Crane Company follows ASPE. It manufactures sweatshirts for sale to athletic-wear retailers. The following summary information...

Crane Company follows ASPE. It manufactures sweatshirts for sale to athletic-wear retailers. The following summary information was available for Crane for the year ended December 31, 2019:

Cash		$19,000
Accounts receivable		36,000
Inventory		85,000
Accounts payable		57,000
Accrued liabilities		24,000

Part 1

During 2020, Crane had the following transactions:

1.		Total sales were $505,000. Of the total sales amount, $265,000 was on a credit basis.
2.		On June 30, a $53,000 account receivable of a major customer was settled, with Crane accepting a $53,000, one-year, 10% note, with the interest payable at maturity.
3.		Crane collected $150,000 on accounts receivable during the year.
4.		At December 31, 2020, Cash had a balance of $18,000, Inventory had a balance of $75,000, Accounts Payable was $77,000, and Accrued Liabilities was $18,000.

Prepare summary journal entries to record the items noted above. (Round answers to 0 decimal places, e.g. 8,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Part 2

Now assume that at year end 2020, Crane enters into the following transactions related to the company’s receivables:

1.		Crane sells the note receivable to Prairie Bank for $53,000 cash plus accrued interest. Given the creditworthiness of Crane’s customer, the bank accepts the note without recourse and assesses a finance charge of 3.40%. Prairie Bank will collect the note directly from the customer.
2.		Crane factors some accounts receivable at the end of the year. Accounts totalling $36,000 are transferred to Larkspur, Inc., with recourse. Larkspur retains 6% of the balances and assesses a finance charge of 3% on the transfer. Larkspur will collect the receivables from Logo’s customers. The fair value of the recourse obligation is $3,900.

Prepare the journal entry to record the transfer of the note receivable to Prairie Bank. (Round answers to 0 decimal places, e.g. 8,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Prepare the journal entry to record the sale of receivables to Larkspur. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

SHOW LIST OF ACCOUNTS

Calculate the current ratio and the receivables turnover ratio for Crane at December 31, 2020. (Round answers to 2 decimal places, e.g. 1.25.)

Current Ratio
Accounts Receivable Turnover			times

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Crane Company follows ASPE. It manufactures sweatshirts for sale to athletic-wear retailers. The following summary information...

Crane Company follows ASPE. It manufactures sweatshirts for sale to athletic-wear retailers. The following summary information was available for Crane for the year ended December 31, 2019: Cash $19,000 Accounts receivable 36,000 Inventory 85,000 Accounts payable 57,000 Accrued liabilities 24,000 Part 1 During 2020, Crane had the following transactions: 1. Total sales were $505,000. Of the total sales amount, $265,000 was on a credit basis. 2. On June 30, a $53,000 account receivable of a major customer was settled, with...

Quest Quality Sportswear (QQS) is an athletic wear company, which manufactures boys, girls, men, and women's...

Quest Quality Sportswear (QQS) is an athletic wear company, which manufactures boys, girls, men, and women's clothing. The company is located in NC. QQS is a private company. Therefore, audited financial statements are not available to external users on the company website. At Quest Quality Sportswear, the following changes took place on the company's balance sheet last year: Note I is for increase and D is for decrease. Asset and Contra-Asset Accounts Liabilities and Stockholders' Equity Accounts Cash and cash...

You have been given the following information for Kellygirl’s Athletic Wear Corp. for the year 2015:...

You have been given the following information for Kellygirl’s Athletic Wear Corp. for the year 2015: a. Net sales = $38,750,000. b. Cost of goods sold = $22,190,000. c. Other operating expenses = $6,100,000. d. Addition to retained earnings = $1,207,500. e. Dividends paid to preferred and common stockholders = $1,935,500. f. Interest expense = $1,835,000. g. The firm’s tax rate is 30 percent. h. In 2016, net sales are expected to increase by $9.75 million. i. Cost of goods...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2021:...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2021: Net sales = $39,000,000. Cost of goods sold = $22,240,000. Other operating expenses = $6,600,000. Addition to retained earnings = $1,212,500. Dividends paid to preferred and common stockholders = $1,948,000. Interest expense = $1,860,000. The firm’s tax rate is 30 percent. In 2022: Net sales are expected to increase by $10.00 million. Cost of goods sold is expected to be 60 percent of net...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018:...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018: Net sales = $38,450,000. Cost of goods sold = $22,130,000. Other operating expenses = $5,500,000. Addition to retained earnings = $1,201,500. Dividends paid to preferred and common stockholders = $1,920,500. Interest expense = $1,805,000. The firm’s tax rate is 30 percent. In 2019: Net sales are expected to increase by $9.45 million. Cost of goods sold is expected to be 60 percent of net...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018:...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018: Net sales = $38,500,000. Cost of goods sold = $22,140,000. Other operating expenses = $5,600,000. Addition to retained earnings = $1,202,500. Dividends paid to preferred and common stockholders = $1,923,000. Interest expense = $1,810,000. The firm’s tax rate is 30 percent. In 2019: Net sales are expected to increase by $9.50 million. Cost of goods sold is expected to be 60 percent of net...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018:...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018: Net sales = $38,700,000. Cost of goods sold = $22,180,000. Other operating expenses = $6,000,000. Addition to retained earnings = $1,206,500. Dividends paid to preferred and common stockholders = $1,933,000. Interest expense = $1,830,000. The firm’s tax rate is 30 percent. In 2019: Net sales are expected to increase by $9.70 million. Cost of goods sold is expected to be 60 percent of net...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018:...

You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018: Net sales = $39,150,000. Cost of goods sold = $22,270,000. Other operating expenses = $6,900,000. Addition to retained earnings = $1,215,500. Dividends paid to preferred and common stockholders = $1,955,500. Interest expense = $1,875,000. The firm’s tax rate is 30 percent. In 2019: Net sales are expected to increase by $10.15 million. Cost of goods sold is expected to be 60 percent of net...

Question 8 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its...

Question 8 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan’s product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Kragan’s...

The Eastern Technology Company manufactures Weather Radios for sale to retailers such as Wal-Mart, Target, etc....

The Eastern Technology Company manufactures Weather Radios for sale to retailers such as Wal-Mart, Target, etc. The 2016 quarterly unit sales estimates and projected sales prices per unit areas follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales units 9,200 9,300 9,500 9,400 Price per unit $90 $90 $90 $90 Also, note that that projected sales (and projected production) for Quarter 1 of 2017 is 10,000 units. Product Cost Assumptions The company’s product requires two raw materials, resistors and...

Subjects