Exam (elaborations) TEST BANK SOLUTIONS FOR College Accounting Chapters 16-27 By Heintz and Parry (Study Guide Solutions)

Exam (elaborations) TEST BANK SOLUTIONS FOR College Accounting Chapters 16-27 By Heintz and Parry (Study Guide Solutions) Study Guide Solutions Chapters 16-27 College Accounting Twenty-first Edition James A. Heintz, DBA, CPA Professor of Accounting School of Business University of Kansas Robert W. Parry, Jr., Ph.D. Professor of Accounting Kelley School of Business Indiana University ________________________________________________________________________________ Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. iii Table of Contents Chapter 16 Accounting for Accounts Receivable ................................................ 165 Chapter 17 Accounting for Notes and Interest..................................................... 173 Chapter 18 Accounting for Long-Term Assets .................................................... 181 Chapter 19 Accounting for Partnerships .............................................................. 187 Chapter 20 Corporations: Organizations and Capital Stock................................. 197 Chapter 21 Corporations: Taxes, Earnings, Distributions, and the Statement of Retained Earnings.............................................................................. 205 Chapter 22 Corporations: Bonds .......................................................................... 211 Chapter 23 Statement of Cash Flows ................................................................... 221 Chapter 24 Analysis of Financial Statements....................................................... 239 Chapter 25 Departmental Accounting.................................................................. 247 Chapter 26 Manufacturing Accounting: The Job Order Cost System.................. 253 Chapter 27 Manufacturing Accounting: The Work Sheet and Financial Statements.......................................................................................... 261 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Chapter 16 Accounting for Accounts Receivable 165 CHAPTER 16 REVIEW QUESTIONS 1. allowance method direct write-off method 2. allowance 3. matching 4. allowance 5. Bad Debt Expense Allowance for Doubtful Accounts 6. contra asset 7. net realizable value or net receivables 8. percentage of sales method percentage of receivables method 9. percentage of sales 10. Allowance for Doubtful Accounts Accounts Receivable 11. percentage of receivables 12. aging the receivables 13. percentage of sales 14. percentage of receivables 15. Accounts Receivable Allowance for Doubtful Accounts 16. Cash Accounts Receivable 17. direct write-off 18. Bad Debt Expense 19. Uncollectible Accounts Recovered 20. Bad Debt Expense EXERCISES Exercise 1 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-9 Dec. 31 Bad Debt Expense 3 5 0 0 00 1 2 Allowance for Doubtful Accounts 3 5 0 0 00 2 3 3 Net realizable value: Accounts receivable ................................................... $ 28,000 Less allowance for doubtful accounts ........................ 3,800 Net realizable value .................................................... $ 24,200 Exercise 2 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-6 Dec. 31 Bad Debt Expense 2 8 0 0 00 1 2 Allowance for Doubtful Accounts 2 8 0 0 00 2 3 3 Net realizable value: Accounts receivable ................................................ $ 32,000 Less allowance for doubtful accounts ..................... 3,200 Net realizable value ................................................. $ 28,800 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 166 Chapter 16 Exercise 3 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-7 Nov. 15 Allowance for Doubtful Accounts 3 5 0 00 1 2 Accounts Receivable/B. Fountain 3 5 0 00 2 3 Wrote off uncollectible account 3 4 4 5 20-8 Jan. 21 Accounts Receivable/B. Fountain 3 5 0 00 5 6 Allowance for Doubtful Accounts 3 5 0 00 6 7 Reinstated account receivable 7 8 8 9 21 Cash 3 5 0 00 9 10 Accounts Receivable/B. Fountain 3 5 0 00 10 11 Collection on account 11 12 12 Exercise 4 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-8 Mar. 15 Bad Debt Expense 2 5 0 00 1 2 Accounts Receivable/B. Karst 2 5 0 00 2 3 3 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Chapter 16 Accounting for Accounts Receivable 167 Exercise 5 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-4 Nov. 15 Bad Debt Expense 4 0 0 00 1 2 Accounts Receivable/B. Farlow 4 0 0 00 2 3 Wrote off uncollectible account 3 4 4 5 15 Bad Debt Expense 5 0 0 00 5 6 Accounts Receivable/C. Turner 5 0 0 00 6 7 Wrote off uncollectible account 7 8 8 9 Dec. 21 Accounts Receivable/B. Farlow 4 0 0 00 9 10 Bad Debt Expense 4 0 0 00 10 11 Reinstated account receivable 11 12 12 13 21 Cash 4 0 0 00 13 14 Accounts Receivable/B. Farlow 4 0 0 00 14 15 Collection on account 15 16 16 17 20-5 Jan. 15 Accounts Receivable/C. Turner 5 0 0 00 17 18 Uncollectible Accounts Recovered 5 0 0 00 18 19 Reinstated account receivable 19 20 20 21 15 Cash 5 0 0 00 21 22 Accounts Receivable/C. Turner 5 0 0 00 22 23 Collection on account 23 24 24 25 25 26 26 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 168 Chapter 16 PROBLEMS Problem 6 (a) (1) Amount of adjusting entry: $450,800 × 0.01 = $4,508 Accounts receivable ................................................................ $ 32,000 Allowance for doubtful accounts ............................................ 4,908 Net realizable value ................................................................ $ 27,092 (2) Amount of adjusting entry: $4,250 – $400 = $3,850 Accounts receivable ................................................................ $ 32,000 Allowance for doubtful accounts ............................................ 4,250 Net realizable value ................................................................ $ 27,750 (b) (1) Amount of adjusting entry: $450,800 × 0.015 = $6,762 Accounts receivable ................................................................ $ 32,000 Allowance for doubtful accounts ............................................ 6,162 Net realizable value ................................................................ $ 25,838 (2) Amount of adjusting entry: $6,200 + $600 = $6,800 Accounts receivable ................................................................ $32,000 Allowance for doubtful accounts ............................................ 6,200 Net realizable value ................................................................ $ 25,800 Problem 7 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Adjusting Entry 1 2 20-6 Dec. 31 Bad Debt Expense 17 0 0 0 00 2 3 Allowance for Doubtful Accounts 17 0 0 0 00 3 4 4 5 20-7 Mar. 1 Allowance for Doubtful Accounts 3 8 0 00 5 6 Accounts Receivable/J. Dullard 3 8 0 00 6 7 Wrote off uncollectible account 7 8 8 9 May 30 Accounts Receivable/J. Dullard 3 8 0 00 9 10 Allowance for Doubtful Accounts 3 8 0 00 10 11 Reinstated account receivable 11 12 12 13 30 Cash 3 8 0 00 13 14 Accounts Receivable/J. Dullard 3 8 0 00 14 15 Collection on account 15 16 16 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Chapter 16 Accounting for Accounts Receivable 169 Problem 8 1. and 2. TALLAHASSEE SEMINOLE SHOP AGING SCHEDULE OF ACCOUNTS RECEIVABLE A B C D E F G 1 Customer Total Not Yet Due Number of Days Past Due 2 1–30 31–60 61–90 Over 90 3 Borthick, A. $ 6,500 $ 3,000 $1,200 $2,300 4 Clark, R. 3,700 $3,700 5 Copley, P. 9,600 2,800 2,300 $4,500 6 Davis, H. 1,500 1,500 7 Heagy, C. 200 200 8 O’Keefe, S. 4,700 1,400 3,300 9 Pasewark, W. 5,500 5,500 10 Schroeder, M. 2,300 2,300 11 Shockley, W. 3,800 3,000 800 12 Wilkerson, J. 3,100 1,700 1,100 300 13 Total $40,900 $21,200 $6,400 $4,600 $4,700 $4,000 14 Estimated percent uncollectible 2% 4% 8% 16% 32% 15 Total est. uncollectible accounts $3,080 $424 $256 $368 $752 $1,280 16 17 18 19 20 3. GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-9 Dec. 31 Bad Debt Expense 3 5 8 0 00 1 2 Allowance for Doubtful Accounts 3 5 8 0 00 2 3 3 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 170 Chapter 16 Problem 9 GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-6 Mar. 20 Accounts Receivable/Ready Merchants 19 4 0 0 00 1 2 Sales 19 4 0 0 00 2 3 Made sale on account 3 4 4 5 May 12 Accounts Receivable/Neighborhood Watchers 13 8 0 0 00 5 6 Sales 13 8 0 0 00 6 7 Made sale on account 7 8 8 9 July 9 Cash 12 0 0 0 00 9 10 Accounts Receivable/Ready Merchants 12 0 0 0 00 10 11 Collection on account 11 12 12 13 9 Bad Debt Expense 7 4 0 0 00 13 14 Accounts Receivable/Ready Merchants 7 4 0 0 00 14 15 Wrote off uncollectible account 15 16 16 17 Oct. 15 Cash 6 0 0 0 00 17 18 Accounts Receivable/Neighborhood Watchers 6 0 0 0 00 18 19 Collection on account 19 20 20 21 15 Bad Debt Expense 7 8 0 0 00 21 22 Accounts Receivable/Neighborhood Watchers 7 8 0 0 00 22 23 Wrote off uncollectible account 23 24 24 25 Dec. 5 Accounts Receivable/Ready Merchants 7 4 0 0 00 25 26 Bad Debt Expense 7 4 0 0 00 26 27 Reinstated account receivable 27 28 28 29 5 Cash 7 4 0 0 00 29 30 Accounts Receivable/Ready Merchants 7 4 0 0 00 30 31 Collection on account 31 32 32 33 33 34 34 Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Chapter 16 Accounting for Accounts Receivable 171 Problem 9 (Concluded) GENERAL JOURNAL PAGE DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 20-7 Feb. 26 Accounts Receivable/Neighborhood Watchers 7 8 0 0 00 1 2 Uncollectible Accounts Recovered 7 8 0 0 00 2 3 Reinstated account receivable 3 4 4 5 26 Cash 7 8 0 0 00 5 6 Accounts Receivable/Neighborhood Watchers 7 8 0 0 00 6 7 Collection on account 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14