Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
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Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
CHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso of goods and services (l.e., in trade). Notes receivable represent claims that are evidenced by formal instruments of credit2Other receivables include non-trade receivables such as interest receivable, loans to company officers, advances to employees, and income taxes refundable3The essential featur Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso es of the allowance method of accounting for bad debts are:-1Uncollectible accounts receivable are estimated and matched against revenues in the sameChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
accounting period in which the revenues occurred.-2Estimated uncollectibles are debited to Bad Debts Expense and credited to Allowance for Doubtful AcCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso ounts Receivable at the time the specific account is written off as uncollectible.4Knstl should realize that the decrease in cash realizable value occurs when estimated uncollectibles are recognized in an adjusting entry The write-off of an uncollectible account reduces both accounts receivable and Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso the allowance for doubtful accounts by the same amount. Thus, cash realizable value does not change5The adjusting entry under the percentage of receivChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
ables basis is:Bad Debts Expense....................................................... 3,600Allowance for Doubtful Accounts (S5.800 - S2.200)........CHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso ince Tootsie Roll s balance sheet reports allowance amounts for receivables, we know that Tootsie Roll uses the allowance method rather than the direct write-off method.7Under the direct write-off method, bad debt losses are not estimated and no allowance account IS used. When an account is determin Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso ed to be uncollectible, the loss IS debited to Bad Debts Expense and credited to Accounts Receivable. The direct write-off method makes no attempt toChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
match bad debts expense to revenues or to show the cash realizable value of the receivables in the balance sheet.8Offering credit usually results in aCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso credit standards to determine if a particular customer is credit worthy. Standards that are easily met can result in additional sales being made to customers that may not be able to meet the "tighter' credit policies of competitors. If such customers fail to pay, the additional sales revenue will be Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso offset by higher collection costs and bad debts expense.9A promissory note gives the holder a stronger legal claim than one on an account receivable.Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
As a result, it is easier to sell to another party Promissory notes are negotiable instruments, whichCopyright © 2010 John Wiley s Son* me. Kimmtl. FCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso ty by endorsement. The holder of a promissory note also can earn interest.10The maturity date of a promissory note may be stated In one of three ways: (1) on demand.-2on a stated date, and (3) at the end of a stated period of time.11The missing amounts are: (a) S12,000, (b) 10%, (c) six months or 18 Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso 0 days, and (d) S7.200.12When Dotson Company has dishonored a note, the lender can renegotiate new terms for the receivable which is equal to the fullChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
amount of the note plus the interest due. It will then try to collect the balance due. or as much as possible. If there is no hope of collection, it CHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso statements. Both the gross amount of receivables and the allowance for doubtful accounts should be reported. If collectible within a year or the operating cycle, whichever IS longer, these receivables are reported as current assets immediately below short-term investments Notes receivables are usua Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso lly listed before accounts receivable because notes are more easily converted to cash14The steps involved in receivables management are:-1Determine toChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
whom to extend credit.-2Establish a payment period.-3Monitor collections.-4Evaluate the liquidity of receivables.-5Accelerate cash receipts from receCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso l collection experience of a company and identifies problem accounts.16A concentration of credit risk exists when a material threat of nonpayment exists from either a single customer or class of customers that could adversely affect the company's financial health.17An increase in the current ratio n Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso ormally indicates an improvement in short-term liquidity. This may not always be the case because the composition of current assets may vary. In orderChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
to determine if the increase is an improvement in financial health, other ratios that should be considered include: receivables turnover ratio and avCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale o Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso The new sales director may have increased sales by extending credit to customers that did not meet the company's previous credit standards. Management should try to determine if the longer collection period jeopardizes the company's overall financial position It should compare its collection period Chapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso to that of its competitors to determine if it is reasonable. It should also monitor collections to see if the additional sales are producing significChapter8 Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso
ant increases in costs associated with collection and bad debt To reduce the average collection period, management might consider offering a sales disCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale oCHAPTER 8Reporting and Analyzing ReceivablesANSWERS TO QUESTIONS1Accounts receivable are amounts customers owe on account. They result from the sale oGọi ngay
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