Receivables
Chapter 8
Exercises
Percent of Sales Method

In-Class Exercise:
Exercise No.
E8-17
Page
529
Percent of Sales Method
Percent of Sales Method
Exercise E8-17 (Percent of Sales Method)
At January 1, 2015, Windy Mountain Flagpoles had the following:
Accounts Receivable of $34,000
Allowance for Bad Debts of $3,000 (credit balance).
During the year, Windy Mountain Flagpoles recorded the following:
(a) Sales of $189,000 ($165,000 on account; $24,000 for cash).
(b) Collections on account, $133,000.
(c) Write-offs of uncollectible receivables, $2,800.
Requirements:
(1) Journalized Windy’s transactions that occurred during 2015.
(2) Post transactions to the Accounts Receivable and Allowance for
Bad Debts T-accounts.
(3) Journalize Windy’s adjustment for bad debts expense assuming
Windy estimates bad debts as 1% of credit sales. Post
adjustment to the appropriate T-accounts.
(4) Show how Windy will report net accounts receivable on its
December 31 balance sheet.
Percent of Sales Method
Percent of Sales Method
Percent of Sales Method
Percent of Sales Method
Percent of Sales Method
Percent of Sales Method
End of Exercise
Percent of Accounts Receivable Method

In-Class Exercise):
Exercise No.
E8-18
Page
529
Percent of Accounts Receivable
Method
Percent of Accounts Receivable Method
Exercise E8-18 (Percent of Receivables Method)
At January 1, 2015, Windy Mountain Flagpoles had the following:
Accounts Receivable of $34,000
Allowance for Bad Debts of $3,000 (credit balance).
During the year, Windy Mountain Flagpoles recorded the following:
(a) Sales of $189,000 ($165,000 on account; $24,000 for cash).
(b) Collections on account, $133,000.
(c) Write-offs of uncollectible receivables, $2,800.
Requirements:
(1) Journalized Windy’s transactions that occurred during 2015.
(2) Post transactions to the Accounts Receivable and Allowance for
Bad Debts T-accounts.
(3) Journalize Windy’s adjustment for bad debts expense assuming
Windy estimates bad debts as 2% of accounts receivable. Post
adjustment to the appropriate T-accounts.
(4) Show how Windy will report net accounts receivable on its
December 31 balance sheet.
Percent of Accounts Receivable Method
(
Percent of Accounts Receivable Method
(
Percent of Accounts Receivable Method
(
Percent of Accounts Receivable Method
(
Percent of Accounts Receivable Method
Percent of Accounts Receivable Method
End of Exercise
Aging of Accounts Receivable Method

In-Class Exercise:
Exercise No.
E8-19
Page
529 Aging of Accounts Receivables
Method
Aging of Accounts Receivable Method
Exercise E8-19 (Aging of Receivables Method)
At December 31, 2014, the Accounts Receivable balance of GPS Technology is $190,000.
The Allowance for Bad Debts account has a $1,600 debit balance.
GPS prepares the following aging schedule for its accounts receivable:
Total
Accounts receivable……190,000
Percent uncollectible…..
1 to 30
Age of Accounts
31 to 60 61 to 90
Over 90
$80,000
$60,000
$10,000
0.4%
5.0%
$40,000
6.0%
.
.
50%
Requirements:
(1) Journalize the year-end adjusting entry for bad debts on the basis of the aging
schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2014.
(2) Show how GPS Technology will report its net accounts receivable on it December 31,
2014 balance sheet.
Aging of Accounts Receivable Method
Aging of Accounts Receivable Method
Aging of Accounts Receivable Method
End of Exercise
Accounting for Notes Receivable
 In-Class Exercise (Form groups and work exercise):
Exercise No.
E8-23
Page
531
Notes Receivable
Transactions
(Use the format, as reflected on the next chart, to
complete this exercise)
Accounting for Notes Receivable
General Journal
Date
Description
Exercise E8-23 (Page 531)
Debit
Credit
Notes Receivable
Exercise E8-23
The following transactions occurred during 2013 and 2014 for Caspian
Importers. The company ends its accounting year on April 30.
2013
Feb. 1 Loaned $14,000 cash to Brett Dowling on a one-year, 8% note.
Apr. 6 Sold goods to Putt Masters, receiving a 90-day, 6% note for
$9,000.
Apr. 30 Made a single entry to accrue interest revenue on both notes.
???
Collected the maturity value of the Putt Masters note.
2014
Feb 1 Collected the maturity value of the Dowling note.
Requirements:
(1) Journalize all required entries.
(2) Make sure to determine the missing maturity date (???).
Notes Receivable
Accrued interest earned on the two notes.
Dowling – ($14,000 x .08 x 90/360 = $280)
Masters – ($ 9,000 x .06 x 24/360 = $ 36)
Total
$316
Notes Receivable
Accrued interest earned on the two notes.
Dowling – ($14,000 x .08 x 90/360 = $280)
Masters – ($ 9,000 x .06 x 24/360 = $ 36)
$ 9,000 x .06 x 66/360 = $ 99
Notes Receivable
Accrued interest earned on the two notes.
Dowling – ($14,000 x .08 x 90/360 = $280)
Masters – ($ 9,000 x .06 x 24/360 = $ 36)
$ 14,000 x .08 x 9/12 = $840
Notes Receivable
End of Exercise