西方财务会计 全英文版 第五章 课后练习 答案_ch05[1].doc

Chapter 5Short-Term Investments and ReceivablesCheck Points(5 min.) CP 5-11.Trading investments are reported at their current market value.2.A trading investment is always a current asset because the investor intends to sell the trading investment in the very near future days, weeks, or only a few months. A current asset is to be sold within one year or within the companys operating cycle if longer than a year.(10 min.) CP 5-2BALANCE SHEETCurrent assets:Short-term trading investments, at market value.$74,000INCOME STATEMENTOther revenue and gains (losses):Unrealized loss on investment.$ (6,000)(10 min.) CP 5-31.Paid $100,0002.Unrealized Loss on Investment ($100,000 $98,000)2,000Short-Term Investment. 2,000Adjusted investment to market value.BALANCE SHEETCurrent assets:Short-term trading investment, at market value.$98,000INCOME STATEMENTOther revenue (loss):Unrealized loss on investment$ (2,000)(5 min.) CP 5-4Jennings, the accountant, should not handle the companys cash. With cash-handling duties, the accountant can steal cash and hide the theft by writing off a customers account receivable as uncollectible.(5 min.) CP 5-51.Uncollectible-Account Expense ($900,000 .01).9,000Allowance for Uncollectible Accounts9,0002.Balance sheetAccounts receivable$90,000Less Allowance for uncollectible accounts. (9,000)Accounts receivable, net$81,000(5-10 min.) CP 5-61.Accounts Receivable. 800,000Sales Revenue 800,0002.Cash780,000Accounts Receivable780,0003.Allowance for Uncollectible Accounts. 5,000Accounts Receivable.5,0004.Uncollectible-Account Expense ($800,000 .01) 8,000Allowance for Uncollectible Accounts.8,000(10 min.) CP 5-71.Accounts ReceivableBeg. bal.90,000Net credit sales800,000Collections780,000Write-offs5,000End. bal.105,000Amount customers owe the company2.Allowance for Uncollectible AccountsBeg. bal.9,000Write-offs5,000Uncollectible-account expense8,000End. bal.12,000 Amount Spitzerexpects not to collect3. and 4.BALANCE SHEET:Accounts receivable, net($105,000 $12,000)$93,000 Amount Spitzer expects to collectINCOME STATEMENT:Sales revenue.$800,000Uncollectible-account expense8,000(5-10 min.) CP 5-8(a)Accounts Receivable.700,000Sales Revenue.700,000(b)Cash.720,000Accounts Receivable.720,000(c)Allowance for Uncollectible Accounts.6,000Accounts Receivable.6,000(d)Uncollectible-Account Expense.7,000Allowance for Uncollectible Accounts.7,000Allowance for Uncollectible AccountsBeg. bal.8,000Write-offs6,000Uncollectible account expenseX= 7,000End. bal.9,000(10 min.) CP 5-91. and 2.Accounts ReceivableBeg. bal.100,000Net credit sales700,000Collections720,000Write-offs6,000End. bal.74,000Allowance for Uncollectible AccountsBeg. bal.8,000Write-offs6,000Uncollectible account expense7,000End. bal.9,0003.BALANCE SHEETAccounts receivable.$74,000Less Allowance for uncollectible accounts (9,000)Accounts receivable, net.$65,000(5-10 min.) CP 5-10a.May19Note Receivable R. Kroll.100,000Cash100,000b.Nov.19Cash103,000Note Receivable R. Kroll.100,000Interest Revenue($100,000 .06 6/12)3,000(10 min.) CP 5-111.Interest for:20X7($200,000 .09 8/12).$12,00020X8($200,000 .09).18,00020X9($200,000 .09 4/12).6,0002.Tradewinds Bank has a note receivable and interest revenue.Mike Toby has a note payable and interest expense.3.Payoff at November 30, 20X7:Principal.$200,000Interest ($200,000 .09 7/12). 10,500Total.$210,500(10 min.) CP 5-1220X5a.Aug. 31Note Receivable L. Holland1,000Cash.1,000To lend money.20X6b.June 30Interest Receivable ($1,000 .09 10/12).75Interest Revenue. 75To accrue interest revenue.20X6c.Aug. 31Cash ($1,000 + $90).1,090Interest Receivable. 75Interest Revenue ($1,000 .09 2/12).15Note Receivable1,000To collect on note receivable.(5-10 min.) CP 5-13a.BALANCE SHEETJune 30, 20X6Current assets:Note receivable $1,000Interest receivable. 75b.INCOME STATEMENTYear ended June 30, 20X6Revenues:Interest revenue.