Question 1

Refer to the data for Slammer Sports.
Determine the effect on Slammer Sports' accounting equation of the year­end adjustment of bad debts using the
aging approach.

Accepted Answer

The answer of Refer to the data for Slammer Sports.
Determine...

Question 2

Rafter.com received a 10%, 90-day promissory note with a face amount of $12,000 from Joyce Company, for the sale of merchandise on November 1, 2014.
A Identify the maturity date of the note.
B How much interest income to the nearest whole month will Rafter.com earn over the term of the note?
C How much interest income will Rafter.com recognize during 2014?

Accepted Answer

The answer of Rafter.com received a 10%, 90-day promissory note...

Question 3

On August 16, 2015, Blenim Corp. purchases 6,000 shares of common stock in Mountain Inc. at a market price of
$17 per share. In addition, Blenim pays brokerage fees of $2,000. On October 21, 2015, Blenim sells the Mountain stock for $12 per share.
REQUIRED:
Identify the effects on the accounting equation in connection with Blenim's investment beginning with
the purchase of the common stock on August 16, 2015, and the sale on October 21, 2015.

Accepted Answer

The answer of On August 16, 2015, Blenim Corp. purchases...

Question 4

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company
for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31.
REQUIRED: Identify the maturity date of the note.

Accepted Answer

The answer of Cyprus Corp. received a 7%, 6-month promissory...

Question 5

Refer to the data for Beatrice Equipment.
Determine the balance of Accounts Receivable at December 31, 2014.

Accepted Answer

The answer of Refer to the data for Beatrice Equipment.
Determine...

Question 6

On May 31, 2015, Evergreen Corp. purchased a 120-day, 6% certificate of deposit for $60,000. The CD was redeemed on September 28, 2015. Identify the effects of the following transactions on the accounting equation for Evergreen's books:
a. The purchase of the CD.
b. The accrual of interest adjustment for interest earned through June 30, the end of the company's fiscal year.
c. The redemption of the CD. Assume 360 days in a year.

Accepted Answer

The answer of On May 31, 2015, Evergreen Corp. purchased...

Question 7

If a company has a choice of acceptable methods to estimate bad debts, what factors should be considered in the selection?

Accepted Answer

The answer of If a company has a choice of...

Question 8

The 2015 annual report of Ski Products, Inc. reported the following amounts in millions of dollars:
  REQUIRED:
1. Compute Ski's accounts receivable turnover ratio for the year ended May 31, 2015. Assume that all sales are
on credit.
2. What is the average collection period in days for an account receivable? Explain your answer.
3. Ski's main products are medium to high­end skis and snow boards. Give some examples of the types of customers you would expect Ski to have. Do you think the average collection period for sales to these customers is reasonable? What other information do you need to fully answer that question?

Accepted Answer

The answer of The 2015 annual report of Ski Products,...

Question 9

On September 1, 2015, Fox Corp. accepted a six-month, 6%, $65,000 interest bearing note from Rudy Company in payment of an accounts receivable. Fox's year­end is December 31. Rudy paid the note and interest on the due date.
REQUIRED:
1. Who is the maker and who is the payee of the note?
2. What is the maturity date of the note?
3. Identify the effects of Fox's transactions on the accounting equation in connection with this note.

Accepted Answer

The answer of On September 1, 2015, Fox Corp. accepted...

Question 10

Refer to data for Sliders Company.
Determine the balance of Accounts Receivable at December 31, 2014.

Accepted Answer

The answer of Refer to data for Sliders Company.
Determine the...

Question 11

Hawthorne Industries' comparative balance sheets included accounts receivable of $221,400 at December 31, 2013, and $205,900 at December 31, 2014. Sales reported on Hawthorne's 2014 income statement amounted to
$2,550,000. What is the amount of cash collections that Hawthorne will report in the Operating Activities category of its 2014 statement of cash flows assuming that the direct method is used? Show your calculations.

Accepted Answer

The answer of Hawthorne Industries' comparative balance sheets included accounts...

Question 12

Refer to Beatrice Equipment.
Assume that Beatrice Equipment estimates bad debts on an aging analysis, and the aging schedule indicates that
$28,000 of the December 31, 2014 accounts receivable will be uncollectible.
A What amount will Beatrice Equipment recognize as bad debts expense for 2014?
B How much is the net realizable value of the receivables to be reported on Beatrice
Equipment's balance sheet at December 31, 2014?

Accepted Answer

The answer of Refer to Beatrice Equipment.
Assume that Beatrice Equipment...

