Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2014:

$$\begin{array}{lr} \text { Customer } & \text { Amount } \\ \hline \text { Shawn Brooke } & \$ 4,650 \\ \text { Eve Denton } & 5,180 \\ \text { Art Malloy } & 11,050 \\ \text { Cassie Yost } & 9,120 \\ \text { Total } & \$ 30,000 \\ \hline \end{array}$$

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31, 2014:

June 8. Wrote off account of Kathy Quantel, $8,440. Aug. 14. Received$3,000 as partial payment on the $12,500 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the$8,440 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

$$\begin{array}{lr} \text { Wade Dolan } & \$ 4,600 \\ \text { Greg Gagne } & 3,600 \\ \text { Amber Kisko } & 7,150 \\ \text { Shannon Poole } & 2,975 \\ \text { Niki Spence } & 6,630 \end{array}$$

c. How much higher (lower) would Rustic Tables’ 2014 net income have been under the direct write-off method than under the allowance method?

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31, 2014:

June 8. Wrote off account of Kathy Quantel, $8,440. Aug. 14. Received$3,000 as partial payment on the $12,500 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the$8,440 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

$$\begin{array}{lr} \text { Wade Dolan } & \$ 4,600 \\ \text { Greg Gagne } & 3,600 \\ \text { Amber Kisko } & 7,150 \\ \text { Shannon Poole } & 2,975 \\ \text { Niki Spence } & 6,630 \end{array}$$

b. Journalize the transactions for 2014 under the allowance method, assuming that the allowance account had a beginning balance of $36,000 on January 1, 2014, and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable:

$$\begin{array}{lcc} \begin{array}{l} \text { Aging Class (Number } \\ \text { of Days Past Due) } \end{array} & \begin{array}{c} \text { Receivables Balance } \\ \text { on December 31 } \end{array} & \begin{array}{c} \text { Estimated Percent of } \\ \text { Uncollectible Accounts } \end{array} \\ \hline \text { 0-30 days } & \$ 320,000 & 1 \% \\ 31-60 \text { days } & 110,000 & 3 \\ 61-90 \text { days } & 24,000 & 10 \\ \text { 91-120 days } & 18,000 & 33 \\ \text { More than 120 days } & 43,000 & 75 \\ \text { Total receivables } & \$ 515,000 & \end{array}$$

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31, 2014:

June 8. Wrote off account of Kathy Quantel, $8,440. Aug. 14. Received$3,000 as partial payment on the $12,500 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the$8,440 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

$$\begin{array}{lr} \text { Wade Dolan } & \$ 4,600 \\ \text { Greg Gagne } & 3,600 \\ \text { Amber Kisko } & 7,150 \\ \text { Shannon Poole } & 2,975 \\ \text { Niki Spence } & 6,630 \end{array}$$

The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31, 2014:

Apr. 13. Wrote off account of Dean Sheppard, $8,450. May 15. Received$500 as partial payment on the $7,100 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received$8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

$$\begin{array}{lr} \text { Paul Chapman } & \$ 2,225 \\ \text { Duane DeRosa } & 3,550 \\ \text { Teresa Galloway } & 4,770 \\ \text { Ernie Klatt } & 1,275 \\ \text { Marty Richey } & 1,690 \end{array}$$

c. How much higher (lower) would Shipway Company’s net income have been under the direct write-off method than under the allowance method?

The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31, 2014:

Apr. 13. Wrote off account of Dean Sheppard, $8,450. May 15. Received$500 as partial payment on the $7,100 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received$8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

$$\begin{array}{lr} \text { Paul Chapman } & \$ 2,225 \\ \text { Duane DeRosa } & 3,550 \\ \text { Teresa Galloway } & 4,770 \\ \text { Ernie Klatt } & 1,275 \\ \text { Marty Richey } & 1,690 \end{array}$$

b. Journalize the transactions for 2014 under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, 3/4% of credit sales are expected to be uncollectible. Shipway Company recorded $3,778,000 of credit sales during 2014.

