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BE 7-18 Discounting a note L07-8 On March 31, Dower Publishing discounted a $30.

ID: 2591787 • Letter: B

Question

BE 7-18 Discounting a note L07-8 On March 31, Dower Publishing discounted a $30.000 note at a local bank. The note was dated February 28 required the payment of the principal amount and much cash will Dower receive from the bank on March 31? and interest at 6% on May 31 The bank's discount rate is 8%. How BE 7-19 Receivables turnover Camden Hardware's credit sales for the year were $320,000. Accounts receivable at the beginning and end of the year were $50.000 and $70,000, respectively. Calculate the accounts receivable turnover ratio and the average collection period for the year. L07-8 BE 7-20 Bank Reconciliation . Appendix 7A Marin Company's general ledger indicates a cash balance of $22.340 as of September 30. 2018. Early in October Marin received a bank statement indicating that during September Marin had an NSF check of $1,500 returned to a customer and incurred service charges of $45. Marin also learned it had incorrectly recorded a check received from a customer on September 15 as $500 when in fact the check was for $550. Calculate Marin's cor- rect September 30, 2018, cash balance. Shan Enterprises received a bank statement listing its May 31, 2018, bank balance as $47,582. Shan determined BE 7-21 Bank Reconciliation Appendix 7A hecks outstanding of $7.224. Calculate Shan's correct May 31, 2018, cash balance. BE 7-22 Impairments of Accounts Receivable Einhorn Industries believes it is not probable that Thaler Inc. will default on an account receivable, but given the possibility of default, Einhorn believes it will collect $30,000 less than the receivable's current carrying value on Einhorn's balance sheet. Under current GAAP, how much impairment charge should Einhorn recognize? Appendix 7B Assume the same facts as in BE 7-22, but that Einhorn determines credit losses using the CECL model intro- duced in ASU 2016-13 and required in 2020. How much credit loss should Einhorn recognize? BE 7-23 Credit Losses on Accounts Receivable (CECL Model) e Appendix 7B

Explanation / Answer

7-18

Maturity value                        30,450

Discount                                      (406)

Cash proceeds                        30,044

Explanation:

Face amount                                                                             $ 30,000

Interest to maturity ($30,000 × 6% × 3/12)                                450

Maturity value                                                                            30,450

Discount ($30,450 × 8% × 2/12)                                                 (406)

Cash proceeds                                                                         $ 30,044

7-19

A

Receivables Turnover Ratio

Net credit sales/Average accounts receivable (net) =Receivables turnover ratio

320,000/60,000=5.33times

B

Total number of days/Receivables turnover ratio=Average collection period

365/5.33=68days


Explanation:

Receivables turnover= $320,000/$60,000*= 5.33 times

($50,000 + $70,000) ÷ 2 = $60,000*

Calculate Marin’s correct September 30, 2018, cash balance.

Balance per books                                               $22,340

Add: Error in recording cash receipt                           50

Deduct: NSF checks                                              (1,500)

Service charges                                                           (45)

Corrected cash balance                                       20,845

Explanation:

Error in recording cash receipt ($550 – 500) = $50

7-21

Calculate Shan’s correct May 31, 2018, cash balance.

Balance per bank statement                                     47,582

Add: Deposits outstanding                                          2,500

Deduct: Checks outstanding                                     (7,224)

Corrected cash balance                                             42,858