answer all parts of the practice case
amount PRACTICE CASE receivable "nd badklts espense dLG 1,Ach, Ultimate sells hide in, their The averagn price of a home the follkwiog sales terms are availale syst is $1200 To aist customers in date Payment in full by cashoreheck. Adiscount of 2% ofthe sales invoice is allowed to encourage cash paynent at the point of sale and collecting credit card receivables As of December 31, 2010, the balances in selected current asset accounts b-Fvment using a credit card. Issuing institutions charge the retailer a fee of 4% for accepting of the sales invoice price within 30 days from the invoice date on an interest-free basis. were as follows: Debit 800,000 420,000 Credit Cash Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable-Credit Cards $16,800 300,000 During the year 2011, the following summary transactions occurred: a. Sales on a cash basis totaled $480,000 (before discounts). b. Credit card sales using bank credit cards totaled $600,000 and using nonbank credit cards totaled $200,000. e. Sales on open 30-day account totaled $980,000. d. Cash collections on open account were $900,000 and from nonbank credit cards were $320,000. e. The $9,000 account of Ron Murphy was written off as uncollectible. f. Received a check from Phil Ressler for $6,000 in full payment of his account, which had been written off as uncollectible in September 2010 & Don Johnson returned an amplifier he did not like for a credit to his account in the amount of $3.200. Johnson did not have any previous balance in his account and has agreed to apply the credit to a new amplifier, which is on special order 304 CHAPTER 7 1, 201 Increased the allowance to 6% ofthe accounts receivable outstanding as of Decem not consider the $3,200 credit balance in transaction g.) REQUIREL I. Journalize the transactions in general journal form. 2. Based on the accounts given in the problem, prepare the current asset section of the balance sheet as of December 31, 2011. 3. If Audio Ultimate used the direct write-off method of accounting for bad debts, compute the amount of total current assets as of December 31, 2011. BUSINESS DECISION AND COMMUNICATION PROBLEM ffect ofa!ternative methods for bad debts on financial statements (LG 6) Linda's Dolls corporated on January 1, 2011. After completing its first year of operations, the trial bala cluded the following selected accounts at December 31, 2011: wold appear on PRACTICE CASE ble and had debts espense (L.G 1, 3-7) Audio Ultimate sells high-end audio The erage price of a home system is $12000 To assist customers in financing their in full by cash or check. A discount of 2% of the sales invoice is allowed to a credit card issuing institutions charge the retailer a fee of 4% for accepting t of the sales invoice price within 30 days from the invoice date on an interest-free basis. the following sales terms are available encourage cash payment at the point of sale and collecting credit card receivables As of December 31, 2010, the balances in selected current asset accounts were as follows b Payment using c. Debit 800,000 420,000 Credit Cash Allowance for Doubtful Accounts Accounts Receivable-Credit Cards $16,800 300,000 During the year 2011, the following summary transactions occurred a. Sales on a cash basis totaled $480,000 (before discounts). b. Credit card sales using bank credit cards totaled $600,000 and using nonbank credit cards totaled $200,000. c. Sales on open 30-day account totaled $980,000. d. Cash collections on open account were $900,000 and from nonbank credit cards were $320,00 e. The $9,000 account of Ron Murphy was written off as uncollectible. f. Received a check from Phil Ressler for $6,000 in full payment of his account, which had been written off as uncollectible in September 2010. $3,200. Johnson did not have any previous balance in his account and has agreed to appl the credit to a new amplifier, which is on special order g. Don Johnson returned an amplifier he did not like for a credit to his account in the amount of
