Problem 9-6A Farwell Company closes its books monthly. On September 30, selected ledger account balances are: | Notes Receivable | $138,000 | | Interest Receivable | 1,752 |
Notes Receivable include the following. | Date | Maker | Face | Term | Interest | | Aug. 16 | K. Goza Inc. | $108,000 | 60 days | 12% | | Aug. 25 | Holt Co. | 12,000 | 60 days | 11% | | Sept. 30 | Noblitt Corp. | 18,000 | 6 months | 13% |
Interest is computed using a 360-day year. During October, the following transactions were completed. | Oct. 7 | Made sales of $6,900on Farwell credit cards. | | 12 | Made sales of $900on MasterCard credit cards. The credit card service charge is1%. | | 15 | Added $460to Farwell customer balances for finance charges on unpaid balances. | | 15 | Received payment in full from K. Goza Inc. on the amount due. | | 24 | Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future.) |
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| Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.(Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use 360 days for calculation.) | Date | Account Titles and Explanation | Debit | Credit | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | | | Oct. 12 | | | | | | | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | | | | | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | | | | | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | |
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| Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts.(Post entries in the order of journal entries presented in the previous part.) | Notes Receivable | | Date | Explanation | Ref. | Debit | Credit | Balance | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | Balance | ? | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Accounts Receivable | | Date | Explanation | Ref. | Debit | Credit | Balance | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Interest Receivable | | Date | Explanation | Ref. | Debit | Credit | Balance | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | Balance | ? | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | | | Oct. 1Oct. 7Oct. 12Oct. 15Oct. 24Oct. 31 | | | | | |
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| Show the balance sheet presentation of the receivable accounts at October 31.(List Current Assets in order of liquidity.) | FARWELLCOMPANY Balance Sheet (Partial) For the Year Ended October 31For the Quarter Ended October 31October 31 | | Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentOwner's EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Owner's EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Owner's EquityTotal Receivables | | | $ | | | | | | | | Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentOwner's EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Owner's EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Owner's EquityTotal Receivables | | $ |
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Problem 9-3A Presented below is an aging schedule for Halleran Company. Number of Days Past Due Not Yet Due Total Anders $ 23,600 Blake 40,500 $ 40,500 Coulson 57,200 16,700 Deleon 34,400 Others 131,500 96,400 15,700 14,300 $287,20 0 $153,60 0 $31,00 0 $27,900 $35,200 $39,500 3% 6% 12% 25% 49% $ 4,608 $ 1,860 $ 3,348 $ 8,800 $19,355 Estimated Percentage Uncollectible Total Estimated Bad Debts $ 37,971 1-30 31-60 $10,00 0 $13,600 5,300 61-90 Over 90 Customer $35,200 $34,400 5,100 At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000. Journalize and post the adjusting entry for bad debts at December 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Dec. 31 Account Titles Debit Credit Bad Debts Expense Date Explanation Dec. 31 Adjusting Ref. Debit Credit Balance Ref. Debit Credit Balance Allowance for Doubtful Accounts Date Explanation Dec. 31 Balance Dec. 31 Adjusting LINK TO TEXT Journalize and post to the allowance account the following events and transactions in the year 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1 On March 31, a $1,200 customer balance originating in 2017 is judged uncollectible. ) (2 On May 31, a check for $1,200 is received from the customer whose account was written off ) as uncollectible on March 31. No. Date Account Titles and Explanation Debit Credit (1). Mar. 31 (2). May 31 (To reverse write-off) May 31 (To record collection of write off.) Allowance for Doubtful Accounts Date Explanation Dec. 31 2017 Balance Dec. 31 2017 Adjusting Ref. Debit Credit Balance 12,000 25,971 37,971 Mar. 31 2018 May 31 2018 LINK TO TEXT Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $900 and the aging schedule indicates that total estimated bad debts will be $31,200. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles Dec. 31 LINK TO TEXT Debit Credit Problem 9-4A Rigney Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year-end. Calculate the total estimated bad debts based on the below information. Number of Days Outstanding Accounts receivable Total 0-30 31-60 61-90 91-120 Over 120 200,900 77,000 45,800 38,700 22,900 $16,500 2% 5% 6% 9% 21% $ $ $ $ $ % uncollectible $ Estimated Bad debts LINK TO TEXT (b) Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $7,800 debit. (c) Of the above accounts, $4,500 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account. (d) The company collects $4,500 subsequently on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account N Titles and Debit o Explanati on (b ) (c) Credit (d ) (To reverse write-off.) (To record collection of write off.) LINK TO TEXT Problem 9-6A Farwell Company closes its books monthly. On September 30, selected ledger account balances are: Notes Receivable $138,000 Interest Receivable 1,752 Notes Receivable include the following. Date Maker Face Term Aug. 16 K. Goza Inc. $ 108,000 60 days Aug. 25 Holt Co. 12,000 60 days Sept. 30 Noblitt Corp. 18,000 6 months Interest is computed using a 360-day year. During October, the following transactions were completed. Oct. 7 Made sales of $6,900 on Farwell credit cards. 12 Made sales of $900 on MasterCard credit cards. The credit card service charge is 1%. 15 Added $460 to Farwell customer balances for finance charges on unpaid balances. 15 Received payment in full from K. Goza Inc. on the amount due. 24 Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future.) Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use 360 days for calculation.) Date Account Titles and Explanation Debit Credit Oct. 12 LINK TO TEXT LINK TO TEXT Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. (Post entries in the order of journal entries presented in the previous part.) Notes Receivable Date Explanation Ref. Debit Credit Balance Balance Accounts Receivable Date Explanation Ref. Debit Credit Balance Credit Balance Interest Receivable Date Explanation Ref. Debit Balance LINK TO TEXT LINK TO TEXT Show the balance sheet presentation of the receivable accounts at October 31. (List Current Assets in order of liquidity.) FARWELL COMPANY Balance Sheet (Partial) $ $ LINK TO TEXT LINK TO TEXT
