Week 10 · Accounting Workshop

Week 10 Accounting Workshop: What the Bicycle Shop Will Really Collect

Financial Accounting Free sample edition

Part 1 — The Big Picture

This week you learned that a business that sells on account will not collect everything it is owed, and that the allowance method estimates the shortfall in the period of the sales. In this workshop you work one small set of books end to end: the bicycle shop's receivables at the end of Year 3. You build its aging schedule, record the year-end bad debt adjustment, the later write-off, and the collection of a note with its interest, check that every entry balances, show the receivables on the balance sheet at net realizable value, read what the result shows in one plain sentence, and then check a chatbot's version of the same work. This is the adjust-and-report mode of the Accounting Workshop: the record-and-post work from Week 3 carries forward into the entries, and the analyze-and-explain work happens in your plain-sentence reading and your critique.

Time budget: Plan for about 90 minutes.

Part 2 — The Task

Guiding question: How much of the $40,000 its customers owe will the bicycle shop really collect, and how do its entries show that without counting the same loss twice?

Workshop data: Dataset G, the bicycle shop's receivables (illustrative)

Source: The running case at the end of Year 3: an illustrative, unnamed bicycle repair and sales shop, organized as a corporation by two founders, with customers who buy on account and one note receivable; it describes no real business.

Rows: 4 age groups of receivables, one write-off, and one note; the aging table has 5 rows (4 group rows plus a totals row), the entry table has 4 entry rows, and the receivables table has 3 rows
Accounts Receivable: $40,000 owed by customers at the end of Year 3
Age groups: $28,000 not yet due at 1 percent; $7,000 1 to 30 days past due at 4 percent; $3,000 31 to 60 days past due at 10 percent; $2,000 over 60 days past due at 30 percent
Allowance before the adjustment: a $260 credit balance in Allowance for Doubtful Accounts
Write-off: one customer's $350 balance, written off later under the allowance method
Note: a $6,000, 6 percent, 3-month note signed by a youth cycling program

Part 3 — Materials & Procedure

Tools and materials

A free spreadsheet (Google Sheets, or any free spreadsheet) for journals, T-accounts, trial balances, schedules, and statements, with every total computed by formula; the SEC's free EDGAR search for public companies' annual reports; and one approved chatbot used as a sparring partner whose entries, totals, and claims about standards and tax rates the student checks by hand and against the pinned source before trusting them
A free spreadsheet (Google Sheets, or any free spreadsheet)
One approved chatbot

Ways of working

record-and-post
adjust-and-report
analyze-and-explain

Procedure

Read Dataset G in Part 2 twice. For each age group, write one line in your own words saying how late those bills are and why an older group gets a higher percentage. Check: Four short lines, one per age group, each linking the bill's age to its percentage.
Open a new sheet and copy the aging table from Part 4. Enter each balance and its percentage as a decimal, compute each group's estimate with a formula that multiplies the two, and total both the balances and the estimates with SUM formulas. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Four estimates computed by formula, a balance total that matches Dataset G, and an estimate total that is the allowance's required balance.
On a second tab, copy the entry table from Part 4. Compute the bad debt expense as the required balance minus the allowance's existing credit balance, then write the year-end adjustment, the write-off, and the two-line collection of the note, each with the account debited first and the account credited below it. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Four entries, each with equal debits and credits, and Cash only in the collection of the note.
Copy the receivables table from Part 4 and fill in Accounts Receivable, the allowance, and net realizable value before and after the write-off, computing each net figure with a subtraction formula. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Net realizable value is the same in both columns.
Answer the analysis questions in Part 5, including the plain sentence that says what the receivables table shows. Check: Written answers to all five questions.
Paste your three tables and then the Part 6 prompt into one approved chatbot. Compare every entry, every total, and every claim about a standard or a rate with your own work and with Chapter 10, and write the critique report, or complete the equivalent route instead. Tool: One approved chatbot. Check: A three-to-five-sentence report that quotes at least two of the chatbot's slips and corrects each by hand, or the marked-up equivalent-route analysis.

Fallback route

When to use it: Use this route if you cannot open a spreadsheet or print the tables.

Copy the three tables by hand onto paper or into any text file, read Dataset G from this page, compute each estimate, balance, and interest figure by hand, add each column twice, and complete every analysis question and the critique step in the same order. Submit a photo or scan of the paper, or the text file, for equal credit.

This route earns the same credit as the primary route.

Part 4 — The Scaffold

Build the aging schedule one group at a time, so each estimate shows how the age of a bill drives the share the shop expects to lose.

