**During the first year of operation, Year 1, McGinnis Appliance recognized $370,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $72,733. Even though this is his first year in business, the owner believes he will collect all but about 5 percent of the ending balance.****Required**a. What amount of cash was collected by McGinnis during Year 1?b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1?c. What is the net realizable value of receivables at the end of Year 1?d. Show the effect of these transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If the element is not affected by the event, leave the cell blank.**Complete this question by entering your answers in the tabs below.****[Tabs: Req A to C | Req D]**a. What amount of cash was collected by McGinnis during Year 1?b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1? (Round your final answer to the nearest whole dollar amount.)c. What is the net realizable value of receivables at the end of Year 1? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)**Table:**- **A. Cash collected** - **B. Uncollectible accounts expense** - **C. Net realizable value** *[Button: Req D]* **Educational Website Content: Understanding Financial Transactions****Case Study: McGinnis Appliance Financials**During its first year of operation, McGinnis Appliance recognized $370,000 of service revenue on account. By the end of Year 1, the accounts receivable balance was $72,733. Despite being in the first year of business, the owner expects to collect all but about 5 percent of the ending balance.**Required Analysis:**a. **Cash Collection Calculation:** What was the total amount of cash collected by McGinnis during Year 1?b. **Uncollectible Accounts Expense:** Assuming an allowance system for uncollectible accounts, determine the uncollectible accounts expense for Year 1.c. **Net Realizable Value of Receivables:** Calculate the net realizable value of receivables at the end of Year 1.d. **Financial Statement Effects:** Record these transactions using a horizontal statements model. Indicate if the cash flow amount relates to an Operating Activity (OA), Investing Activity (IA), or Financing Activity (FA). If no impact, leave the cell blank.**Interactive Exercise Instructions:**To complete this exercise, enter your analysis in the provided tabs:1. **Req A to C:** Calculate and enter the answers for parts a, b, and c.2. **Req D:** Record the effects on financial statements in the horizontal model table.**Horizontal Statements Model: McGinnis Appliance**| Event No. | Assets | | | Liability | + | Equity | Income Statement | Cash Flow Statement ||-----------|--------------|---------|--------------------------------|-----------|-----|--------|------------------|----------------------|| | Cash | + | NRV Accounts Receivable | | = | | Revenue | Expense = Net Income || 1 | | = | | | | | | || 2 | | = | | | | | | || 3 | | = | | | | | | |**Instructions for Event Recording:**- Indicate the cash flow category (OA, IA, FA) next to the relevant transaction in the Cash Flow column.- Use negative signs for any decreases in account balances or cash outflows.- Not

Allowance for doubtful accounts means where we expect some debts to become bad in near future then…

During the first year of operation, Year 1, McGinnis Appliance recognized $370,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $72,733. Even though this is his first year in business, the owner believes he will collect all but about 5 percent of the ending balance. Required a. What amount of cash was collected by McGinnis during Year 1? b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1? c. What is the net realizable value of receivables at the end of Year 1?

During the first year of operation, Year 1, McGinnis Appliance recognized $370,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $72,733. Even though this is his first year in business, the owner believes he will collect all but about 5 percent of the ending balance. Required a. What amount of cash was collected by McGinnis during Year 1? b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1? c. What is the net realizable value of receivables at the end of Year 1?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

At the beginning of Year 3 Omega Company had a $75,000 balance in its accounts receivable account and a $10,400 balance in allowance for doubtful accounts. During Year 3 Omega experienced the following events. (1) Earned $256,000 of revenue on account. (2) Collected $248,000 cash from accounts receivable. (3) Wrote off $8,500 of accounts receivable as uncollectible. Omega estimates uncollectible accounts to be 4% of receivables. The December 31, Year 3 ending balance in the allowance for doubtful accounts account (balance after expense recognition) is: Multiple Choice $2,980. $8,500. $2,660. $3,300.
Johnson company’s financial year ended on December 31, 2010. All the transactions related to the company’s uncollectible accounts are can be found below: January 15 Wrote off $440 account of Miller Company as uncollectible April 2nd Re-establish the account of Louisa Teller and record the collection of $1,050 as payment in full for her account which had been written off earlier July 31 Received 40% of the $700 balance owed by William John and wrote off the remainder as uncollectible August 15 Wrote off as uncollectible the accounts of Sherwin Company, $1,700 and V. Vasell $2,200 September 26 Received 25% of the $1,140 owed by Grant Company and wrote off the remainder as uncollectible October 16 Received $741 from M. Fuller in full payment of his account which had been written off earlier as uncollectible December 31 Estimated uncollectible accounts expense for the year to be 1.5% of net credit sales of $521,000 The accounts…
The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $136,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account. What is the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement? Multiple Choice О $5,700 $1,320 О $4,080
Davos Company performed services on account for $160,000 in Year 1. Davos collected $120,000 cash from accounts receivable during Year 1, and the remaining $40,000 was collected in cash during Year 2. Required a. e. & f. Record the Year 1 transactions in T-accounts and close the Year 1 Service Revenue account to the Retained Earnings account. Record the Year 2 cash collection in the appropriate T-accounts.
Answer full question please.
On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112.500 would be uncollectible. Loudoun uses the allowance method. On February 15, Year 2, one of Loudoun's customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050. Which of the following correctly states the effect of Loudoun's recording the restablishment of the receivable on April 4, Year 2? Cash 蛋蛋蛋白 NA a. b. NA C. NA d. NA Assets Multiple Choice + Net Realizable Value - 1,050 (1,050) (1,050) (1,050) 1,050 (1,050) Option A Option Balance Sheet Option C Liabilities + Accounts Payable + NA + NA (1,050) 1,050 + Stockholders' Equity Retained earnings NA (1,050) NA NA Common Stock NA NA NA (1,050) Revenue NA (1,050) NA NA Income Statement Expenses NA NA NA 1,050. = Net Income NA (1,050) NA (1,050) Statement of Cash Flows NA NA NA NA
State the accounting entries required if a business made sales on credit of $10,000, on which it must account for sales tax at the rate of 20%.
problem
The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Paid $73,000 cash for other operating expenses during the year.Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2:Paid the balance of the sales tax due for Year 1.Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Repaid the principal of the note and applicable interest on April 1, Year 2.Paid $86,000 of other operating expenses…
The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…
In the first year of operations, Ralph's Repair Service recognized $482,000 of service revenue earned on account. The ending accounts receivable balance was $88,900. Ralph estimates that 2% of sales on account will not be collected. During the year, Ralph wrote off a $200 receivable that was determined to be uncollectible. Assume there were no other transactions affecting accounts receivable. Required: a. What amount of cash was collected in Year 1? b. What amount of uncollectible accounts expense was recognized In Year 1? c. What will be Ralph's net realizable value of receivables on the December 31, Year 1 balance sheet? a. Cash collected b. Uncollectible accounts expense c. Net realizable value of receivables
Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the following four accounting events in Year 1: 1. Recognized $71,000 of revenue on account. 2. Collected $65,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $650. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 2 percent of sales on account. Required a. Show the effect of each event on the elements of the financial statements, using a horizontal statements model. Use + for increase, - for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example. b. Record the previous transactions in general journal form.