On December 31, 2013, before the yearly financial statements were prepared, the controller of the STN Corporation reviewed certain transactions that affected accounts receivable and the allowance for doubtful accounts. The controller first examined the December 31, 2012, balance sheet (Exhibit 1). A subsequent review of the year's transactions applicable to accounts receivable revealed the items listed below: 1. Sales on account during 2013 amounted to $9,965,575. 2. Payment received on accounts receivable during 2013 totaled $9,685,420. 3. During the year, accounts receivable totaling $26,854 were deemed uncollectible and were written off. 4. Two accounts that had been written off as uncollectible in 2012 were collected in 2013. One account for $2,108 was paid in full. A partial payment of $1,566 was made by the Hollowell Company on another account that originally had amounted to $2,486. The controller was reasonably sure this account would be paid in full because reliable reports were circulating that the trustee in bankruptcy for the Hollowell Company would pay all obligations 100 cents on the dollar. 5. The Allowance for Bad Debts was adjusted to equal 3% of the balance in Accounts Receivable at the end of the year. Questions: 1. Analyze the effect of each of these transactions in terms of its effect on Account Receivable, Allowance for Doubtful Accounts, and any other account that may be involved, and prepare necessary journal entries. 2. Give the correct totals for Accounts Receivable and the Allowance for Doubtful Accounts as of December 31, 2013, after the transaction affecting them had been recorded. 3. Calculate the current ratio, acid-test ratio, and days' receivables figures as of December 31, 2013. Assume that the amounts for the items other than those described in the case are the same as on December 31, 2012.

STN CORPORATION Balance Sheet December 31, 2013 ASSETS Current Assets $671,344 Cash Accounts Receivable S988.257 Less: Allowance for doubtful accounts S29.648 $958,609 Treasury Securities at cost S274,060 $1,734,405 Inventories Total Current Assets S3,638,418 Other Assets $412,294 Investments Land $186,563 Building S2,405,259 Less: Accumulated depreciation S663,379 $1.741.880 Factory Machinery S3.425,585 Less: Accumulated Depreciation S1,642,358 S1,783,227 Furnitures and Fixtures $56,484 $16,084 Less: Accumulated Depreciation S40.400 Automotive equipment S58.298 Less: Accumulated Depreciation $37.156 $21,142 Office Machines S42,534 Less: Accumulated Depreciation S28,005 $14,529 Tools $61.294. $56.250 Patent $100.190 Prepaid Expenses TOTAL ASSETS $8,031,871 LIABILITIES and PROPRIETORSHIP Current Liabilities Accounts payable S510,000 $709,354 Taxes payable Accrued salaries, wages, and interest $141,478 Long-term debt, due within one year $69.300 Total Current Liabilities S1,430.132 Non-Current Liabilities $1,247,368 Long-term debt Shareholder's Equity Common Stock S2,503.275 Retained Earnings S2,851.096 Total shareholder's equity S5,354,371 Total Liabilities and Shareholder's Equity $8,031.871