future bad debts On December 31, 2016:

Accounts receivable=[Providing services on account on March 4, 2016Received cash from customers on account on October 19, 2016]=$56,000$45,000=$11,000 (3)

[Balance in allowance for uncollectible accounts after write off]=[Allowance for uncollectible accounts on December 31,2015Write-off actual bad debts on July 2, 2016]=$7,200$6,000=$1,200 (4)

Estimate future bad debts=[Accounts receivable×Estimated Percentage of uncollectible accountsBalance in allowance for uncollectible accounts after write off]=$11000(3)×45%$1,200(4)=$3,750 (5)

 2.

To determine

To post: Transactions to the following accounts: Cash, Accounts receivable, and Allowance for uncollectible accounts.

 2.

Expert Solution
Check Mark

Explanation of Solution

Accounts receivable:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet.

For 2015:

Cash account
Date Particulars Debit Date Particulars Credit
September 17, 2015 Accounts receivable $25,000
December 31, 2015 Balance (Balancing figure) $25000

Table (2)

For 2016:

Cash account
Date Particulars Debit Date Particulars Credit
January 1, 2016 Beginning balance $25,000
May 20, 2016 Accounts receivable $10,000
October 19, 2016 Accounts receivable $45,000
December 31, 2016 Balance (balancing figure) $80,000

Table (3)

For 2015:

Accounts receivable account
Date Particulars Debit Date Particulars Credit
June 12, 2015 Service revenue $41,000 September 17, 2015 Cash $25000
December 31, 2015 Balance (Balancing figure) $16,000

Table (4)

For 2016:

Accounts receivable account
Date Particulars Debit Date Particulars Credit
March 4, 2016 Service revenue $56,000 May 20, 2016 Cash $10,000
July 2, 2016 Allowance for uncollectible accounts $6,000
October 19, 2016 Cash 45,000
December 31, 2016 Balance (balancing figure) $11,000

Table (5)

For 2015:

Allowance for uncollectible account
Date Particulars Debit Date Particulars Credit
December 31, 2015 Bad debt expense $7,200

Table (6)

For 2016:

Allowance for uncollectible account
Date Particulars Debit Date Particulars Credit
July 2, 2016 Accounts receivable $6,000 December 31, 2016 Bad debt expense $3,750
December 31, 2016 Balance (balancing figure) $4,950

Table (7)

 3.

To determine

To Calculate: The net realizable value of accounts receivable at the end of 2015 and 2016.

 3.

Expert Solution
Check Mark

Explanation of Solution

Accounts receivable:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet.

Calculate the net realizable value of accounts receivable at the end of 2015 and 2016:

Years 2015 2016
Total accounts receivable $16,000 $11,000
Less: Allowance for uncollectible accounts ($7,200) ($4,950)
Net realizable value $8,800 $6,050

Table (8)

Conclusion

Hence, the net realizable value of Company U for the year 2015 is $8,800 and for the year 2016 is $6,050.

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Chapter 5 Solutions

Financial accounting

Ch. 5 - Prob. 11RQCh. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14RQCh. 5 - Prob. 15RQCh. 5 - Discuss the differences between the allowance...Ch. 5 - 17.Notes receivable differ from accounts...Ch. 5 - With respect to notes receivable, explain what...Ch. 5 - Prob. 19RQCh. 5 - Interest on a note receivable typically is due...Ch. 5 - Prob. 21RQCh. 5 - Prob. 22RQCh. 5 - Prob. 23RQCh. 5 - Prob. 24RQCh. 5 - Prob. 25RQCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - At the end of the first war of operations,...Ch. 5 - Record the adjustment for uncollectible accounts...Ch. 5 - Prob. 5.5BECh. 5 - Record the adjustment for uncollectible accounts...Ch. 5 - Prob. 5.7BECh. 5 - Prob. 5.8BECh. 5 - Prob. 5.9BECh. 5 - Record the write-off of uncollectible accounts...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Prob. 5.13BECh. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Refer to the information in BE517, but now assume...Ch. 5 - Prob. 5.1ECh. 5 - Prob. 5.2ECh. 5 - Record credit sale and cash collection with a...Ch. 5 - Prob. 5.4ECh. 5 - Prob. 5.5ECh. 5 - On April 25, Foreman Electric installs wiring in a...Ch. 5 - Prob. 5.7ECh. 5 - Prob. 5.8ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10ECh. 5 - Prob. 5.11ECh. 5 - Consider the following transactions associated...Ch. 5 - Prob. 5.13ECh. 5 - Prob. 5.14ECh. 5 - Prob. 5.15ECh. 5 - Prob. 5.16ECh. 5 - Prob. 5.17ECh. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Prob. 5.20ECh. 5 - Prob. 5.1APCh. 5 - Prob. 5.2APCh. 5 - Prob. 5.3APCh. 5 - Prob. 5.4APCh. 5 - Compare the direct write-off method to the...Ch. 5 - Prob. 5.6APCh. 5 - Prob. 5.7APCh. 5 - Prob. 5.8APCh. 5 - Assume selected financial data for Walmart and...Ch. 5 - Prob. 5.1BPCh. 5 - Prob. 5.2BPCh. 5 - Prob. 5.3BPCh. 5 - Prob. 5.4BPCh. 5 - Compare the direct write-off method to the...Ch. 5 - Prob. 5.6BPCh. 5 - Underestimating future uncollectible accounts...Ch. 5 - Prob. 5.8BPCh. 5 - Assume selected financial data for Sun Health...Ch. 5 - Prob. 5.1APCPCh. 5 - Prob. 5.2APFACh. 5 - Prob. 5.3APFACh. 5 - Prob. 5.4APCACh. 5 - Prob. 5.5APECh. 5 - Prob. 5.6APIRCh. 5 - Written Communication You have been hired as a...Ch. 5 - Earnings Management Ernie Upshaw is the...
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