(a)

On March 2, Monroe Company received order of $1,500,000 of merchandise

to Churchill Company, credit terms 2/10, n/30. Invoice date is marked as March 2 for cash discount purpose.

The cost of the merchandise was $1,000,000.The merchandise was delivered on March 5. The shipping cost was $50,000(paid on March 5) and shipping term was

FOB shipping point

(b)

On March 6, Churchill Company returned $300,000 of the merchandisepurchased on March 2 because it was defective.

The cost of the returned merchandise was $240,000, but no value to Monroe (not resell-able and no other usage)

(c)On March 7, Monroe Company received the balance due from Churchill

Company

How much cash did Monroe receive from Churchill Company on March 7?

2. Under average cost, calculate the Cost of goods sold on 10/1.

Round the average unit cost into two decimal points.

Show your work clearly.

3. At December 31, 2007, Braddock Company had a credit balance of $200 in

the Allowance for Doubtful Accounts. During 2008, Braddock wrote off accounts

totaling $300. One of those accounts ($50) was later collected.

The ledger of Braddock Company at the end of 2008 shows that Sales, $1,500 and Sales discount of $100. And among net sales, 60% is credit net sales.Baddebt expense is expected to 3% ofcredit net sales. What is ending balance of allowance for doubtful accounts after you record bad debt expense?

4. Under the allowance method that is based on percentage of accounts

receivable, what would be the bad debt expense of Elburn in 2006?

Assume that the trial balance of ADA shows the credit balance of

$220. Total accounts receivable is $100,000.

5. Describe the philosophical difference between percentage of sales method vs

percentage of receivable method. Also comments on which method is better (you

may want to mention circumstances where one method is better than other), yet

why the inferior method is allowed in accounting for ADA account?

6. Determine the total interest revenue recorded in 12/31/2011, and show the

relevant journal entries.Show your work clearly.