At the beginning of 2018, Brad's Heating & Air (BHA) has a balance of $26,000 in accounts receivable. Because BHA is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of 2018, BHA wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that BHA now will need to use the allowance method. The following transactions occur during 2018 and 2019. a. During 2018, install air conditioning systems on account,$190,000. b. During 2018, collect $185,000 from customers on account. c. At the end of 2018, estimate that uncollectible accounts total 15% of ending accounts receivable. d. In 2019, customers' accounts totaling$8,000 are written off as uncollectible. 1. Record each transaction using the allowance method. 2. Record each transaction using the direct write-off method. 3. Calculate the difference in net income (before taxes) in 2018 and 2019 between the two methods. 1. Record each transaction using the allowance method. 2. Record each transaction using the direct write-off method. 3. Calculate the difference in net income (before taxes) in 2018 and 2019 between the two methods.

The following events occur for The Underwood Corporation during 2018 and 2019, its first two years of operations.

$$\begin{matrix} \text{June $12,2018$} & \text{Provide services to customers on account for $\$ 41,000$ .}\\ \text{September $17,2018$} & \text{Receive $\$ 25,000$ from customers on account.}\\ \text{December $31,2018$} & \text{Estimate that 45$\\\%$ of accounts receivable at the end of the year will not be received.}\\ \text{March $4,2019$} & \text{Provide services to customers on account for $\$ 56,000$ .}\\ \text{May $20,2019$} & \text{Receive $\$ 10,000$ from customers for services provided in 2018 .}\\ \text{July $2,2019$} & \text{Write off the remaining amounts owed from services provided in 2018 .}\\ \text{October $19,2019$} & \text{Receive $\$ 45,000$ from customers for services provided in 2019 .}\\ \text{December $31,2019$} & \text{Estimate that 45$\\\%$ of accounts receivable at the end of the year will not be received.}\\ \end{matrix}$$

1. Record transactions for each date. 2. Post transactions to the following accounts: Cash, Accounts Receivable, and Allowance for Uncollectible Accounts. 3. Calculate the net realizable value of accounts receivable at the end of 2018 and 2019.

Pearl E. White Orthodontist specializes in correcting misaligned teeth. During 2018, Pearl provides services on account of $590,000. Of this amount,$80,000 remains receivable at the end of the year. An aging schedule as of December 31, 2018, is provided below.

$$\begin{matrix} \text{Age Group} & \text{Amount Receivable} & \text{Estimated Percent Uncollectible}\\ \hline \text{Not yet due} & \text{$\$ 40,000$} & \text{4$\\\%$}\\ \text{$0-90$ days past due} & \text{$16,000$} & \text{20$\\\%$}\\ \text{$91-180$ days past due} & \text{$11,000$} & \text{25$\\\%$}\\ \text{More than 180 days past due} & \underline{13,000} & \text{80$\\\%$}\\ \text{Total} & \underline{\underline{\$ 80,000}} & \text{ }\\ \end{matrix}$$

1. Calculate the allowance for uncollectible accounts. 2. Record the December 31, 2018, adjustment, assuming the balance of Allowance for Uncollectible Accounts before adjustment is $5,000 (credit). 3. On July 19, 2019, a customer's account balance of$8,000 is written off as uncollectible. Record the write-off. 4. On September 30, 2019, the customer whose account was written off in Requirement 3 unexpectedly pays the full amount. Record the cash collection.

At the beginning of 2024, Best Heating & Air (BHA) has a balance of $\$ 26,000$ in accounts receivable. Because $\mathrm{BHA}$ is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of 2024, BHA wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that BHA now will need to use the allowance method. The following transactions occur during 2024 and 2025.

1. During 2024, install air conditioning systems on account, $\$ 190,000$.
2. During 2024 , collect $\$ 185,000$ from customers on account.
3. At the end of 2024 , estimate that uncollectible accounts total $15 \%$ of ending accounts receivable.
4. In 2025, customers' accounts totaling $\$ 3,000$ are written off as uncollectible. Required:
5. Record each transaction using the allowance method.
6. Record each transaction using the direct write-off method.
7. Calculate bad debt expense for 2024 and 2025 under the allowance method and under the direct write-off method, prior to any adjusting entries in 2025.

Indicate whether the statement is true (T) or false (F). Justify your answer. (a) Ifv is a vector in $R^{n}$, then $\{\mathbf{v}, k \mathbf{v}\}$ is a linearly independent set if $k \neq 0$. (b) If $A \mathbf{x}=\mathbf{b}$ is any consistent linear system of m equations in n unknowns, then the solution set is a subspace of $R^{n}$. (c) If W is a subspace of $R^{n}$, then $\operatorname{span}(W)=W$. (d) If $\operatorname{span}\left(S_{1}\right)=\operatorname{span}\left(S_{2}\right)$, and $S_{1}=S_{2}$.