Student scaffold table 1
Age group	Balance	Estimated uncollectible
Not yet due	$28,000	1 percent
1 to 30 days past due	$7,000	4 percent
31 to 60 days past due	$3,000	10 percent
Over 60 days past due	$2,000	30 percent
Total

Record each entry in the same order every time, debit first and credit below, so you can check that the two sides are equal.

Student scaffold table 2
Entry	What happened	Account debited	Account credited	Amount
1	Year-end bad debt adjustment, Year 3
2	Later write-off of one customer's balance
3	Collection of the note at maturity (the face)
4	Collection of the note at maturity (the interest)

Show the receivables before and after the write-off, so the two columns prove whether the write-off changed what the shop expects to collect.

Student scaffold table 3
Line	After the year-end adjustment	After the write-off
Accounts Receivable
Less: Allowance for Doubtful Accounts
Net realizable value of receivables

Part 5 — Analysis Questions

Compute each group's estimate and the required allowance, then compute the bad debt expense from the allowance's $260 credit balance, showing the multiplication and the subtraction.
Compute Accounts Receivable, the allowance, and net realizable value after the write-off, and compute the note's interest and maturity value, showing each step.
Explain why the write-off records no expense under the allowance method, and describe, by its effect, how the direct write-off method would record the same account and in which period.
Write one plain sentence saying what the receivables table shows. Then say in words how a different allowed estimate, such as a higher percentage for the over 60 days group, would change the required allowance, the bad debt expense, and net realizable value, without calling either estimate better.
Choose one reflection: (a) which step did your first instinct get wrong, and what changed your mind? or (b) name one thing the aging schedule cannot tell the shop for certain, and one percentage in Dataset G that a lender might question.

Part 6 — AI-Critique Moment

Choose one equal-credit critique route. Route A: ask an approved AI tool to critique your completed work, then check its response against your own evidence. Route B is the no-AI equivalent printed below.

Approved tools: Claude, Gemini, ChatGPT, Grok, Microsoft Copilot.

Prompt to paste:

I've pasted my completed aging schedule, journal entries, and receivables table above. Here is an illustrative bicycle shop at the end of Year 3. Its customers owe it $40,000: $28,000 not yet due (1 percent expected uncollectible), $7,000 that are 1 to 30 days past due (4 percent), $3,000 that are 31 to 60 days past due (10 percent), and $2,000 over 60 days past due (30 percent). Allowance for Doubtful Accounts already has a $260 credit balance, and the shop uses the allowance method. Please compute the required allowance, write the year-end bad debt entry, and give the net realizable value of receivables. Later the shop writes off a customer's $350 balance: write that entry and give the new net realizable value. A youth cycling program signs a $6,000, 6 percent, 3-month note to the shop: compute the interest, say when it is earned, and write the entry when the program pays at maturity. Then tell me whether recording bad debt expense lowers the shop's cash, where Allowance for Doubtful Accounts goes on the balance sheet, what rule says when an account must be written off, what Social Security rate and wage base apply to the shop's mechanic in 2026, what the shop's $200 a month of equipment depreciation says about the equipment's value, and whether the shop could use LIFO for its bicycles under IFRS.

Test the response for these likely failures:

Chatbots sometimes say the note's interest is earned only on the day the cash arrives, or book all $90 the day the program signs the note.
Chatbots sometimes write the write-off backwards, debiting Accounts Receivable and crediting Allowance for Doubtful Accounts, which is the first entry of a recovery.
Chatbots sometimes write the note's collection as Cash 6,090 against Notes Receivable 6,000, leaving out the interest.
Chatbots often record $350 of bad debt expense in the period of the write-off even though the shop uses the allowance method.
Chatbots often book the full $1,460 as the expense, or add the $260 balance to it and report a $1,720 allowance.
Chatbots sometimes invent a rule, such as GAAP requiring every account to be written off after a fixed number of days past due.
Chatbots often quote an earlier year's Social Security wage base when asked about the mechanic's wages.
Chatbots sometimes say a business reporting under IFRS may choose LIFO for its inventory.
Chatbots sometimes say that recording $1,200 of bad debt expense lowers the shop's cash by $1,200.
Chatbots often describe the shop's $200 a month of equipment depreciation as the drop in what the equipment would sell for.
Chatbots sometimes list Allowance for Doubtful Accounts among the liabilities because it has a credit balance.

Write three to five sentences naming what the chatbot got right and at least two places where it slipped into one of the failures above, quoting its words and correcting each by hand against Dataset G, Chapter 10, and the pinned source.

