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Acct 2201 Exam 2 Flashcards _ 100- SURE ANSWERS.pd
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7/6/24, 10:45 AM Acct 2201 Exam 2 Flashcards | Quizlet https://quizlet.com/894310109/acct -2201 -exam -2-flash -cards/ 1/31 Jeremiah Terms in this set (243) Lewis Company uses the allowance method for recording its expected credit losses. It estimates credit losses at 1 percent of credit sales, which were $900,000 during the year. On December 31, the Accounts Receivable balance was $150,000, and the Allowance for Doubtful Accounts had a balance of $10,200 before adjustment. a. Determine the amount and the financial statement effect of the adjustment to record the credit losses for the year. b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December 31 balance sheet CHEGG a. $900,000 x .01 = $9,000 Bad Debt Expense Assets= Liabilities+Equity R E= NI -9000 0 -9000 0 +9000 -9000 b. Current Assets: Accounts receivable $150,000 Less: Allowance for doubtful accounts 19,200 ($10,200 + 9,000) $130,800 Hunter, Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: Age Group Balance Probability of Noncollection $131,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $520 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. b. Determine the financial statement effect of a write off of the Rose Company's CHEGG a. $90,000 x 1% = $ 900 20,000 x 2% = 400 11,000 x 5% = 550 6,000 x 10% = 600 4,000 x 25% = 1,000 3,450 Less: Balance before adjustment 520 $2,930 b. (Asset) allowance for doubtful accounts = 425 (Asset) accounts receivable = -425 Acct 2201 Exam 2 7/6/24, 10:45 AM Acct 2201 Exam 2 Flashcards | Quizlet Acct 2201 Exam 2 https://quizlet.com/894310109/acct -2201 -exam -2-flash -cards/ 2/31 On March 10, Gardner, Inc., declared a $900 account receivable from the Gates Company as uncollectible and wrote off the account. On November 18, Gardner received a $400 payment on the account from Gates. a. Assume that Gardner uses the allowance method of handling credit losses. What are the adjustments to record the write-off and the subsequent recovery of Gates's account? b. Assume that the payment from Gates arrives on February 5 of the following year rather than on November 18 of the current year. Is there any difference in the financial statement impact? a. allowance for doubtful accounts = 900 accounts receivable = -900 allowance for doubtful accounts = -400 accounts receivable = 400 cash = 400 accounts receivable = -400 b. There is no difference in the net effect of the subsequent remittance on the financial statements whether payment is made in the current year or in the following year. Ruth Anne's Fabrics accepts cash, personal checks, and two credit cards when customers buy merchandise. With the Great American Bank Card, Ruth Anne's Fabrics receives an immediate deposit in its checking account for credit card sales. The bank charges a four percent fee. With the United Merchants Card, Ruth Anne's Fabrics receives a deposit after 3 days, net of a three percent fee. Use the Transaction Analysis Template to record the following: Chegg a. Sales for March 15 were as follows: Cash and checks $2,650 b. Received a check for $3,978 from United Merchants 7/6/24, 10:45 AM Acct 2201 Exam 2 Flashcards | Quizlet Acct 2201 Exam 2 https://quizlet.com/894310109/acct -2201 -exam -2-flash -cards/ 3/31 Determine the maturity date and compute the amount of interest at maturity for each of the following notes: Date of Note Principal Interest Rate (%) Term a. August 5 ................................ ................... $ 6,000 8 120 days b. May 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,800 7 90 days c. October 20 . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 9 45 days d. July 6................................ .......................... 4,500 10 60 days e. September 15. . . . . . . . . . . . . . . . . . . . . . . . 9,000 8 75 days Maturity Date -> Interest at Maturity a. December 3 -> $160 ($6,000 × 0.08 × 120/360) b. August 8 -> $294 ($16,800 × 0.07 × 90/360) c. December 4 -> $270 ($24,000 × 0.09 × 45/360) d. September 4 -> $75 ($4,500 × 0.10 × 60/360) e. November 29 -> $150 ($9,000 × 0.08 × 75/360) Compute the interest accrued on each of the following notes receivable held by Northland, Inc., on December 31: Maker Date of Note Principal Interest Rate (%) Term Maple ................................ .... 11/21 $18,000 10 120 days Wyman ................................ . 12/13 14,000 9 90 days Nahn. ................................ ... 12/19 21,000 8 60 days Maple: $18,000 × 0.10 × 40/360 = $200 Wyman: $14,000 × 0.09 × 18/360 = $63 Nahn: $21,000 × 0.08 × 12/360 = $56 The Forrester Corporation disclosed the following financial information (in millions) in its recent annual report: Year 1 Year 2 Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $67,096 $81,662 Beginning accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,896 3,696 Ending accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,696 3,598 a. Calculate the accounts receivable turnover ratio for both years. b. Calculate the average collection period for both years. c. Is the company's accounts receivable management improving or deteriorating? a. Accounts receivable turnover year 1 = 17.68 year 2 = 22.39 b. Average collection period year 1 = 20.64 days year 2 = 16.30 days c. The company's receivable management improved by 4.34 days. 7/6/24, 10:45 AM Acct 2201 Exam 2 Flashcards | Quizlet Acct 2201 Exam 2 https://quizlet.com/894310109/acct -2201 -exam -2-flash -cards/ 4/31 Los Altos, Inc. uses the allowance method of handling its credit losses. It estimates credit losses at one percent of credit sales, which were $1,800,000 during the year. On December 31, the Accounts Receivable balance was $300,000, and the Allowance for Doubtful Accounts had a credit balance of $20,400 before adjustment. a. $1,800,000 x 0.01 = $18,000 b. Current Assets: Accounts receivable $300,000 Less: Allowance for doubtful accounts 38,400 $20,400 + $18,000 $261,600 a. Determine the amount and financial statement effect of the adjustment to record the credit losses for the year. b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December 31 balance sheet. Miller, Inc., analyzed its accounts receivable a. balances at December 31 and arrived at the $180,000 x 1% = $1,800 aged balances listed below, along with the 40,000 x 2% = 800 percentage that is estimated to be 22,000 x 5% = 1,100 uncollectible: 12,000 x 10% = 1,200 Age Group Balance 8,000 x 25% = 2,000 Probability of 6,900 Noncollection 1,040 Less: Balance before adjustment 0-30 days past due . . . . . . . . . . . . . . . . . . . . . . . $5,860 . . . . . . . . . . . . . . $180,000 1 31-60 days past due . . . . . . . . . . . . . . . . . . . . . . . b. allowance for doubtful accounts = 425 . . . . . . . . . . . . . 40,000 2 accounts receivable = -425 61-120 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 5 121-180 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 10 Over 180 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 25 $262,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,040 on December 31, before any adjustments. a. Determine thThe benefits of buying summaries with Stuvia:
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