CHC Helicopter Corporation is Vancouver-based and is the world’s largest provide
ID: 2541873 • Letter: C
Question
CHC Helicopter Corporation is Vancouver-based and is the world’s largest provider of helicopter services to the global offshore oil and gas industry. Assume the company’s balance sheet at April 30, 2016, adapted, reported the following:
(in millions)
Accounts receivable
$240.6
Allowance for doubtful accounts
(8.4)
Required:
1. How much of the April 30, 2016, balance of accounts receivable did CHC Helicopter Corporation expect to collect? Stated differently, what was the expected net realizable value of these receivables?
2. Journalize, without explanations, 2017 entries for CHC Helicopter, assuming the following:
a. The write-offs of uncollectible accounts receivable total $8.0 million. Prepare a T-account for Allowance for Doubtful Accounts and post to this account.
b. The April 30, 2017, aging of receivables indicates that $3.1 million of the total receivables of $303.4 million is uncollectible at year-end. Post to Allowance for Doubtful Accounts as well, and show its adjusted balance at April 30, 2017.
3. Show how CHC Helicopter’s receivables and related allowance will appear on the April 30, 2017, balance sheet.
4. Show what CHC Helicopter income statement will report for the foregoing transactions.
(in millions)
Accounts receivable
$240.6
Allowance for doubtful accounts
(8.4)
Explanation / Answer
Answer 1 The expected net realizable value of receivables = Accounts receivables (Gross) - Allowance for doubtful accounts The expected net realizable value of receivables = $240.60 millions - $8.40 millions = $232.20 millions Answer 2-a (in millions) Journal entry (in millions) T - Account of Allowance for Doubtful Accounts Transaction Account Titles Debit Credit To Accounts receivables $8.00 By balance b/d $8.40 a Allowance for doubtful accounts $8.00 By Bad debt expense $2.70 Accounts Receivables $8.00 To balance c/f $3.10 Total $11.10 Total $11.10 Answer 2-b Journal entry (in millions) Transaction Account Titles Debit Credit Adjusted balance of Allowance for Doubtful accounts at April 30,2017 = $3.10 million b Bad debt expense $2.70 Allowance for doubtful accounts $2.70 Answer 3 CHC Helicopter’s receivables and related allowance will appear on the April 30, 2017, balance sheet. Current Assets in Millions Accounts Receivables (Gross) $303.40 Less : Allowance for Doubtful accounts $3.10 Accounts Receivables (Net) $300.30 Answer 4 CHC Helicopter income statement will report as under, Expenses in Millions Bad debt Expense $2.70