Solution Manual AR - Empleo

Chapter 4
Receivables and Related Revenues
MULTIPLE CHOICE – THEORY
1. D
6. D

2. C
7. B

3. C
8. B

4. B
9. A

Problem 1 (Fontana Blue)
a.

Cost of Sales
Inventory

20,000

b.

Cost of Sales
Inventory

18,000
18,000

c.

No adjustment

d.

Sales

20,000

40,000
Accounts Receivable

e.

40,000

Sales

60,000
Accounts Receivable

60,000

Inventory

33,600
Cost of Sales

f.

33,600

Sales

120,000
Accounts Receivable

g.

120,000

Accounts Receivable
Sales

60,000
60,000

h.

No adjustment

i.

Accounts Receivable
Sales

80,000

Cost of Sales
Inventory

55,000

Accounts Receivable
Sales

90,000

j.

80,000
55,000
90,000

Problem 2 (Magnolia Company)
1.
2.

Accounts Payable – B
Accounts Receivable - B

74,000

Accounts Receivable – L
Accounts Receivable – C

16,200

3.

16,200

No disposition yet (Customer D)

4.

74,000

Sales

24,000
Accounts Receivable – E

24,000

38

5. D
10. D

Chapter 4
Receivables and Related Revenues
5.

Inventory

16,500
Cost of Sales

6.

16,500

Sales

60,000
Accounts Receivable - F
Advances from Customers

7.

Sales

15,000
45,000
85,000

Accounts Receivable – G

Inventory

85,000

59,000
Cost of Sales

8.

Sales

9.

59,000
2,500

Sales

Accounts Receivable – H
10,000 / 200 x (200 – 150) = 2,500

180,000
Accounts Receivable – I

10.

180,000

Inventory

120,000
Cost of Sales

11.

2,500

120,000

Sales Returns and Allowances
Sales

5,000

5,000

Problem 3 (Blooms Company)
Account
1
2
3
4
5
6
Total

Per client
12,000
22,000
97,600
20,000
55,000
7,500
215,300

Adjustment

Per audit

(98,800)

(98,800)

Age Classification
Not due
1-60 days past due
61-120 days past due
Over 120 days past due
Total
Notes Receivable
Interest Income
Accounts Receivable

Not due

12,000
22,000
0
20,000