The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31, 2014:

Apr. 13. Wrote off account of Dean Sheppard, $8,450. May 15. Received$500 as partial payment on the $7,100 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received$8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

$$\begin{array}{lr} \text { Paul Chapman } & \$ 2,225 \\ \text { Duane DeRosa } & 3,550 \\ \text { Teresa Galloway } & 4,770 \\ \text { Ernie Klatt } & 1,275 \\ \text { Marty Richey } & 1,690 \end{array}$$

Traditional Bikes Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2014, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

$$\begin{array}{lrc} \text { Age Interval } & \text { Balance } & \begin{array}{c} \text { Percent } \\ \text { Uncollectible } \end{array} \\ \hline \text { Not past due } & \$ 740,000 & 1 / 2 \% \\ \text { 1-30 days past due } & 390,000 & 2 \\ \text { 31-60 days past due } & 85,000 & 4 \\ 61-90 \text { days past due } & 28,000 & 14 \\ 91-180 \text { days past due } & 42,000 & 32 \\ \text { Over 180 days past due } & 15,000 & 80 \\ & \$ 1,300,000 & \\ \hline \end{array}$$

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2014.

Traditional Bikes Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2014, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

$$\begin{array}{lrc} \text { Age Interval } & \text { Balance } & \begin{array}{c} \text { Percent } \\ \text { Uncollectible } \end{array} \\ \hline \text { Not past due } & \$ 740,000 & 1 / 2 \% \\ \text { 1-30 days past due } & 390,000 & 2 \\ \text { 31-60 days past due } & 85,000 & 4 \\ 61-90 \text { days past due } & 28,000 & 14 \\ 91-180 \text { days past due } & 42,000 & 32 \\ \text { Over 180 days past due } & 15,000 & 80 \\ & \$ 1,300,000 & \\ \hline \end{array}$$

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2014.

The note receivable dishonored is paid on December 30 by the maker, plus interest for 30 days at 9%. What entry should be made to record the receipt of the payment ?

Traditional Bikes Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2014, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

$$\begin{array}{lrc} \text { Age Interval } & \text { Balance } & \begin{array}{c} \text { Percent } \\ \text { Uncollectible } \end{array} \\ \hline \text { Not past due } & \$ 740,000 & 1 / 2 \% \\ \text { 1-30 days past due } & 390,000 & 2 \\ \text { 31-60 days past due } & 85,000 & 4 \\ 61-90 \text { days past due } & 28,000 & 14 \\ 91-180 \text { days past due } & 42,000 & 32 \\ \text { Over 180 days past due } & 15,000 & 80 \\ & \$ 1,300,000 & \\ \hline \end{array}$$

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2014

Boeing is one of the world’s major aerospace firms, with operations involving commercial aircraft, military aircraft, missiles, satellite systems, and information and battle management systems. As of a recent year, Boeing had $2,969 million of receivables involving U.S. government contracts and$1,241 million of receivables involving commercial aircraft customers, such as Delta Air Lines and United Airlines.

Should Boeing report these receivables separately in the financial statements, or combine them into one overall accounts receivable amount? Explain.

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31: Feb. 8. Received 40% of the $18,000 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible. May 27. Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of$7,350 cash in full paymentof Seth’s account. Aug. 13. Wrote off the $6,400 balance owed by Kat Tracks Co., which has no assets. Oct. 31. Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of$3,880 cash in full payment of the account. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,190; Bonneville Co.,$5,500; Crow Distributors, $9,400; Fiber Optics,$1,110. 31. Based on an analysis of the $1,785,000 of accounts receivable, it was estimated that$35,700 will be uncollectible. Journalized the adjusting entry. Instructions

1. Record the January 1 credit balance of $26,000 in a T account for Allowance for Doubtful Accounts.
2. Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances: Allowance for Doubtful Accounts Bad Debt Expense
3. Determine the expected net realizable value of the accounts receivable as of December 31.
4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of 1/4 of 1% of the net sales of$18,200,000 for the year, determine the following: a. Bad debt expense for the year. b. Balance in the allowance account after the adjustment of December 31. c. Expected net realizable value of the accounts receivable as of December 31.

Bev Wynn, vice president of operations for Dillon County Bank, has instructed the bank’s computer programmer to use a 365-day year to compute interest on depository accounts (liabilities). Bev also instructed the programmer to use a 360-day year to compute interest on loans (assets). Discuss whether Bev is behaving in a professional manner.