CHƯƠNG 6 – CASH & RECEIVABLES

Bài tập

6.1

BE7.1 (LO 1) Kraft Enterprises owns the following assets at December 31, 2022.

Cash in bank—savings account €68,000

Cash on hand 9,300

Tax refund due 31,400

Checking account balance 17,000

Postdated checks 750

Certificates of deposit (180-day) 90,000

What amount should be reported as cash?

Cash in bank—savings account................................. €68,000

Cash on hand............................................................... 9,300
Checking account balance......................................... 17,000
Cash to be reported..................................................... €94,300

6.2

BE7.2 (LO 2) Restin plc uses the gross method to record sales made on credit. On June 1, 2022, it made
sales of £50,000 with terms 3/15, n/45. On June 12, 2022, Restin received full payment for the June 1
sale. Prepare the required journal entries for Restin plc.

June 1 Accounts Receivable............................ 50,000

Sales Revenue............................. 50,000

June 12 Cash....................................................... 48,500*

Sales Discounts.................................... 1,500
Accounts Receivable................... 50,000
*£50,000 – (£50,000 X .03) = £48,500

6.3
BE7.3 (LO 2) Use the information from BE7.2, assuming Restin plc uses the net method to account for
cash discounts. Prepare the required journal entries for Restin plc.

June 1 Accounts Receivable............................ 48,500*

Sales Revenue............................. 48,500

June 12 Cash....................................................... 48,500

Accounts Receivable................... 48,500

*£50,000 – (£50,000 X .03) = £48,500

6.4

BE7.4 (LO 3) Roeher Company sold $9,000 of its specialty shelving to Elkins Office Supply Co. on account.
Prepare the entries when (a) Roeher makes the sale, (b) Roeher grants an allowance of $700 when some
of the shelving does not meet exact specifications but still could be sold by Elkins, and (c) at year-end,
Roeher estimates that an additional $200 in allowances will be granted to Elkins.

(a)
Accounts Receivable............................ 9,000
Sales Revenue............................. 9,000

BRIEF EXERCISE 7.4 (Continued)

(b)
Sales Returns and Allowances............ 700
Accounts Receivable................... 700

(c)
Sales Returns and Allowances............ 200
Return Liability............................. 200
6.5

BE7.5 (LO 3) Wilton, AG had net sales in 2022 of €1,400,000. At December 31, 2022, before adjusting
entries, the balances in selected accounts were Accounts Receivable €250,000 debit, and Allowance for
Doubtful Accounts €2,400 credit. If Wilton estimates that 8% of its receivables will prove to be
uncollectible, prepare the December 31, 2022, journal entry to record bad debt expense.

Dec. 31 Bad Debt Expense............................................. 17,600

Allowance for Doubtful Accounts................ 17,600

[(€250,000 X .08) – €2,400]

6.6

BE7.6 (LO 3) Use the information presented in BE7.5 for Wilton, AG. a. Instead of an Allowance for
Doubtful Accounts Balance of €2,400 credit, the balance was €1,900 debit. Assume that 10% of accounts
receivable will prove to be uncollectible. Prepare the entry to record bad debt expense. b. Instead of
estimating uncollectibles based on a percentage of receivables, assume Wilton prepares an aging
schedule that estimates total uncollectible accounts at €24,600. (Assume an allowance of €2,400 credit.)
Prepare the entry to record bad debt expense.

(a) Dec. 31 Bad Debt Expense..............................................

26,900
Allowance for Doubtful Accounts
[(.10 X €250,000) + €1,900]............................. 26,900

(b) Dec. 31 Bad Debt Expense..............................................

22,200
Allowance for Doubtful Accounts
(€24,600 – €2,400)........................................... 22,200

6.7

BE7.7 (LO 4) Milner Family Importers sold goods to Tung Decorators for $30,000 on November 1, 2022,
accepting Tung’s $30,000, 6-month, 6% note. Prepare Milner’s November 1 entry, December 31 annual
adjusting entry, and May 1, 2023, entry for the collection of the note and interest.

11/1/22 Notes Receivable..............................................................

30,000
 Sales Revenue......................................................... 30,000

12/31/22 Interest Receivable...........................................................

