Question

Problem 5-26 Accounting for notes receivable and uncollectible accounts using the percent of sales allowance method. The following transactions apply to Hooper co. for 2018, its first year of operations. (1). Issued $60,000 of common stock for cash. (2). Provided $90,000 of common stock for cash. (3). Collected $78,000 cash from accounts receivable. (4). Loaned $20,000 to Mosby Co. on November 30, 2018. The note had a one-year term to maturity and a 6 percent interest rate. (5). Paid $23,000 of salaries expense for the year. (6). Paid a $2,000 dividend to the stockholders. (7). Recorded the accrued interest on December 30, 2018 (see item 4). (8). Estimated that 1 percent of service revenue will be uncollectible.

a. Show the effects of these transactions in a horizontal statements model like the one shown as follows

Assets Equity Rev. - Exp. = Net Inc. Cash Flows

Event: Cash +Accts. Rec. + Notes Rec. + Int. Rec. = Com. Stk. + Ret.Earn.

- Allow. for Doubtful.

(b). Prepare the income statement, balance sheet, and statement of cash flows for 2018

Problem 7-29 Current Liabilities, The following selected transactions were taken from the books of Ripley Company for 2018. (1). On February 1, 2018, borrowed $70,000 cash from the local bank. The note had a 6 percent interest rate and was due on June 1, 2018. (2). Cash sales for the year amounted to $240,000 plus sales tax at the rate of 7 percent. (3). Pipley provided a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 1 percent of sales.( 4). Paid the sales tax to the state sales agency on $210,000 of the sales.( 5) Paid the note due on June 1 and the related interest. (6). On November 1, 2018, borrowed $20,000 cash from the local bank. The note had a 6 percent interest rate and a one-year term to maturity. (7). Paid $2,100 for warranty repairs (8). A customer has filed a lawsuit against Ripley for $1 million for breach of contract. The company attorney does not believe the suit has merit. Questions a. (1) What is the amount of cash did Ripley pay for interest during 2018? (2) What amount of interest expense is reported on Ripley's income statement for 2018? (3) What is the amount of warranty expense for 2018? (b). Prepare the current liabilities section of the balance sheet at December 31, 2018.

(c). Show the effect of these transactions on the financial statements using a horizontal statements model like the one below. Use + for the increase, - for the decrease, and NA for not affected. In the Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA).The first transaction has been recorded as an example.

Assets = Liabilities + Equity Rev. - Exp. = Net Inc. Cash Flow

+ + NA NA NA NA + FA

Problem 6-22, Accounting for the acquisition of assets, including a basket purchase. Trinkle Company made several purchases of long-term assets in 2018. The details of each purchase are presented here: Basket purchase of Copier, Computer, and Scanner for $30,000 with Fair Market Values. 1. Copiers, $22,000 2. Computer, $10,000 3. Scanner, $8,000 Question. Allocation is based on relative market values Then, 6-23 Calculating depreciation expense using three different methods. Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2018. Purchase price $70,000 Delivery cost $3,000 Installation charge $1,000 Estimated life 5 years Estimated units 140,000 Salvage estimate $4,000. During 2018, the machine produced 36,000 units and during 2019, it produced 38,000 units. Determine the amount of depreciation expense for 2018 and 2019 using each of the following methods. Questions: (a). Straight - line b. Double - declining - balance. c. Units of productions Check figures: (b). Depreciation Expense, 1018, $29,600 c. Depreciation Expense, 2019, $19,000.

Answer 1

ans a
Event	Cash	Acc rec-Allow for doubtful debts	Notes Rec	Int rec	Common stock	Ret. Earning	Rev-	Exp	Net Inc	Cash flows
1	$60,000				60000					FA
2		90000				90000	90000		90000	No effect
3	78000	-78000								OA
4	-20000		20000							IA
5	-26000					-26000		26000	-26000	OA
6	-2000					-2000				FA
7				100		100	100		100	No effect
				(20000*6%*1/12)
8		-900				-900		900	-900	No effect
Total	$90,000	$11,100	$20,000	$100	$60,000	$61,200	$90,100	$26,900	$63,200
ans b
Income Statement
Service Revenue		$90,000
Less: Expenses
Salaries expenses	26000
Bad Debt expenses	900	26900
Operating Income		$63,100
Add: interest revenue		100
Net Income		$63,000
Balance Sheet
Assets
Current Assets
Cash		$90,000
Accounts Receivable	12000
Less: Allow for Doubtful Debts	900	11100
Notes Receivable		$20,000
Interest Receivable		100
Total Assets		$121,200
Stockholder Equity
Common stock	$60,000
Retained Earning	$61,200
Total stockholder equity		$121,200
Statement of cash flow
Cash flows from operating activities
Cash inflows
From customers	78000
For salaries	-26000
Net cash from operating activities		52,000.00
Cash flows from investing activities
Loaned to party	($20,000)
		-20000
Net cash used investing activities		(20,000.00)
Cash flows from financing activities
Sale of common stock	60000
Payment of Dividend	-2000	58,000.00
Net cash from financing activities		58,000.00
Net Increase in cash and cash equivalents		90,000.00

Dear student I have done the first question