22. (4 points) On December 31, 2010, M Company sold some inventory to X Company in exchange for a $25,000 10% note receivable. The note principal will be collected as follows - $5,000 on December 31, 2011, $10,000 on December 31, 2012 and $5,000 on December 31, 2013. Interest will be collected every December 31 starting December 31, 2011. Under normal market conditions, M would only accept a note with a stated rate of 12%. The cost of the inventory sold was $10,000. Prepare the journal entries that M should make on 12-31-10, 12-31-11, 12-31-12, and 12-31-13. 23. (1 point) Dynasty Company uses the gross method to record sales made on credit. On August 1, 2010, Dynasty made credit sales of $200,000 with terms of 2/15, n/60. On August 12, 2010, Dynasty received full payment for the August 1, 2010 sale. Prepare the journal entries Dynasty should make on August 1, 2010 and August 12, 2010. 24. (4 points) A trial balance before adjustments included the following: Debit Credit Sales $500,000 Sales returns and allowance $10,000 Accounts receivable 50,000 Allowance for doubtful accounts 5,000 Prepare the proper adjusting journal entry for each of the following situations: o The estimate of uncollectibles is made by taking 4% of gross sales o The estimate of uncollectibles is made by taking 5% of net sales o The estimate of uncollectibles is made by taking 14% of gross accounts receivable o The estimate of uncollectibles is made by taking 13% of gross accounts receivable AND the allowance for doubtful accounts has a debit balance of $600 25. (1 point) Ace Co. prepared an aging of its accounts receivable at December 31, 2010 and determined that the net realizable value of the receivables was $450,000. Additional information is available as follows: Allowance for uncollectible accounts at 1/1/10credit balance $ 38,000 Accounts written off as uncollectible during 2010 44,000 Accounts receivable at 12/31/10 530,000 Uncollectible accounts recovered during 2010 15,000 For the year ended December 31, 2010, what would be Ace's uncollectible accounts expense? 26. (1 point) Nenn Co.'s allowance for uncollectible accounts was $95,000 at the end of 2010 and $90,000 at the end of 2009. For the year ended December 31, 2010, Nenn reported bad debt expense of $13,000 in its income statement. What amount of write-offs did Nenn record during 2010? 27. (2.5 points) Acme Co.s aging schedule as of year-end is given below: No. of Days Account is Outstanding Amount Probability of Collection 0 30 $9,000,000 99.0% 31 60 6,500,000 98.0 61 90 3,000,000 94.0 91- 120 1,200,000 80.0 121-150 600,000 70.0 over 150 days 400,000 40.0 Acme accounts for bad debts using the allowance method. At the beginning of the year, the allowance had a credit balance of $1,750,000. During the year, Acme wrote off $1,500,000 of ARs. What is Acmes bad debt expense for the year? SHOW YOUR WORK. 28. (2.5 points) The following pertains to Sheridan Company for the year ended 12-31-10. Sheridan estimates its allowance for doubtful ARs using an aging analysis. During the year, there were no subsequent collections of ARs previously written off. Gross accounts receivable, 12-31-09 $ 715,000 Gross accounts receivable, 12-31-10 $ 700,000 Provisions for uncollectible accounts recorded during the year ended 12-31-10 4% of credit sales Estimated uncollectible accounts per the aging analysis, 12-31-10 $ 225,000 Allowance for uncollectible accounts, 12-31-09 $ 239,000 Total gross sales during the year ended 12-31-10 $9,000,000 77% of Sheridans sales are made on a credit basis What amount of cash did Sheridan collect during the year ended 12-31-10 relating to its total sales? SHOW YOUR WORK. 29. (2 points) Oak Company sold $1,200,000 of its accounts receivable to Stone Factors Incorporated. Stone assesses a 6% finance charge of the receivables sold and Stone retains, for possible adjustments, an amount equal to 8% of the receivables sold. Prepare the journal entry Oak should make if: o The receivables were sold on a without-recourse basis. o The receivables were sold with recourse and Oak estimates a recourse obligation of $24,000. 30. (3 points) On December 31, 2010, Pauline Company signed a 3%, $5,000,000 note with Norman City Bank. The market rate of interest on 12-31-10 was 4%. The note requires annual interest payments every December 31 starting on 12-31-11 and the note is scheduled to mature on 12-31-21. During 2015, Paulines financial situation worsened and Norman estimated that as of 12-31-15, it would only be able to collect $3,000,000 from Pauline on 12-31-18. Norman did estimate, however, that Pauline would continue to make the required annual interest payments. o Determine the amount of cash Norman gave Pauline on 12-31-10. o Prepare the adjusting journal entry Norman should make on 12-31-15 as a result of the impairment. 31. (3 points) Benson Plastics Company deposits all receipts and makes all payments by check. The following information is available from the cash records: MARCH 31 BANK RECONCILIATION Balance per bank $26,746 Add: Deposits in transit 2,100 Deduct: Outstanding checks (3,800) Balance per books $25,046 Month of April Results Per Bank Per Books Balance April 30 $27,995 $28,855 April deposits 10,784 13,889 April checks 11,600 10,080 April note collected (not included in April deposits) 3,000 -0- April bank service charge 35 -0- April NSF check of a customer returned by the bank (recorded by bank as a charge) 900 -0- Instructions (a) Calculate the amount of the April 30: 1. Deposits in transit 2. Outstanding checks (b) What is the April 30 adjusted cash balance? Show all work