Question 13

Bagel Inc. reported net income of $105,000 for the year ended December 31, 2014. The following items were
included on Bagel's balance sheets at December 31, 2014 and 2013:
  Bagel uses the indirect method to prepare its statement of cash flows. Bagel does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2014.
REQUIRED:
1. Prepare Bagel's 2014 statement of cash flows.
2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

Accepted Answer

The answer of Bagel Inc. reported net income of $105,000...

Question 14

On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of $10,000; the collection charge is 4%.
Required: Identify the effects on the accounting equation for Mendes' books on September 20, the date of deposit.

Accepted Answer

The answer of On September 20, Mendes Inc. presents credit...

Question 15

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31.
REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

Accepted Answer

The answer of Cyprus Corp. received a 7%, 6-month promissory...

Question 16

Refer to the data for Sliders Company.
The firm estimates that bad debts could be 1% of their net sales.
A What amount will Sliders Company recognize as bad debts expense for the year?
Once this calculation is recorded, assume that the company has a balance of Accounts
B Receivable of $58,700, and an Allowance for Doubtful Accounts of $800. What will be the net realizable value once the adjustment from Part A is made?

Accepted Answer

The answer of Refer to the data for Sliders Company.
The...

Question 17

Hemmer Company received a 12%, 6-month promissory note with a face amount of $10,000 from Stutfeld Company, for the sale of merchandise on December 1, 2014.
A Which party is the maker? _______________________
B Which party is the payee? _____________________
C Determine the maturity value of the note.

Accepted Answer

The answer of Hemmer Company received a 12%, 6-month promissory...

Question 18

Speed Wear Bicycle Gear accepts VISA credit cards from its customers. Speed Wear is closed on Sundays and on that day records the weekly sales and remits the credit card drafts to VISA. For the week ending on Sunday, April 12, cash sales totaled $3,650 and credit card sales amounted to $3,900. On April 15, Speed Wear received
$3,794.70 from VISA as payment for the credit card drafts. Identify the effects on the accounting equation for the April 12 and April 15 transactions. As a percentage, what collection fee is VISA charging Speed Wear?

Accepted Answer

The answer of Speed Wear Bicycle Gear accepts VISA credit...

Question 19

Can a company use the direct write-off method rather than the allowance method to account for bad debts expense? Explain why or why not.

Accepted Answer

The answer of Can a company use the direct write-off...

Question 20

Refer to the data for Beatrice Equipment.
Assume that Beatrice Equipment estimates bad debts at 1% of net credit sales.
A What amount will Beatrice Equipment record as bad debts expense for 2014?
B How much is the net realizable value of accounts receivable reported on Beatrice
Equipment's balance sheet at December 31, 2014?

Accepted Answer

The answer of Refer to the data for Beatrice Equipment.
Assume...

Quiz 7: Receivables and Investments

Refer to the data for Slammer Sports. Determine the effect on Slammer Sports' accounting equation of the yearend adjustment of bad debts using the aging approach.

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting yearend is December 31. REQUIRED: Identify the maturity date of the note.

Refer to the data for Beatrice Equipment. Determine the balance of Accounts Receivable at December 31, 2014.

If a company has a choice of acceptable methods to estimate bad debts, what factors should be considered in the selection?

Refer to data for Sliders Company. Determine the balance of Accounts Receivable at December 31, 2014.

On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of $10,000; the collection charge is 4%. Required: Identify the effects on the accounting equation for Mendes' books on September 20, the date of deposit.

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting yearend is December 31. REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

Hemmer Company received a 12%, 6-month promissory note with a face amount of $10,000 from Stutfeld Company, for the sale of merchandise on December 1, 2014. A Which party is the maker? ___ B Which party is the payee? _ C Determine the maturity value of the note.

Can a company use the direct write-off method rather than the allowance method to account for bad debts expense? Explain why or why not.

Quiz 7: Receivables and Investments

Refer to the data for Slammer Sports. Determine the effect on Slammer Sports' accounting equation of the year­end adjustment of bad debts using the aging approach.

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31. REQUIRED: Identify the maturity date of the note.

Refer to the data for Beatrice Equipment. Determine the balance of Accounts Receivable at December 31, 2014.

If a company has a choice of acceptable methods to estimate bad debts, what factors should be considered in the selection?

Refer to data for Sliders Company. Determine the balance of Accounts Receivable at December 31, 2014.

On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of $10,000; the collection charge is 4%. Required: Identify the effects on the accounting equation for Mendes' books on September 20, the date of deposit.

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31. REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

Can a company use the direct write-off method rather than the allowance method to account for bad debts expense? Explain why or why not.

Refer to the data for Slammer Sports. Determine the effect on Slammer Sports' accounting equation of the yearend adjustment of bad debts using the aging approach.

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting yearend is December 31. REQUIRED: Identify the maturity date of the note.

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting yearend is December 31. REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?