$ 75c.BALANCE SHEETJune 30, 20X7Nothing to report because the note wascollected on August 31, 20X6.d.INCOME STATEMENTYear ended June 30, 20X7Revenues:Interest revenue.$ 15(10 min.) CP 5-14Req. 120X6Cash + Short-term investments$4,000 + $15,000Acid-test ratio=+ Net current receivables=+ $73,000Total current liabilities$101,000=.91The companys acid-test ratio compares favorably to the industry average of .90.Req. 2One days sales=$743,000=$2,036365Days sales in averageaccounts receivableAverage net=accounts receivable=($73,000 + $68,000) / 2One days sales$2,036=35 daysThe companys days-sales-in-receivables ratio (35) is okay relative to the 30-day period of the credit terms. (10-15 min.) CP 5-15Income StatementBalance SheetDebitCreditDebitCredit1.ClassificationsBalanceBalanceBalanceBalanceService revenueXOther assets.XProperty, plant, andequipment.XCost of services sold.XCash.XNotes payable.XUnearned revenues.XAllowance fordoubtful accounts.XOther expensesXAccounts receivableXAccounts payableXMillions2.Service revenue$23,613Cost of services sold. (11,620)Other expenses. (12,569)Net income (net loss).$ (576)3.Current ratio=$239 + $4,417 $389=1.48$607 + $2,285Exercises(10-15 min.) E 5-11.This is a trading investment because Exxonintends to sell the stock within a short time.2.Dec. 20Short-Term Investment (10,000 $60).600,000Cash.600,000Purchased investment.Dec. 31Short-Term Investment (10,000 $63) $600,000.30,000Unrealized Gain on Investment30,000Adjusted investment to market value.3.BALANCE SHEETCurrent assets:Short-term trading investment, at market value.$630,000INCOME STATEMENTOther revenue and gains:Unrealized gain on investment$ 30,000(10-20 min.) E 5-2INCOME STATEMENTOther revenue and (expense):Dividend revenue$ 500Unrealized gain on investment ($101,000 $98,000).3,000BALANCE SHEETCurrent assets:Short-term investments, at market value.$101,000(15-30 min.) E 5-3Req. 1CashShort-Term InvestmentDividend Revenue110,00067,00067,0002,0001,700* 1,700*65,00072,000Unrealized Gain (Loss)On InvestmentGain on Sale Of Investment2,0007,000_*2,000 shares $.85 = $1,700Req. 2December 31BALANCE SHEET20X320X4Current assets:Short-term investments $65,000 $ Year EndedINCOME STATEMENT20X320X4Other revenue and expense:Dividend revenue $ 1,700 $ Unrealized (loss) on investment.(2,000) Gain on sale of investment. 7,000(5-10 min.) E 5-4MEMORANDUMDATE:TO:Bob OReillyFROM:Student NameRE:Essential element of internal control over collection from customersSeparation of duties is the essential element in a system to ensure that cash received by mail from customers is properly handled and accounted for. It is very important to separate cash-handling duties from accounting duties. Otherwise, an employee can steal a cash receipt from a customer and cover the theft by writing off the customer account as uncollectible.Student responses may vary.(15-20 min.) E 5-5JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDIT20X8Dec.31Year-end entry:Doubtful-Account Expense($600,000 .01).6,000 Allowance for Doubtful Accounts. 6,000BALANCE SHEETCurrent assets:Accounts receivable, net of allowancefor doubtful accounts of $6,9001. $84,1002_ _1$900 + $6,000 = $6,900 2$91,000 $6,900 = $84,100(15 min.) E 5-6Req. 1JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITOct.Accounts Receivable.100,000Sales Revenue.100,000Oct.Cash.94,000Accounts Receivable.94,000Oct.Allowance for Uncollectible Accounts1,700Accounts Receivable.1,700Oct.Uncollectible-Account Expense($100,000 .02).2,000Allowance for Uncollectible Accounts2,000Req. 2Accounts ReceivableAllowance forUncollectible Accounts28,00094,0001,600100,0001,7001,7002,00032,3001,900Net accounts receivable = $30,400 ($32,300 $1,900)The store expects to collect an amount approximating the net receivable.Req. 3BALANCE SHEETCurrent assets:Accounts receivable, net of allowance foruncollectible accounts of $1,900$30,400(10-15 min.) E 5-7Req. 1JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITOct.Uncollectible-Account Expense.1,700Accounts Receivable.1,700Req. 2Net accounts receivable is $32,300, the balance in Accounts Receivable, computed as follows:Accounts ReceivableBeg. bal.28,000Cr. sales100,000Collections94,000Write-offs1,700End. bal.32,300The store does not expect to collect the full $32,300 because some credit customers are likely not to pay their accounts.