A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1, including a $720 sale to Marshall Fresh. On December 31, Year 1, the company estimated its bad debts at 1.5% of its credit sales. On June 1, Year 2, the company wrote off, as uncollectible, the $720 account of Marshall Fresh. On December 21, Year 2, Marshall Fresh unexpectedly paid his account in full. Prepare the necessary journal entries: (a) On December 31, Year 1, to reflect the estimate of bad debts expense. (b) On June 1, Year 2, to write off the bad debt. (c) On December 21, Year 2, to record the unexpected collection.
What will be an ideal response?
Year 1 | ? | ? | ? |
| Dec. 31 | Bad Debts Expense | 11,100 | ? |
| ? | Allowance for Doubtful Accounts | ? | 11,100 |
| ($740,000 * .015) | ? | ? | |
| Year 2 | ? | ? | ? |
| June 1 | Allowance for Doubtful Accounts | 720 | ? |
| ? | Accounts Receivable-Marshall Fresh | ? | 720 |
| ? | ? | ? | ? |
| Dec. 21 | Accounts Receivable-Marshall Fresh | 720 | ? |
| ? | Allowance for Doubtful Accounts | ? | 720 |
| ? | ? | ? | ? |
| 21 | Cash | 720 | ? |
| ? | Accounts Receivable-Marshall Fresh | ? | 720 |
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Rachel Robinson owns a small retail store in Cairo, Georgia. The following summary information regarding expectations for the month of January is provided: As of December 31 there is $1,000 in the bank and the balance in accounts receivable is $5,000. Budgeted cash and credit sales for January are $6,000 and $4,000, respectively. Ninety percent of credit sales are collected in the month of sale and the remainder is collected in the following month. Rachel's suppliers do not extend credit. Cash payments for January are expected to be $24,000. Rachel has a line of credit that enables the store to borrow funds on demand. However, funds must be borrowed on the first day of the month and interest paid in cash on the last day of the month. Rachel's bank charges annual interest of 12% per year.
Rachel desires a minimum $1,000 cash balance at the end of each month.Required:1) Compute the amount of funds that needs to be borrowed.2) Compute the amount of interest expense that will appear on the January 31 pro forma income statement. What will be an ideal response?
Who holds a valid claim against someone filing a chapter 11 bankruptcy?
a. Examiner b. Debtor c. Creditor d. Adjuster
What is a special order? What factors does a company consider when examining a special order?
During its first five years of operations, Della Manufacturing reports net income and pays dividends as follows. Calculate the balance of retained earnings at the end of each year. Note that retained earnings will always equal $0 at the beginning of year 1. YearNetIncomeDividendsRetainedEarnings1$1,700$1,000________22,7001,000________33,2002,000________45,4002,000________57,6003,000________
What will be an ideal response?