1. PE.09-04.ALGO (Algorithmic) 2. PE.09-06A Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $885,000; Allowance for Doubtful Accounts has a credit balance of $8,000; and sales for the year total $3,980,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $36,800. a. Determine the amount of the adjusting entry for uncollectible accounts. $ b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ Allowance for Doubtful Accounts $ Bad Debt Expense $ c. Determine the net realizable value of accounts receivable. $ Accounts receivable turnover and days sales in receivables Financial statement data for years ending December 31 for Chiro-Solutions Company follow: 20Y2 20Y1 Sales $2,912,000 $2,958,000 Accounts receivable: Beginning of year 300,000 280,000 End of year 340,000 300,000 a. Determine the accounts receivable turnover for 20Y2 and 20Y1. If required, round the final answers to one decimal place. Accounts Receivable Turnover 20Y2 20Y1 3. PE.09-06B b. Determine the days sales in receivables for 20Y2 and 20Y1. Use 365 days, if required round the final answers to one decimal place. Days Sales in Receivables 20Y2 days 20Y1 days c. Does the change in accounts receivable turnover and the days sales in receivables from 20Y1 to 20Y2 indicate a favorable or unfavorable change? Accounts receivable turnover and days sales in receivables Financial statement data for years ending December 31 for Robinhood Company follow: 20Y9 20Y8 Sales $7,906,000 $6,726,000 Accounts receivable: Beginning of year 600,000 540,000 End of year 580,000 600,000 a. Determine the accounts receivable turnover for 20Y9 and 20Y8. If required, round the final answers to one decimal place. Accounts Receivable Turnover 20Y9 20Y8 b. Determine the days sales in receivables for 20Y9 and 20Y8. Use 365 days, if required round the final answers to one decimal place. Days Sales in Receivables 4. EX.09-02 20Y9 days 20Y8 days c. Does the change in accounts receivable turnover and the days sales in receivables from 20Y8 to 20Y9 indicate a favorable or unfavorable change? Nature of Uncollectible Accounts MGM Resorts International owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, MGM reported accounts receivable of $570,348,000 and allowance for doubtful accounts of $89,789,000 Johnson & Johnson manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Johnson & Johnson reported accounts receivable of $11,002,000,000 and allowance for doubtful accounts of $268,000,000. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM Resorts International. Round to one decimal place. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Johnson & Johnson. Round to one decimal place. % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: a. Casino operators historically lose money on operations. b. Casino operators have larger accounts receivable. c. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement of gambling. d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino. 5. EX.09-06 6. EX.09-07 Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a debit balance of $6,800,000 and sales for the year total $81,500,000. a. The allowance account before adjustment has a debit balance of $68,250. Bad debt expense is estimated at of 1% of sales. b. The allowance account before adjustment has a debit balance of $68,250. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $575,000. c. The allowance account before adjustment has a credit balance of $45,000. Bad debt expense is estimated at of 1% of sales. d. The allowance account before adjustment has a credit balance of $45,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $450,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above. a. $ b. $ c. $ d. $ Number of Days Past Due Toot Auto Supply distributes new and used automobile parts to local dealers throughout the Midwest. Toot's credit terms are n/30. As of the end of business on October 31, the following accounts receivable were past due: Account Due Date Amount Avalanche Auto August 8 $12,000 Bales Auto October 11 2,400 Derby Auto Repair June 23 3,900 Lucky's Auto Repair September 2 6,600 Pit Stop Auto September 19 1,100 Reliable Auto Repair July 15 9,750 Trident Auto August 24 1,800 Valley Repair & Tow May 17 4,000 Determine the number of days each account is past due as of October 31. 7. EX.09-25 8. PR.09-01A.BLANKSHEET Account Due Date Number of Days Past Due Avalanche Auto August 8 Bales Auto October 11 Derby Auto Repair June 23 Lucky's Auto Repair September 2 Pit Stop Auto September 19 Reliable Auto Repair July 15 Trident Auto August 24 Valley Repair & Tow May 17 Receivables on the Balance Sheet Identify any errors in the following partial balance sheet. Napa Vino Company Balance Sheet December 31, 20Y9 Assets Current assets: Cash $78,500 Notes receivable $300,000 Less interest receivable 4,500 295,500 Accounts receivable $1,200,000 Plus allowance for doubtful accounts 11,500 1,211,500 The interest receivable should be . The allowance for doubtful accounts should be . Entries related to uncollectible accounts The following transactions were completed by Daws Company during the current fiscal year ended December 31: Jan. 29 Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible. Instructions 9. PR.09-05A.BLANKSHEET Notes receivable entries The following data relate to notes receivable and interest for CGH Cable Co., a cable manufacturer and supplier. (All notes are dated as of the day they are received.) Apr. 10. Received a $144,000, 5%, 60-day note on account. May 15. Received a $270,000, 7%, 120-day note on account. June 9. Received $145,200 on note of April 10. Aug. 22. Received a $150,000, 4%, 45-day note on account. Sept. 12. Received $276,300 on note of May 15. 30. Received a $210,000, 8%, 60-day note on account. Oct. 6. Received $150,750 on note of August 22. 18. Received a 120,000, 5%, 60-day note on account. Nov. 29. Received $212,800 on note of September 30. Dec. 17. Received $121,000 on note of October 18. Required: Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. CHART OF ACCOUNTS