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P9-30A
| P9-30A | |||||||||
| Record the transactions in the journal of Quality Recliner Chairs. Explanations are not required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.) | |||||||||
| Solution: | |||||||||
| Date | Accounts and Explanation | Debit | Credit | ||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
P9-32A
| P9-32A | |||||||||
| Journalize all transactions for Jo Jo Music. Round all amounts to the nearest dollar. | |||||||||
| (For notes stated in days, use a 360-day year.) | |||||||||
| Solution: | |||||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
P9-33A
| P9-33A | ||
| Requirements | ||
| 1. | Compute these ratios for 2016 and 2015: | |
| a. Acid-test ratio (Round to two decimals.) | ||
| b. Accounts receivable turnover (Round to two decimals.) | ||
| c. Days’ sales in receivables (Round to the nearest whole day.) | ||
| 2. | Considering each ratio individually, which ratios improved from 2015 to 2016 and which ratios deteriorated? Is the trend favorable or unfavorable for the company? | |
| Solution: | ||
| Requirement 1 | ||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
P9-34B
| P9-34B | |||||||||||
| Requirements | |||||||||||
| 1. | Journalize all September entries using the allowance method. Bad debts expense was estimated at 2% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts). | ||||||||||
| 2. | Using the same facts, assume that Bouquet used the direct write-off method to account for uncollectible receivables. Journalize all September entries using the direct write-off method. Post to Accounts Receivable and Bad Debts Expense and show their balances at September 30, 2016. | ||||||||||
| 3. | What amount of Bad Debts Expense would Bouquet report on its September income statement under each of the two methods? Which amount better matches expense with revenue? Give your reason. | ||||||||||
| 4. | What amount of net accounts receivable would Bouquet report on its September 30, 2016, balance sheet under each of the two methods? Which amount is more realistic? Give your reason. | ||||||||||
| Solution: | |||||||||||
| Requirement 1 | |||||||||||
| Date | Accounts and Explanation | Debit | Credit | ||||||||
| Accounts Receivable | Allowance for Bad Debts | ||||||||||
| Bad Debts Expense | |||||||||||
| Requirement 2 | |||||||||||
| Date | Accounts and Explanation | Debit | Credit | ||||||||
| Accounts Receivable | Bad Debts Expense | ||||||||||
| Requirement 3 | |||||||||||
| Income Statement | Allowance Method | Direct Write- Off Method | |||||||||
| Requirement 4 | |||||||||||
| Balance Sheet | Allowance Method | Direct Write- Off Method |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
P9-35B
| P9-35B | |||||||||
| Requirements | |||||||||
| 1. | Journalize the transactions. | ||||||||
| 2. | Open the Allowance for Bad Debts T-account, and post entries affecting that account. Keep a running balance. | ||||||||
| 3. | Show how Spring Heights Medical Center should report net accounts receivable on its December 31, 2016, balance sheet. | ||||||||
| Solution: | |||||||||
| Requirement 1 | |||||||||
| Date | Accounts and Explanation | Debit | Credit | ||||||
| Age of Accounts Receivable | |||||||||
| 1 – 30 Days | 31 – 60 Days | 61 – 90 Days | Over 90 Days | Total Receivables | |||||
| Requirement 2 | |||||||||
| Allowance for Bad Debts | |||||||||
| Requirement 3 | |||||||||
| SPRING HEIGHTS MEDICAL CENTER | |||||||||
| Balance Sheet—Partial | |||||||||
| December 31, 2016 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
P9-37B
| P9-37B | |||||||||
| Record the transactions in the journal of Comfy Recliner Chairs. Explanations are not required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.) | |||||||||
| Solution: | |||||||||
| Date | Accounts and Explanation | Debit | Credit | ||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
P9-40B
| P9-40B | ||
| Requirements | ||
| 1. | Compute these ratios for 2016 and 2015: | |
| a. Acid-test ratio (Round to two decimals.) | ||
| b. Accounts receivable turnover (Round to two decimals.) | ||
| c. Days’ sales in receivables (Round to the nearest whole dollar.) | ||
| 2. | Considering each ratio individually, which ratios improved from 2015 to 2016 and which ratios deteriorated? Is the trend favorable or unfavorable for the company? | |
| Solution: | ||
| Requirement 1 | ||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
Fraud Case 9-1
| Fraud Case 9-1 | ||
| Requirements | ||
| 1. | What can a business like this do to prevent employee fraud of this kind? | |