(15-30 min.) E 5-8Req. 1The credit balance at December 31 in Allowance for Doubtful Accounts should be $13,400. ($106,000 .005) + ($78,000 .015) + ($70,000 .06) + ($15,000 .50) = $13,400. The current balance is $7,400. Thus, the balance of the allowance account is too low. Req. 2JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITDoubtful-Account Expense.6,000Allowance for Doubtful Accounts.6,000Allowance for Doubtful Accounts 7,4006,00013,400Req. 3BALANCE SHEETCurrent assets:Cash.$ XXShort-term investments.XXAccounts receivable, net of allowancefor doubtful accounts of $13,400.255,600*_ *Another way to report accounts receivable isAccounts receivable.$269,000Less Allowance for doubtful accounts (13,400)255,600(15-20 min.) E 5-9Req. 12% is reasonable because for each years sales and for the entire three-year period, the ratio of total write-offs to sales is very close to 2%.(Dollars in thousands)20X420X520X6TotalWrite offs=$139$138$144$421Sales$6,800$7,000$7,100$20,900= .0204= .0197= .0203= .0201Req. 2 Thousands20X6Accounts Receivable7,100Sales Revenue.7,100Recorded sales on account.20X6Bad-Debt Expense ($7,100 .02).142Allowance for Bad Debts142Recorded expense for the year.20X6Allowance for Bad Debts.144Accounts Receivable.144Wrote off uncollectible receivables.(10-15 min.) E 5-10JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITNov. 1Note Receivable Al Sperry 40,000Cash.40,000Dec. 3Note Receivable Acura, Inc. 5,000Service Revenue.5,00016Note Receivable Vanguard Co. 2,000 Accounts Receivable Vanguard Co.2,00031Interest Receivable. 656*Interest Revenue.656_($40,000 .09 2/12) + ($5,000 .12 28/365) + ($2,000 .12 15/365*) = $645 $600 $46 $10*Fraction can also be stated as .5/12Harrison earned interest revenue of $656 this year.(15 min.) E 5-1120X820X9BALANCE SHEETCurrent assets:Note receivable.$100,000$ Interest receivable ($100,000 .08 9/12).6,000 INCOME STATEMENTInterest revenue6,0002,000*_ *$100,000 .08 3/12 = $2,000(10 min.) E 5-121.Stockton Bank has interest receivable and interest revenue.California Company has interest payable and interest expense.Interest for one month ($100,000 .06 1/12) $5002.Stockton Bank:Assets = Liabilities + Equity Affected By0 Interest revenueCalifornia Company: 0 Interest expense3.True4.The net amount of receivables the amount the company expects to collect is more interesting because the company will probably collect this amount in cash.5.Accounts receivable.$XXXLess Allowance for uncollectibles (X)Accounts receivable, net.$ XXBALANCE SHEETCurrent assets:CashShort-term investmentsAccounts receivable, net6.False. The direct write-off method overstates assets because it fails to show the amount of the receivables the company expects to collect.(10-15 min.) E 5-13Amounts in millions of dollars Short-term Net current(a)Acid-test=Cash + investments + receivablesratioTotal current liabilities=$137 + $30 + $37$40 + $158=$204$198= 1.03An acid-test ratio of 1.03 is normal.(b)OneSales anddays=service revenue=$415=$1.137sales365 365Days salesAverage netin average=accounts receivable=($37 + $42) / 2receivablesOne days sales$1.137=35 days35 days sales in average receivables is okay relative to credit terms of net 30 days.(10-15 min.) E 5-14Req. 1Average collection period:Millions of dollarsOne days sales=$256,329=$702.3365Days sales in average receivables=($1,254 + $1,569) / 2=2 days(average collection period)$702.3Req. 2Wal-Marts collection period is short because Wal-Mart sells for cash and on credit cards and bank cards. Rec