Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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(Learning Objectives 1, 3: Apply GAAP for proper revenue recognition; accountfor sales discounts) Marshall Industrial Supply offers terms of 2/10, n/30 to its wholesalecustomers. Marshall’s cost of goods sold is 30% of sales. The company had the followingtransactions during October:October 1 Sold $8,000 of merchandise to Pez Co. on account.Sold $1,000 of merchandise to Omaha Corporation, who paid by credit card. Thecredit card company charges Marshall a fee of 2% on credit card sales.October 3October 12 Sold $17,000 of merchandise to Wexler Enterprises on account.October 16 Magnolia paid the balance of what it owed for the purchase on October 7.October 31 Wexler paid the balance of what it owed for the purchase on October 12.October 7 Sold $32,000 of merchandise to Magnolia Company on account.October 8 Pez paid the balance of what it owed for the purchase on October 1.Requirements1. Record Marshall’s transactions, including the cost of goods sold entry for each sale.2. Calculate the…
(Learning Objectives 1, 3: Apply GAAP for proper revenue recognition; accountfor sales discounts) At Hometown Arts, gross sales for the month included:Sales on account (2/10, n/30) $150,000Credit card sales (3% credit card fee) $200,000Half of the sales on account were paid within the discount period; the other accounts were paidin full by the end of the month.Requirements1. Journalize the sales on account, the credit card sales, and the cash payments on accountreceived during the month.2. Calculate the net sales revenue for the month
During its first year of operations, Fall Wine Tour earned net credit sales of $311,000.
S9-6 Applying the allowance method (percent-of-sales) to account for
Industry experience suggesis ibst bad debts will amount to 3% of net credit sales.
At December 31, 2018, acceanis receivable total $44,000. The company uses the
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1. Journalize Fall Wine Tour's kad Debts Expense using the percent-of-sales method.
2. Show how to report accounts receivable on the balance sheet at December 31.
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Learning Objective
Chapter 7 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8BPCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Aging of accounts receivable allowance method...Ch. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Accounting for notes receivable (Learning...Ch. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Financial Analysis Purpose: To help familiarize...Ch. 7 - Industry Analysis Purpose: To help you understand...Ch. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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- . (Learning Objectives 1, 3: Apply GAAP for proper revenue recognition; accountfor sales discounts) Preston Industrial Supply offers terms of 2/10, n/30 to its wholesalecustomers. Preston’s cost of goods sold is 25% of sales. The company had the followingtransactions during October:October 1 Sold $6,000 of merchandise to Penzey Co. on account.Sold $2,000 of merchandise to Brownlee Corporation, who paid by credit card.The credit card company charges Preston a fee of 2% on credit card sales.October 3October 12 Sold $13,000 of merchandise to Wolf Enterprises on account.October 16 Marigold paid the balance of what it owed for the purchase on October 7.October 31 Wolf paid the balance of what it owed for the purchase on October 12.October 7 Sold $23,000 of merchandise to Marigold Company on account.October 8 Penzey paid the balance of what it owed for the purchase on October 1.Requirements1. Record Preston’s transactions, including the cost of goods sold entry for each sale.2. Calculate the…arrow_forward(Learning Objective 5: Evaluate collectibility using the allowance for uncollectibleaccounts) During its first year of operations, Spring Garden, Inc., had sales of $439,000, all onaccount. Industry experience suggests that Spring Garden’s uncollectibles will amount to 4% ofcredit sales. At December 31, 2018, accounts receivable total $59,000. The company uses theallowance method to account for uncollectibles.1. Make Spring Garden’s journal entry for uncollectible-account expense using thepercent-of-sales method.2. Show how Spring Garden should report accounts receivable on its balance sheet atDecember 31, 2018.arrow_forward(Learning Objectives 1, 2, 3, 4, 5: Apply GAAP for proper