ACCT 382 Week 7 Chapter 7 Homework

ACCT 382 Week 7 Chapter 7 Homework University of Phoenix Latest Course If You Want To Purchase A+ Graded Work Then Click The Link Below, Instant Download

ACCT 382 Week 7 Chapter 7 Homework

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Question 1

The controller of the Red Wing Corporation is in the process of preparing the company’s 2013 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered: a.

Balances in the company’s accounts at the First National Bank; checking $13,500, savings $22,100.

b. Undeposited customer checks of $5,200. c. Currency and coins on hand of $580. d.

Savings account at the East Bay Bank with a balance of $400,000. This account is being used to accumulate cash for future plant expansion (in 2015).

$20,000 in a checking account at the East Bay Bank. The balance in the account represents a e. 20% compensating balance for a $100,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in 2016. f. U.S. Treasury bills; 2-month maturity bills totaling $15,000, and 7-month bills totaling $20,000.

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Question 2

Delta Automotive Corporation has the following assets listed in its 12/31/2013 trial balance:

Cash in bank—checking account

$ 22,500

U.S. Treasury bills (mature in 60 days)*

5,000

Cash on hand (currency and coins)

1,350

U.S. Treasury bills (mature in six months)*

10,000

Undeposited customer checks

1,840

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Question 3

Parker Inc. has the following cash balances:

First Bank: Second Bank:

$ 150,000 (10,000 )

Third Bank:

25,000

Fourth Bank:

(5,000 )

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Question 4

Harwell Company manufactures automobile tires. On July 15, 2013, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accounting for cash discounts.

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Question 5

Harwell Company manufactures automobile tires. On July 15, 2013, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts.

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Question 6

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. Halifax only makes credit sales. The company began 2013 with an allowance for sales returns of $300,000. During 2013, Halifax sold merchandise on account for $11,500,000. This merchandise cost Halifax $7,475,000 (65% of selling prices). Also during the year, customers returned $450,000 in sales for credit. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.

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Question 7 Johnson Company uses the allowance method to account for uncollectible accounts receivable.

Bad debt expense is established as a percentage of credit sales. For 2013, net credit sales totaled $4,500,000, and the estimated bad debt percentage is 1.5%. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginning of 2013 and $40,000, after adjusting entries, at the end of 2013.

Required:

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What is bad debt expense for 2013

Bad debt expense $67,500

2. Determine the amount of accounts receivable written off during 2013.

Accounts receivable written off $69,500 3. If the company uses the direct write-off method, what would bad debt expense be for 2013?

Bad debt expense

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$69,500

Question 8

Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount).

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Question 9

Selkirk Company obtained a $15,000 note receivable from a customer on January 1, 2013. The note, along with interest at 10%, is due on July 1, 2013. On February 28, 2013, Selkirk discounted the note at Unionville Bank. The bank’s discount rate is 12%.

Required: Prepare the journal entries required on February 28, 2013, to accrue interest and to record the discounting for Selkirk. Assume that the discounting is accounted for as a sale. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Date February 28, 2013

General Journal Interest receivable Interest revenue

Debit

Credit

250 250

February 28, 2013

Cash

15,120

Loss on sale of note receivable

130

Note receivable

15,000

Interest receivable

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250

Question 10 Listed below are several terms and phrases associated with cash and receivables. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.

List A

List B

1. Internal control

a. Restriction on cash.

2. Trade discount

b. Cash discount not taken is sales revenue.

3. Cash equivalents

c. Includes separation of duties.

4. Allowance for uncollectibles d. Bad debt expense a % of credit sales.

5. Cash discount

e. Recognizes bad debts as they occur.

6. Balance sheet approach

f. Sale of receivables to a financial institution.

7. Income statement approach g. Include highly liquid investments.

8. Net method

h. Estimate of bad debts.

9. Compensating balance

i. Reduction in amount paid by credit customer.

10. Discounting

j. Reduction below list price.

11. Gross method

k. Cash discount not taken is interest revenue.

12. Direct write-off method

l. Bad debt expense determined by estimating realizable value.

13. Factoring

m. Sale of note receivable to a financial institution.

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