Chamberlain Enterprises Inc reported the following receivabl

Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2018, year-end balance sheet: Current assets: Accounts receivable, net of $27,000 in allowance for uncollectible accounts Interest receivable Notes receivable $233,000 10,000 290,000 Additional Information: 1. The notes receivable account consists of two notes, a $60,000 note and a $230,000 note. The $60,000 note is dated October 31, 2018, with principal and interest payable on October 31, 2019. The $230,000 note is dated June 30, 2018, with principal and 8% interest payable on June 30, 2019 2. During 2019, sales revenue totaled $1,370,000, $1,295,000 cash was collected from customers, and $25,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable 3, on March 31, 2019, the $230,000 note receivable was discounted at the Bank of Commerce. The bank\'s discount rate is 10%. Chamberlain accounts for the discounting as a sale. Required 1. Not including sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain\'s 2019 income statement? 2.&3.What amounts will appear in the 2019 year-end balance sheet for accounts receivable and Calculate the receivables turnover ratio for 2019.

Solution

Revenue : Interest on 60,000 notes 4000 Interest on 230,000 notes 4600 Total Revenue 8600 Expense: Bad Debt Expense 29000 Loss on sale of notes 1610 Total Expense 30610 2 Accounts Receivable Net 279000 3 Receivable Turnover Ratio =(sales/((opening +closing receivable)/2)) 5.35 Times =1370000/((233000+279000)/2) Working Interest on 60,000 notes 60000 Interest from 1 Nov 2018 to 31st dec 2018 800 (10000-9200) =800*6/60000 8% Interest from 1 Jan 2019 to 30th Nov 2019 4000 =60000*8%*10/12 Interset on 230,000 notes 230000 Interest from 1 July 2018 to 31st dec 2018 9200 Interest from 1 Jan 2019 to 31st Mar 2019 4600 =230000*8%*3/12 Opening Gross Accounts Receiavble 260000 =233000+27000 Add: Sales Revenue 1370000 Less: Cash collected from customer 1295000 Less: Accounts Receivable written off 25000 Closing Receivable 310000 Allowance Provision 31000 (310000*10%) Net Accounts Receivable 279000 Opening allowance Balance 27000 Less: Written off 25000 2000 Balance of allowance required at year end 31000 Bad debt expense to be recorded 29000 Maturity value 248400 =230000+230000*8% Less: Discount 6210 =248400*10%*3/12 Cash received 242190 Carrying value of 230,000 Notes 243800 =230000+230000*8%*9/12 Less: Cash received 242190 Loss on sale of notes 1610