revenue recognition;account for sales allowances; account for sales discounts; account for accounts receivable;write off account; estimate uncollectible account expense)Bowerston Variety Store had the following balances as of November 1:Accounts Receivable $5,100Allowance for Uncollectible Accounts $360The following selected transactions occurred at Bowerston Variety Store during the month ofNovember:November 3 Sold $300 of merchandise to Martino’s Inc., which paid for the items in cash.The items cost Bowerston $120.Sold $600 of merchandise to Liberty Co., which paid by credit card. The creditcard company charges Bowerston a fee of 2% on credit card sales. Bowerston’scost of this merchandise was $245.November 5Sold $900 of merchandise to Black River Inc., on account. Terms were 2/10,net 30. Bowerston’s cost of this merchandise was $387.November 12November 18 Willow Creek reported that some of the merchandise received was in a…arrow_forward
- (Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales allowances) Niagara Jewelry sells to retailers who then resell the products. Niagaradoes not offer sales discounts for early payment; it asks that customers pay in full within15 days or at the point of sale with a credit card. The company had the following selectedtransactions during July:July 2 Sold $150,000 of merchandise to Lakeside Jewels on account.Sold $12,000 of merchandise to Superior Crystals, which paid by credit card. Thecredit card company charges Niagara a fee of 2% on credit card sales.July 17Shining Stones noticed that some of the merchandise received was damaged, so itreturned $17,000 worth of merchandise to Niagara.July 30July 3July 16July 19Shining Stones paid the balance of what it owed for the purchase on July 17.Lakeside Jewels paid the balance of what it owed for the purchase on July 2.Sold $185,000 of merchandise to Shining Stones on account.Requirements1. Journalize Niagara’s…arrow_forward(Learning Objectives 1, 4, 5, 6: Apply GAAP for revenue, receivables,collections, and uncollectibles using the percent-of-sales method; account for notesreceivable) Hopewell Shipping Corporation is an overnight shipper. Since it sells on credit, thecompany cannot expect to collect 100% of its accounts receivable. At October 31, 2018, and2019, respectively, Hopewell reported the following on its balance sheet (in millions of dollars):October 31,2019 2018Accounts receivable.................................................. $4,200 $4,000Less: Allowance for uncollectible accounts...............Accounts receivable, net........................................... $4,030 $3,840(170) (160)During the year ended October 31, 2019, Hopewell earned service revenue and collected cashfrom customers. Assume uncollectible-account expense for the year was 5% of service revenueon account and Hopewell wrote off uncollectible receivables and made other adjustments as necessary (see below). At year-end,…arrow_forwardE5-18A. (Learning Objective 5: Apply GAAP for uncollectible receivables) At December 31,2018, Waco Travel Agency has an Accounts Receivable balance of $93,000. Allowance forUncollectible Accounts has a credit balance of $870 before the year-end adjustment. Servicerevenue (all on account) for 2018 was $800,000. Waco estimates that its uncollectible-accountexpense for the year is 1% of service revenue. Make the year-end entry to record uncollectibleaccount expense. Show how Accounts Receivable and Allowance for Uncollectible Accountsare reported on the balance sheet at December 31, 2018.arrow_forward
- (Learning Objective 5: Evaluate collectibility using the allowance for uncollectibleaccounts) At the end of the current year (before adjusting entries), Autumn Corporation hada balance of $76,000 in Accounts Receivable and a credit balance of $11,000 in Allowance forUncollectible Accounts. Service revenue (all on credit) for the year totaled $490,000.RequirementsConsider each of the following two independent situations.1. Using the percent-of-sales method, calculate the amount of Uncollectible-Account Expenseif Autumn Corporation estimates its uncollectible-account expense using a rate of 2% ofcredit sales. What is the ending balance of the Allowance for Uncollectible-Accounts underthis scenario?2. Now assume that Autumn Corporation uses the aging-of-receivables method. AutumnCorporation estimates that its Allowance for Uncollectible Accounts should have a creditbalance of $21,000. Calculate the amount of its Uncollectible-Account