The graph of the equation $x ^ { 2 } + y ^ { 2 } = 16$ is a circle of radius 4 centered at the origin.
(a) Find a function whose graph is the upper semicircle and graph it. (b) Find a function whose graph is the lower semicircle and graph it. (c) Graph the upper and lower semicircles together. If the combined graphs do not appear circular, see if you can adjust the viewing window to eliminate the aspect ratio distortion. (d) Graph the portion of the circle in the first quadrant. (e) Is there a function whose graph is the right half of the circle? Explain.

On April 25, Foreman Electric installs wiring in a new home for $3,500 on account. However, on April 27, Foreman's electrical work does not pass inspection, and Foreman grants the customer an allowance of$600 because of the problem. The customer makes full payment of the balance owed, excluding the allowance, on April 30. 1. Record the credit sale on April 25. 2. Record the sales allowance on April 27. 3. Record the cash collection on April 30. 4. Calculate net sales associated with these transactions.

The Giles Agency offers a 12% trade discount when providing advertising services of $1,000 or more to its customers. Audrey's Antiques decides to purchase advertising services of$3,500 (not including the trade discount), while Michael's Motors purchases only $700 of advertising. Both services are provided on account. Record both transactions for The Giles Agency, accounting for any trade discounts.

Southwest Pediatrics has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $130,000; Allowance for Uncollectible Accounts =$2,100 (debit). On December 31, 2018, Southwest estimates uncollectible accounts to be 20% of accounts receivable. 1. Record the adjustment for uncollectible accounts on December 31, 2018. 2. Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet. 3. Calculate the net realizable value of accounts receivable.

Barnes Books allows for possible bad debts. On May 7, Barnes writes off a customer account of $7,000. On September 9, the customer unexpectedly pays the$7,000 balance. Record the cash collection on September 9.

Littleton Books has the following transactions during May.

$$\begin{array}{ll}{ \text{May 2}} & {\text{Purchases books on account from Readers Wholesale for \$3,300, terms 1/ 10, n/30.}}\\ {\text{May 3}} & {\text{Pays cash for freight costs of \$200 on books purchased from Readers.}}\\ {\text{May 5}} & {\text{Returns books with a cost of \$400 to Readers because part of the order is incorrect.}} \\ {\text{May 10}} & {\text{Pays the full amount due to Readers.}} \\ {\text{May 30 }} & {\text{Sells all books purchased on May 2 (less those returned on May 5) for \$4,000 on}}\\ {\text{ }} & {\text{account. }}\\ \end{array}$$

1. Record the transactions of Littleton Books, assuming the company uses a perpetual inventory system. 2. Assume that payment to Readers is made on May 24 instead of May 10. Record this payment.

Assume selected financial data for Walmart and Target, two close competitors in the retail industry, are as follows:

$$\begin{matrix} \text{(\$ in millions)} & \text{Net Sales} & \text{Beginning Accounts Receivable} & \text{Ending Accounts Receivable}\\ \hline \text{Walmart} & \text{$\$ 443,854$} & \text{$\$ 5,089$} & \text{$\$ 5,937$}\\ \text{Target} & \text{$68,466$} & \text{$6,153$} & \text{$5,927$}\\ \end{matrix}$$

1. Calculate the receivables turnover ratio and average collection period for Walmart and Target. Round your answers to one decimal place. Which company has better ratios? Compare your calculations with those for Tenet Healthcare and LifePoint Hospitals reported in the chapter text. Which industry maintains a higher receivables turnover? 2. Because most companies do not separately report cash sales and credit sales, the calculations used here and in the chapter text use companies' reported amount of net sales, which is a combination of cash sales and credit sales. How would including cash sales affect the receivables turnover ratio? How does this help to explain your answer in Requirement 1 above?

On March 12, Medical Waste Services provides services on account to Grace Hospital for $11,000, terms 2/ 10, n/30. Grace pays for those services on March 20. For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20.

Below are amounts (in millions) from three companies' annual reports.

$$\begin{matrix} \text{ } & \text{Beginning Accounts Receivable} & \text{Ending Accounts Receivable} & \text{Net Sales}\\ \hline \text{WalCo} & \text{$\$ 1,815$} & \text{$\$ 2,762$} & \text{$\$ 322,427$}\\ \text{TarMart} & \text{$\$ 6,166$} & \text{$\$ 6,694$} & \text{$\$ 67,878$}\\ \text{CostGet} & \text{$\$ 629$} & \text{$\$ 665$} & \text{$\$ 68,963$}\\ \end{matrix}$$

For each company, calculate the receivables turnover ratio and the average collection period (rounded to one decimal place). Which company appears most efficient in collecting cash from sales?