| 2. | What effect would Dylan’s actions have on the balance sheet? The income statement? | |
| 3. | How much discretion does a business have with regard to accommodating hardship situations? | |
| Solution: | ||
| Requirement 1 | ||
| Requirement 2 | ||
| Requirement 3 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N
E10-20
| E10-20 | |||||||||
| Requirements | |||||||||
| 1. | Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods. Show your computations. Note: Three depreciation schedules must be prepared. | ||||||||
| 2. | Which method tracks the wear and tear on the equipment most closely? | ||||||||
| Solution: | |||||||||
| Requirement 1 | |||||||||
| Straight-Line Depreciation Schedule | |||||||||
| Depreciation for the Year | |||||||||
| Asset | Depreciable | Depreciation | Depreciation | Accumulated | Book | ||||
| Date | Cost | Cost | Rate | Expense | Depreciation | Value | |||
| Units-of-Production Depreciation Schedule | |||||||||
| Depreciation for the Year | |||||||||
| Asset | Depreciation | Number | Depreciation | Accumulated | Book | ||||
| Date | Cost | per Unit | of Units | Expense | Depreciation | Value | |||
| Double-Declining-Balance Depreciation Schedule | |||||||||
| Depreciation for the Year | |||||||||
| Asset | Book Value | DDB | Depreciation | Accumulated | Book | ||||
| Date | Cost | Rate | Expense | Depreciation | Value | ||||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N
E10-24
| E10-24 | |
| Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. | |
| Solution: |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N
E10-26
| E10-26 | ||||||||||
| Requirements | ||||||||||
| 1. | Compute the cost of the goodwill purchased by Princess. | |||||||||
| 2. | Record the purchase of Kettle by Princess. | |||||||||
| Solution: | ||||||||||
| Requirement 1 | ||||||||||
| Requirement 2 | ||||||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N
P10-32A
| P10-32A | ||||||||||
| Record the transactions in the journal of Grace Carol Associates. | ||||||||||
| Solution: | ||||||||||
| Date | Accounts and Explanation | Debit | Credit | |||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N
Ethical Issue 10-1
| Ethical Issue 10-1 | ||
| Requirements | ||
| 1. | Explain the tax advantage of allocating too much to the building and too little to the land. | |
| 2. | Was Western’s allocation ethical? If so, state why. If not, why not? Identify who was harmed. | |
| Solution: | ||
| Requirement 1 | ||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N
P11-25A
| P11-25A | ||||||||||
| Requirements | ||||||||||
| 1. | Using T-accounts, open the listed accounts and insert the unadjusted June 30 balances. | |||||||||
| 2. | Journalize and post the June 30 adjusting entries to the accounts that you opened. Identify each adjusting entry by letter. | |||||||||
| 3. | Prepare the current liabilities section of the balance sheet at June 30, 2016. | |||||||||
| Solution: | ||||||||||
| Requirements 1 and 2 | ||||||||||
| Date | Accounts and Explanation | Debit | Credit | |||||||
| Accounts Payable | Interest Payable | |||||||||
| Salaries Payable | Employee Payroll Taxes Payable | |||||||||
| FICA -- OASDI Taxes Payable | FICA -- Medicare Taxes Payable | |||||||||
| Long-Term Notes Payable | Unearned Rent Revenue | |||||||||
| Requirement 3 | ||||||||||
| QUICK SHIP | ||||||||||
| Balance Sheet (Partial) | ||||||||||
| June 30, 2016 | ||||||||||
| Liabilities |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N
P11-27A
| P11-27A | |||||||||
| Journalize the transactions in Houston’s general journal. Explanations are not required. | |||||||||
| Solution: | |||||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N
P11-29A
| P11-29A | ||
| Requirements | ||
| 1. | Fill in the missing information for Utah’s year ended July 31, 2016, income statement. | |
| 2. | Compute the times-interest-earned ratio for the company. | |
| Solution: | ||
| Requirement 1 | ||
| UTAH COMMUNICATIONS | ||
| Income Statement | ||
| Year Ended July 31, 2016 | ||
| Requirement 2 | ||
| Times-interest-earned ratio |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N
Ethical Issue 11-1
| Ethical Issue 11-1 | ||
| Requirements | ||
| 1. | When a business abuses this issue, how is the independent contractor hurt? | |
| 2. | If a business takes an aggressive position—that is, interprets the law in a very slanted way—is there an ethical issue involved? Who is hurt? | |
| Solution: | ||
| Requirement 1 | ||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N