Expense. What isthe ending balance of the Allowance for…arrow_forwardE5-13A. (Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales allowances) Lakewood Jewelry sells to retailers who then resell the products.Lakewood does not offer sales discounts for early payment; it asks that customers pay infull within 15 days or at the point of sale with a credit card. The company had the followingselected transactions during July:July 2July 3July 16July 17July 19July 30Sold $50,000 of merchandise to Oceanside Jewels on account.Sold $10,000 of merchandise to Brilliant Crystals, which paid by credit card.The credit card company charges Lakewood a fee of 2% on credit card sales.Oceanside Jewels paid the balance of what it owed for the purchase on July 2.Sold $65,000 of merchandise to Precious Stones on account.Precious Stones noticed that some of the merchandise received was damaged, so itreturned $5,000 worth of merchandise to Lakewood.Precious Stones paid the balance of what it owed for the purchase on July 17.Requirements1.…arrow_forwardP5-63A (Learning Objectives 2, 3, 4: Apply GAAP for revenue, receivables, collections, and uncollectibles using the percent-of-sales method) This problem takes you through the accounting for sales, receivables, and uncollectibles for Quick Mail Corp., the overnight shipper. By selling on credit, the company cannot expect to collect 100% of its accounts receivable. At July 31, 2012, and 2013, respectively, Quick Mail Corp. reported the following on its balance sheet (in millions of dollars): July 31, 2013 2012 Accounts receivable. Less: Allowance for uncollectible accounts. . $3,690 (119) $3,430 (160) $3,270 Accounts receivable, net $3,571 During the year ended July 31, 2013, Quick Mail Corp. earned service revenue and collected cash from customers. Assume uncollectible-account expense for the year was 4% of service revenue and that Quick Mail wrote off uncollectible receivables. At year-end, Quick Mail ended with the foregoing July 31, 2013, balances. • Requirements 1. Prepare…arrow_forward
- Bennett Enterprises issues a $600,000, 45-day, 6%, note to Spectrum Industries for merchandise inventory. Assume a 360 days in a year. If required, round your answers to the nearest dollar. If an amount box does not require an entry, leave it blank. Question Content Area a. Journalize Bennett Enterprises’ entries to record: the issuance of the note. the payment of the note at maturity. Transaction Account Debit Credit 1. 2. Feedback Area Feedback Question Content Area b. Journalize Spectrum Industries’ entries to record: the receipt of the note. the receipt of the payment of the note at maturity. Transaction Account Debit Credit 1. 2.arrow_forward(Learning Objectives 4, 5: Account for accounts receivable and uncollectibleaccounts) Perform the following accounting for the receivables of Hawkins and Harris, a CPAfirm, at December 31, 2018.Requirements1. Set up T-accounts and start with the beginning balances for these T-accounts:■ Accounts Receivable, $104,000■ Allowance for Uncollectible Accounts, $12,000Post the following 2018 transactions to the T-accounts:a. Service revenue of $695,000, all on accountb. Collections on account, $720,000c. Write-offs of uncollectible accounts, $8,000d. Uncollectible-account expense (allowance method), $15,0002. What are the ending balances of Accounts Receivable and Allowance for UncollectibleAccounts?3. Show how Hawkins and Harris will report accounts receivable on its balance sheet atDecember 31, 2018.arrow_forwardE5-57 O E-F:5-23 Journalizing sales transactions (Learning Objective 3) Journalize the following sales transactions for Antique Mall. Explanations are not required. The company estimates sales returns at the end of each month. Jan. 4 & 4 7 8 13 20 20 29 Sold $16,000 of antiques on account, credit terms are n/30, to Cavalli Designs. Cost of goods is $8,000. Received a $300 sales return on damaged goods from Cavalli Designs. Cost of goods damaged is $150. Antique Mall received payment from Cavalli Designs on the amount due from Jan. 4, less the return. Sold $4,900 of antiques on account, credit terms are 1/10, n/45, FOB destination, to White Furniture. Cost of goods is $2,450. Antique Mall paid $70 on freight out to White Furniture. Received payment from White Furniture on the amount due from Jan. 20, less the discount. 4+ 8 144 9 ▶|| F5-57 U A لا insert ← prt sc backspace 9:28 PM 9/21/2022 delete homarrow_forward
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