CASH, RECEIVABLES, AND INVENTORY 271 Use the following facts to answer Questions

Question

CASH, RECEIVABLES, AND INVENTORY 271 Use the following facts to answer Questions 83-84 87. Assuming the allowance account had a previous bal Hondo received from a customer a 1-year $400,000 note bearing annual interest of 10%. After holding the note for 6 months, Hondo discounted the note at Second Republic Bank at an effective interest rate of 1396. ance prior to adjustment of $500 debit balance rather than $700 credit, how much should Hackett Corp. record for the ending allowance account balance at December 31, Year 5? A. $4,100 B. $4,600 C. $5,100 D. $0 83. How much is the maturity value of the note? A. $440,000 B. $452,000 C. $497,200 D. $400,000 88. Assuming the allowance account had a previous bal ance prior to adjustment of $500 debit balance rather than $700 credit, how much should Hackett Corp. record for bad debt expense in Year 5? A. $4,100 84. How much cash did Hondo receive from the bank? A. $440,000 B. $402,800 C. $371,400 D. $411,400 C. $5,100 D. $0 89. When a company uses the allowance method to Use the following facts to answer Questions 85-88: On December 31, Year 5, the Hackett Corp. had a credit balance of $700 in its allowance for doubt- ful account for bad debts, what effect does a collection of a previously written off account have on bad debt expense and allowance for doubtful accounts? A. Bad debt expense, no effect; allowance for doubt accounts prior to consideration of the following aging schedule that was prepared at year-end. ful accounts, increase B. Bad debt expense, increase; allowance for doubt Estimated Uncollectible ful accounts, decrease C. Bad debt expense, decrease; allowance for doubt Amount $50,000 $10,000 $5,000 ful accounts, no effect D. Bad debt expense, no effect; allowance for doubt 0-30 days 31-60 days Over 60 days ful accounts, no effect $2,500 90. Miller Corp. adjusted its allowance for doubtful accounts at December 31, Year 11. The general led- ger balances for accounts receivable and the related allowance account were $2,000,000 and $75,000 respectively. In addition, sales on credit for Year 11 were $3,000,000. Miller uses a balance sheet approach to estimate its bad debt expense, and for Year 11 estimates that 4% of accounts receivable will be uncollectible. What amount should Miller record as an adjustment to its allowance for doubtful accounts at December 31, Year 11? A. $5,000 B. $45,000 C. $120,000 D. $3,000 85. What amount should Hackett Corp. report as the ending balance in the allowance account at December 31, Year 5? $4,600 credit A. B. $4,600 debit C. $3,900 credit D. $5,300 credit 86. How much should Hackett Corp.record for bad debt expense in Year 5? A. $4,600 B. $3,900 C. $5,300 D. $700

Explanation / Answer

Answer 83 -A. $440,000 Note          400,000 Interest on Note - $400,000 X 10%            40,000 Total Maturity Value          440,000 Answer 84 -D. $411,400 Total Maturity Value of Note          440,000 Less: Discount Given - $420,000 X 13% X 6/12            28,600 Cash Received From Bank          411,400 Answer 85 -A. $4,600 (Credit) Total 0-30 Days 31-60 Days Over 60 Days Accounts Receivable            65,000          50,000             10,000                   5,000 Estimated Uncollectible 3% 6%                   2,500 Amount Uncollectible              4,600            1,500                   600                   2,500 Answer 86 - B. $3,900 Bad Debt Expense = $4,600 - $700 = $3,900

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.