ACC 557 Week 5, Chapter 8 (E8-3, E8-5, E8-14, P8-7A) 100% ACCURRATE

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EXERCISE 8-3 (a) Dec. 31 Bad Debt Expense 1,400 Accounts Receivable—T.Thum 1,400 (b) (1) Dec. 31 Bad Debt Expense   [($840,000 – $28,000) X 1%] 8,120 Allowance for Doubtful   Accounts 8,120 (2) Dec. 31 Bad Debt Expense 8,900 Allowance for Doubtful Accounts   [($110,000 X 10%) – $2,100] 8,900 (c) (1) Dec. 31 Bad Debt Expense   [($840,000 – $28,000) X .75%] 6,090 Allowance for Doubtful   Accounts 6,090 (2) Dec. 31 Bad Debt Expense 6,800 Allowance for Doubtful Accounts   [($110,000 X 6%) + $200] EXERCISE 8-5 Allowance for Doubtful Accounts 14,100 Accounts Receivable 14,100 Accounts Receivable 1,800 Allowance for Doubtful Accounts 1,800 Cash 1,800 Accounts Receivable 1,800 Bad Debt Expense 16,300 Allowance for Doubtful Accounts [$19,000 – ($15,000 – $14,100 + $1,800)] 16,300 EXERCISE 8-14 (a) Beginning accounts receivable $ 100,000 Net credit sales 1,000,000 Cash collections (920,000) Accounts written off (30,000) Ending accounts receivable $ 150,000 (b) $1,000,000/[($100,000 + $150,000)/2] = 8 (c) 365/8 = 45.6 days PROBLEM 8-7A Jan. 5 Accounts Receivable—Zwingle Company 24,000 Sales Revenue 24,000 20 Notes Receivable 24,000 Accounts Receivable— Zwingle   Company 24,000 Feb. 18 Notes Receivable 8,000 Sales Revenue 8,000 Apr. 20 Cash ($24,000 + $540) 24,540 Notes Receivable 24,000 Interest Revenue   ($24,000 X 9% X 3/12) 540 30 Cash ($30,000 + $1,200) 31,200 Notes Receivable 30,000 Interest Revenue   ($30,000 X 12% X 4/12) 1,200 May 25 Notes Receivable 4,000 Accounts Receivable— Isabella Inc. 4,000 Aug. 18 Cash ($8,000 + $360) 8,320 Notes Receivable 8,000 Interest Revenue   ($8,000 X 8% X 6/12) 320 25 Accounts Receivable—Isabella Inc.   ($4,000 + $70) 4,070 Notes Receivable 4,000 Interest Revenue   ($4,000 X 7% X 3/12) 70 Sept. 1 Notes Receivable 12,000 Sales Revenue 12,000