intermediate accounting.

Question One--Aging of Receivables Venkman Laboratories, Inc. currently has trade receivables from six different companies. The age breakdown of each respective company's receivables is listed below. Determine the balance of each company's receivables account and the total amount of outstanding receivables within each time period. Year-end 30 days or Over 120 Name of Customer 31-60 days 61-90 days 91-120 days Balance less days Allen Manufacturing $64,200 $ 16,100 Boddington Brewery $ 38,500 Charisma, Inc. $19,100 $21,900 Daydream Corporation 8,800 10,200 Elegant Designs 65,000 26,300 46,000 0 Fredrick Brothers 8,900 10,900 6,600 1 Total 2 3 Use the table below to determine the target balance of Venkman Laboratories, Inc.'s allowance for bad debt. 4 Required Age of Receivable Amount Allowance Uncollectible 15 Balance 16 30 days or less 2% 17 31-60 days 4% 18 61-90 days 8% 19 91-120 days 25% 20 Over 120 days 50% 21 Year end balance of allowance for bad debt 22 23 Prior to making this adjustment, Venkman Laboratories, Inc. had a balance of $13,190 in its allowance for bad debt 24 account. Record the vear end adiusting entry to adiust the firm's allowance to its new target balance. AoR Sec. Borrow Factor Note Receivable G A B D E 5 Allen Manufacturing $64,200 $ 16,100 6 Boddington Brewery 38,500 7 Charisma, Inc. $19,100 $21,900 8 Daydream Corporation 8,800 10,200 9 Elegant Designs 65,000 26,300 46,000 10 Fredrick Brothers 8,900 10,900 6,600 11 Total 12 13 Use the table below to determine the target balance of Venkman Laboratories, Inc.'s allowance for bad debt. 14 Required % Age of Receivable Amount Allowance 15 Uncollectible Balance 16 30 days or less 2% 17 31-60 days 18 61-90 days 8% 19 91-120 days 25% 20 Over 120 days 50% 21 Year end balance of allowance for bad debt 22 23 Prior to making this adjustment, Venkman Laboratories, Inc. had a balance of $13,190 in its allowance for bad debt 24 account. Record the year end adjusting entry to adjust the firm's allowance to its new target balance, 25 26 27 28 29 AOR Sec. Borrow Factor Note Receivable B Question Two-Secured Borrowing On July 1st, Ampeg Inc. assigned $260,000 of its receivables as collateral for a $200,000 note from Citi 2 Bank. The bank-assigned terms for this secured borrowing are as such: 3 Ampeg is still responsible for collecting the receivables used as collateral. 4 * Berkshire Bank assess a 3% finance charge on the receivables used as collateral. The note has a 9% APR. 6 Ampeg Inc. will make monthly payments to Citi once that months receivables are collected. Record the following journal entries related to Ampeg Inc.'s secured borrowing through Citi 7 Bank: 8 9 Jul 1) On Ampeg's books, record the receipt of cash from the secured note. 10 4 5 11 12 13 14 Jul 31) During July, Ampeg collected $93,000 of accounts receivables less $3,000 of 15 discounts. Ampeg also accepted sales returns of $2,000 during the period. 16 17 18 19 20 21 Aug 1) Ampeg remitted the actual cash collected from receivables to Citi and paid accrued 22 interest on the note. AOR Sec. Borrow Factor Note Receivable B D Aug 1) Ampeg remitted the actual cash collected from receivables to Citi and paid accrued 22 interest on the note. 23 24 25 26 27 Aug 31) During August, Ampeg collected $82,000 of receivables less discounts of $2,000. 28 Ampeg also and wrote off $3,000 worth of bad debt. 29 30 31 32 3 3 33 34 Sep 1) Ampeg remitted cash collections from the collateralized accounts receivable to Citi 35 and paid interest accrued on the note. 36 37 38 39 40 Sep 30) Ampeg collected $100,000 of accounts receivable less discounts of $5,000. Ampeg also and wrote off $1,000 worth of bad debt, and accepted sales returns of $4,000 during 41 the period. Sec. Borrow Factor Note Rersivahin AOR L12 A B Sep 1) Ampeg remitted cash collections from the collateralized accounts receivable to Citi 35 and paid interest accrued on the note. 36 37 38 39 40 Sep 30) Ampeg collected $100,000 of accounts receivable less discounts of $5,000. Ampeg also and wrote off $1,000 worth of bad debt, and accepted sales returns of $4,000 during 41 the period. 42 43 44 15 46 47 48 Oct 1) Ampeg remitted to Citi enough cash collections from receivables to pay off the 49 remaining balance of the note. Ampeg also paid any applicable interest. 50 51 52 53 54 55 AOR Sec. Borrow Factor Note Receivable AZU B D E 1 Question Three-Factoring Receivables On December 1st, XYZ Company factored $500,000 worth of receivables to Commercial Factors, Inc. Commercial Factors assessed a finance charge equal to 5% of the receivables. XYZ Company is a newer corporation and Commercial Factors retained an unusally high amount of 10% of the receivables for probable adjustments. These receivables were sold with recourse and XYZ Company has determined that the fair value of the recourse provision is $5,000. Record XYZ's journal entry for 2 the receipt of cash from factoring these receivables. 3 4 Determine the amount of cash that XYZ Company will receive: 5 Receivables Book Value 6 Less: Amount Retained by Factor 7 Less: Finance Charge 8 Cash Received 9 Determine the net proceeds on sale of receivables: 10 Cash Received 11 Add: Due from Factor 12 Less: Recourse Liability 13 Net Proceeds 14 Determine the loss on sale of receivables! 15 Receivables Book Value 16 Less: Net Proceeds 17 Loss on Sale of Receivables 18 Record the entry: 19 20 21 22 23 AOR Sec. Borrow Factor Note Receivable 1 Question Four-Discounted Notes Receivable On January 1st, 2021, Crushed and Crooked Ice Makers, Inc. issued a $30,000, five-year note receivable to Coolio Corporation. The stated rate of interest on this note is 6% but the market rate of interest at the time of issuance was 8%. Coolio will make interest payments on the note every December 31st, and Crushed and Crooked Ice Makers, Inc. will amortize any discount (or 2 premium) on the note using the effective interest method. 3 Determine the fair value of the note 4 Present Value of Principal 5 Add: PV of Interest 6 Fair Value of Note 7 Prepare the amortization table for this note Interest Discount Carrying Cash Received B Revenue Amortized Amount 9 Date of issue (1-1-21) 10 End of Year 1 (12-31-21) 11 End of Year 2 (12-31-22) 12 End of Year 3 (12-31-23) 3 End of Year 4 (12-31-24) 14 End of Year 5 (12-31-25) 15 Total 16 Record the January 1st, 2021 journal entry for the issuance of the note 17 18 19 20 21 Record the December 31st, 2021 journal entry for the receipt of interest from Coolio 22 AOR Sec. Borrow Factor Note Receivable Tuna hora M26 A B C D E End of Year 2 (12-31-22) End of Year 3 (12-31-23) End of Year 4 (12-31-24) End of Year 5 (12-31-25) Total Record the January 1st, 2021 journal entry for the issuance of the note 11 12 13 74 15 16 17 78 19 20 21 22 23 24 25 Record the December 31st, 2021 journal entry for the receipt of interest from Coolio Bonus: Assume that Coolio will repay the principal owed on the note when it makes its final interest payment on December 31st, 2025. Record Crushed and Crooked Ice Makers' journal entry for the receipt of the final interest payment plus the repayment of the note's principal from Coolio. 26 27 28 29 30 31 AOR Sec. Borrow Factor Note Receivable HE Tupo horo to coarch