300
Interest Revenue
($30,000 X .06 X 2/12)........................................... 300

5/1/23 Cash ...................................................................................

30,900
Interest Receivable.................................................. 300
Interest Revenue...................................................... 600
Notes Receivable..................................................... 30,000

6.8

BE7.8 (LO 4) On January 1, 2022, Deng Acrobats lent NT$16,529 to Donaldson, Inc., accepting
Donaldson’s 2-year, NT$20,000, zero-interest-bearing note. The implied interest rate is 10%. Prepare
Deng’s journal entries for the initial transaction, recognition of interest each year, and the collection of
NT$20,000 at maturity.

Jan. 1, 2022 Notes Receivable..............................................................

16,529

Cash..........................................................................16,529

Dec. 31 Notes Receivable..............................................................

1,653

Interest Revenue

(NT$16,529 X .10)..................................................... 1,653

Dec. 31, 2023 Notes Receivable..............................................................

1,818

Interest Revenue

(NT$16,529 + NT$1,653) X .10................................. 1,818

 Jan. 1, 2024 Cash...................................................................................
20,000

Notes Receivable.....................................................20,000

6.9

BE7.9 (LO 4) Modest Mouse SE had the following information related to an account receivable from
Counting Crows Inc. Initial face value, €22,000; payments received, €3,000; provision for uncollectibility,
€5,000. Determine the cash realizable value for the Counting Crows receivable.

Initial face value................................................................ €22,000

Less: Payments received................................................ €3,000

Provision for uncollectibility................................ 5,000 8,000

Cash realizable value........................................................ €14,000

6.10

BE7.10 (LO 5) On October 1, 2022, Chung Group assigns ¥1,000,000 of its accounts receivable to Seneca
National Bank as collateral for a ¥750,000 note. The bank assesses a finance charge of 2% of the
receivables assigned and interest on the note of 9%. Prepare the October 1, 2022, journal entries for
both Chung and Seneca.

Chung Group
Cash...................................................................................730,000

Finance Charge (Interest Expense)

(¥1,000,000 X .02)..........................................................
20,000

Notes Payable.......................................................... 750,000

Seneca National Bank

 Notes Receivable..............................................................750,000

Cash.......................................................................... 730,000

Interest Revenue (¥1,000,000 X .02)....................... 20,000

Trắc nghiệm

True-False (T-F)

Câu 1. Savings accounts are usually classified as cash on the statement of financial position.TRUE

Câu 2. Receivables are classified in the statement of financial position as either trade or non-trade
receivables.FALSE

Câu 3. The percentage-of-receivables approach of estimating uncollectible accounts emphasizes

matching over valuation of accounts receivable.FALSE

Câu 4. Companies record and report long-term notes receivable on a discounted basis.TRUE

Câu 5. If substantially all the risks and rewards of ownership of the receivables are transferred, then
they are derecognized.TRUE

Multiple Choice

Câu 6. Which of the following is not considered cash for financial reporting purposes?

a. Petty cash funds and change funds

b. Money orders, certified checks, and personal checks

c. Coin, currency, and available funds

d. Postdated checks and I.O.U.’s

Câu 7. The category "trade receivables" includes

a. advances to officers and employees.

b. income tax refunds receivable.

c. claims against insurance companies for casualties sustained.

d. None of these answer choices are correct.

Câu 8. Why is the allowance method preferred over the direct write-off method of accounting for bad
debts?

a. Allowance method is used for tax purposes

b. Estimates are used

c. Determining worthless accounts under direct write-off method is difficult to do

d. Improved matching of bad debt expense with revenue

Câu 9. Why would a company sell receivables to another company?

a. To improve the quality of its credit granting process

b. To limit its legal liability

c. To accelerate access to amounts collected

d. To comply with customer agreements

Câu 10. Under IFRS, Morley Manufacturing will derecognize its receivables in all of the following cases
except

a. When Morley elects to use the fair value option for a receivable.

b. When the contractual rights to the cash flows of the receivable no longer exist; for example,
when one of Morley’s customers declares bankruptcy.

c. When Morley collects a receivable when due.

d. All of these answer choices require Morley Manufacturing to derecognize its receivables.