11-1 - Notes PDF

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M8–3 a. Accounts Receivable Allowance for Doubtful Accounts Net Accounts Receivable

$ 800,000 (55,000) $745,000

As of December 31, 2014, Extreme Fitness expected to collect $745,000. b. Allowance for Doubtful Accounts............................................. Accounts Receivable ...................................................

10,000 10,000

c. Accounts Receivable Allowance for Doubtful Accounts Net Accounts Receivable

$ 790,000 (45,000) $ 745,000

As of January 3, 2015, Extreme Fitness expected to collect $745,000. No, this has not changed from December 31, 2014, because these write–offs were estimated and allowed for in 2014. Notice that the decrease in Accounts Receivable is offset by the decrease in the Allowance for Doubtful Accounts.

M8–16 a.

Accounts Receivable

$ 800,000

As of December 31, 2014 Extreme Fitness reported it had $800,000 to collect (even though only $745,000 was estimated as collectible). b.

Bad Debt Expense ................................................................. Accounts Receivable ...................................................

c. Accounts Receivable

10,000 10,000

$ 790,000

As of January 3, 2015, Extreme Fitness reported it had $790,000 to collect. Yes, this amount has changed from December 31, 2014, because accounts that were deemed to be uncollectible were written off.

E8–10 In class I changed the facts as follows: We assumed the loan was made on August 1st instead of on July 1st We assumed the note was a 9-month note instead of a one-year note Aug. 1, 2014 dr Notes Receivable (+A).................................................70,000 cr Cash (-A)............................................................. Dec. 31, 2014 dr Interest Receivable (+A).............................................. cr Interest Revenue (+R,+SE)................................. ($70,000 x 10% x 5/12 = $2,917)

May 1, 2015 dr Cash (+A).................................................................... cr Interest Receivable (-A) ...................................... cr Interest Revenue (+R,+SE) ($70,000 x 10% x 4/12)....................... dr Cash (+A).................................................................... cr Notes Receivable (-A)..........................................

70,000

2,917 2,917

5,250 2,917 2,333 70,000 70,000

M8–12 Nov. 1 Dec 31

Apr. 30

dr Notes Receivable (+A) ......................................... cr Accounts Receivable (-A)..............................

8,000 8,000

dr Interest Receivable (+A)........................................ cr Interest Revenue (+R,+SE)........................... ($8,000 x 6% x 2/12)

80

dr Cash (+A).............................................................. cr Interest Receivable (-A) ................................ cr Interest Revenue (+R,+SE) ($8,000 x 6% x 4/12)....................................

240

dr Cash (+A).............................................................. cr Notes Receivable (-A)

80

80 160 8,000 8,000...