Question 1.

Harvest Company has the following December 31 General Ledger Account Balances after adjustments relating to Sales and Receivables:

Sales $39,000 (of which 40% are credit sales still outstanding) Sales returns and Allowances $1,000 Miscellaneous Receivables $1,212 Allowance for Doubtful Accounts $1,502 Long term Receivables $9,014 Advances to Shareholders and Directors $4,728 Notes Receivables $2,903 (Current Portion) Bad Debt Expense is estimated as 4% of credit sales

Required 1: Assuming no other transaction happened, what is the Bad Debt Expense reported on Decmber 31st? $ 624 (my previous answer was correct)

Required 2: Assuming no other transaction happened, what is the adjusted net balance of all current Receivables at December 31st? $

(my previous answer was 19091 which was **incorrect)

Required 3: Assuming no other transaction happened, what is the adjusted net balance of Accounts Receivables at December 31st? $

(my previous answer was 14976 which was **incorrect)

Question 2.

Assume Adam borrows $1,000 from Eve and gives her a Note which matures in 6 months and the borrowing rate is 8% per annum.

Multiple Choice

a. None of the other statements are correct

b. If Adam prepares financial statements prior to the maturity date of the note, he will have to make an adjusting entry to set up the interest income earned (**Incorrect option)

c. If the note is paid on maturity then Eve will record $80 in interest income

d. If the note is paid on maturity then Eve will record $40 in interest expense

e. If the note is dishonoured on maturity then Eve will set up a receivable for more than $1,000

Question 3.

Choose the term that best matches the following description: Bases bad debt expense on an estimate of uncollectible accounts.

a. Allowance Method

b. Percentage of Credit Sales Method (**incorrect)

c. Bad debt Expense

d. None of the other alternatives are correct

e. Sales Returns and Allowances