excercise 7-5
excercise 7-3
B D G H E7-5 (Record Sales Gross and Net) On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $3,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $90 terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company. Instructions: (a) Prepare journal entries on the Arnold Company books to record all the events noted above under each of the following bases: (1) Sales and receivables are entered at gross selling price. Jun 3 Account Title Account Title Account Title 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 0 1 2 3 Jun 12 Account Title Account Title Account Title (2) Sales and receivables are entered at net cash discounts. Jun 3 Account Title Account Title Account Title Jun 12 Account Title Account Title Account Title 5 6 7 (b) Prepare the journal entry under basis 2. assuming that Chester Company did not remit payment until Inty 29 Instructions Exercise 7.5 Problem 73 eady A D E G H 20 Account Title 21 22 Jun 12 Account Title 23 Account Title 24 Account Title 25 26 (2) Sales and receivables are entered at net cash discounts. 27 28 Jun 3 Account Title 29 Account Title 30 Account Title 31 32 Jun 12 Account Title 33 Account Title 34 Account Title 35 36 (b) Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment 87 untilJuly 29. 38 39 Jul 29 Account Title 90 Account Title 1 Account Title 12 3 14 15 B 7 P7-3 (Bad-Debt Reporting-Aging) Manilow Corporation operates in an industry that has a high rate 8 of bad debts. Before any year-end adjustments, the balance in Manilow's Accounts Receivable 9 was $575,000 and the Allowance for Doubtful Accounts had a credit balance of 10 $40,000 The year-end balance reported in the balance sheet for the Allowance for Doubtful 11 Accounts will be based on the aging schedule shown below. 12 13 Days Account Outstanding Amount Probability of Collection 14 Less than 16 days $300,000 0.98 15 Between 16 and 30 days 120.000 0.90 16 Between 31 and 45 days 80 000 0.85 17 Between 46 and 60 days 40,000 0.80 18 Between 61 and 75 days 20,000 0.55 19 Over 75 days 15.000 0.00 20. 21 |Instructions: 22 (a) What is the appropriate balance for the Allowance for Doubtful Accounts at the year-end? 23 24 Days Account Outstanding Amount Probability of Collection Doubtful Acct 25 0-15 days $300,000 0.98 Formu 26 16.30 days 120.000 0.90 Formu 27 31-45 days 80,000 0.85 Formu 28 46.60 days 40,000 0.80 Formu 29 61 - 75 days 20.000 0.55 Formu 0 Over 75 days 15.000 0.00 Form 1 Formu 2 3 Enter text answer here 1 H Formula B C D E F G 33 Enter text answer here 34 35 36 37 38 (b) Show how Accounts Receivable would be presented on the balance sheet. 39 Account Title Amount 40 Less: Account Title Amount 41 Text Title 42 43 (c) What is the dollar effect of the year-end bad debt adjustment on the before tax income? 44 Enter text answer as desired here 45 46 Text Title 47 Text explanation as required. 48 19 Text Title 50 51 52 Amount Amount Formula
