1.

LO 9.1What is the matching principle?

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LO 9.1A beverage wholesale outlet sells beverages by the case. On April 13, a customer purchased 18 cases of wine at $42 per case, 20 cases of soda at$29 per case, and 45 cases of water at $17 per case. The customer pays with a Merill credit card. Merill charges a usage fee to the company of 5% of the total sale. What is the sales entry for this purchase? 3. LO 9.1On January 1, a flower shop contracts with customers to provide flowers for their wedding on June 2. The total contract price is$3,000, payable in equal installments for the next six months on the first of each month (with the first payment due January 1). How much will be recorded as revenue during the month of April?

4.

LO 9.1American Signs allows customers to pay with their Jones credit card and cash. Jones charges American Signs a 3.5% service fee for each credit sale using its card. Credit sales for the month of June total $328,430, where 40% of those sales were made using the Jones credit card. Based on this information, what will be the total in Credit Card Expense at the end of June? 5. LO 9.2Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable? 6. LO 9.2Earrings Depot records bad debt using the allowance, balance sheet method. They recorded$97,440 in accounts receivable for the year and $288,550 in credit sales. The uncollectible percentage is 5.5%. What is the bad debt estimation for the year using the balance sheet method? 7. LO 9.2Racing Adventures records bad debt using the allowance, income statement method. They recorded$134,560 in accounts receivable for the year and $323,660 in credit sales. The uncollectible percentage is 6.8%. What is the bad debt estimation for the year using the income statement method? 8. LO 9.2Aron Larson is a customer of Bank Enterprises. Mr. Larson took out a loan in the amount of$120,000 on August 1. On December 31, Bank Enterprises uses the allowance method and determines the loan to be uncollectible. Larson had not paid anything toward the balance due on account. What is the journal entry recording the bad debt write-off?

9.

LO 9.2The following accounts receivable information pertains to Growth Markets LLC.

What is the total uncollectible estimated bad debt for Growth Markets LLC?

10.

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LO 9.3What are some possible negative signals when the product of the accounts receivable turnover ratio is lower (i.e., fewer times)?

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LO 9.3Berry Farms has an accounts receivable balance at the end of 2018 of $425,650. The net credit sales for the year are$924,123. The balance at the end of 2017 was $378,550. What is the number of days’ sales in receivables ratio for 2018 (round all answers to two decimal places)? 13. LO 9.3What are the two most common receivables ratios, and what do these ratios tell a stakeholder about the company? 14. LO 9.4What is the difference between earnings management and earnings manipulation? 15. LO 9.4What is an earnings management benefit from showing a reduced figure for bad debt expense? 16. LO 9.4Angelo’s Outlet used to report bad debt using the balance sheet method and is now switching to the income statement method. The percentage uncollectible will remain constant at 5%. Credit sales figures for 2019 were$866,000, and accounts receivable was $732,000. How much will Angelo’s Outlet report for 2019 bad debt estimation under the income statement method? 17. LO 9.4What is an earnings management benefit from showing an increased figure for bad debt expense? 18. LO 9.5What are the two methods of revenue recognition for long-term construction projects? 19. LO 9.5What is the installment method? 20. LO 9.5What is a possible ramification of deferred revenue reporting? 21. LO 9.5What is the completed contract method? 22. LO 9.5What is the percentage of completion method? 23. LO 9.6British Imports is unable to collect on a note worth$215,000 that has accumulated interest of $465. What is the journal entry to record the conversion of the note to accounts receivable? 24. LO 9.6Chemical Enterprises issues a note in the amount of$156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?

25.

LO 9.6What is the principal of a note?

26.

LO 9.6A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of$6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?

27.

LO 9.6What are three differences between accounts receivable and notes receivable?

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