Equivalent route (no AI required)

No AI account is required for this workshop. This route assesses the same objectives, Objective 6 (describe internal control and its components, and account for cash, including the bank reconciliation, and for receivables, including the allowance method and notes receivable) and Objective 3 (apply accrual accounting: recognize revenue and expenses in the right period, prepare adjusting entries for deferrals and accruals, and prepare an adjusted trial balance), takes comparable effort of about the same 90 minutes, uses the same rubric, and earns the same credit. Instead of the chatbot, critique this flawed analysis of Dataset G, printed here in full: "The required allowance is 280 + 280 + 300 + 600 = $1,460, so the year-end entry is debit Bad Debt Expense 1,460 and credit Cash 1,460, because the shop is losing that money now. Allowance for Doubtful Accounts is a liability, listed with Accounts Payable. When the shop later writes off the $350, it records another expense: debit Accounts Receivable 350 and credit Allowance for Doubtful Accounts 350, so net realizable value falls by $350. The note earns interest only when the cash arrives, and the collection entry is debit Cash 6,090 and credit Notes Receivable 6,000. A 6 percent note earns 6,000 × 0.06 = $360 no matter how long it runs. GAAP also requires every account to be written off once it is 90 days past due. The shop's $200 a month of equipment depreciation shows the equipment loses $200 of resale value each month. The mechanic's wages carry Social Security at 6.2 percent on wages up to a $168,600 wage base, and under IFRS the shop could choose LIFO for its bicycles." Mark every error you find, name the failure it shows, and correct it by hand against Dataset G, Chapter 10, and the pinned source; find at least two. The wage base in it is out of date on purpose and is itself one of the errors. Submit the marked-up analysis with your corrections in place of the chatbot report and share link.

Part 7 — What to Submit

The completed aging schedule, entry table, and receivables table from Part 4
Written answers to all five analysis questions
The chatbot critique report with its share link, or the equivalent route's marked-up flawed analysis

Deliverable:

A short Accounting Workshop report on the bicycle shop's receivables at the end of Year 3: three completed tables (the aging schedule, the four journal entries, and the receivables before and after the write-off), written answers to five analysis questions, and a critique of a chatbot's version of the same work, or, on the equivalent route, a marked-up correction of the printed flawed analysis. Choose how you show it: a completed spreadsheet with written answers, a recorded explanation with a transcript, or hand-drawn tables with short notes; every form is graded by the same scoring criteria. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Rubric

The rubric below shows how each submitted part is evaluated; bands are full, partial, or none.

Workshop evaluation criteria
Criterion	Full	Partial	None
Balanced, correctly classified entries	All four entries have the right accounts and amounts, each balances with the debit listed first, the adjustment touches no Cash, and the write-off records no expense.	Two or three entries are right, or all four are present but one is reversed, unbalanced, or records the write-off as an expense.	Fewer than two correct entries, or a bad debt adjustment that credits or debits Cash.
Aging schedule and receivables table, computed and footed	Every group estimate is correct, the estimates total the required allowance by formula or written sum, the bad debt expense subtracts the existing balance, and net realizable value is computed in both columns and shown unchanged by the write-off.	The schedule totals correctly but the expense ignores the existing balance, or one net realizable value is wrong.	No aging schedule, or an estimate built from one rate applied to the whole balance with no groups.
Plain-sentence reading and the effect of a different estimate	One plain sentence says what the receivables table shows, and the answer says in words how a higher percentage would raise the allowance and the expense and lower net realizable value, without ranking either estimate.	The plain sentence or the estimate effect is present, but not both, or one of them is vague.	Neither the plain sentence nor the estimate effect is present.
Caught-and-corrected AI slip, on either route	The chatbot critique report, or the equivalent route's marked-up flawed analysis, quotes at least two errors and corrects each by hand against Dataset G, Chapter 10, and the pinned source; either route earns this band equally.	One error is quoted and corrected on either route, or errors are named without a correction.	No critique on either route, or chatbot output is pasted without checking it.
Method comparison, limits, and reflection	The answers explain why the write-off records no expense, describe the direct write-off method's entry and period by its effect, and answer the chosen reflection option with a specific step or percentage from Dataset G.	Either the method comparison or the reflection is present, but not both, or one is general.	Neither the method comparison nor the reflection is present.

Quality Gate

Every journal entry lists the debit first and the credit second, and its debits equal its credits.
The year-end bad debt adjustment does not touch Cash, and the write-off records no expense under the allowance method.
Every estimate, balance, and total is computed by formula or written as a sum or product, and net realizable value is the same before and after the write-off.
No standard, rule, rate, statistic, or quotation is invented anywhere in the submission.
The plain-sentence reading names what the receivables table shows and ranks no allowed estimate or method as better.
The critique quotes the chatbot or the flawed analysis and corrects at least two errors by hand.

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