3.
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $584,000 and the
allowance account had a credit balance of $48,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 584,000 | ||
| Credit sales | 2,670,000 | |||
| Collections | (2,533,000 | ) | ||
| Write-offs | (44,000 | ) | ||
| Ending balance | $ | 677,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 395,000 | 5 | % |
| 61−90 days | 94,000 | 14 | ||
| 91−120 days | 54,000 | 24 | ||
| Over 120 days | 134,000 | 35 | ||
| Total | $ | 677,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
a) In order to meet the industrial and environmental demands and challenges posed by the rapidly developing technological advancement, and promotion of sanity in the country, and in the world at large, it is necessary to create and develop the awareness and interest of Civil Engineering students who are to become the future middle level manpower in the Construction Industry. According to Harris et al (2006:13), quality control is “a set of activities or techniques undertaken to ensure that all quality requirements are being met”. In order to achieve this purpose, processes are monitored. Coin a comprehensive definition of quality control to this effect.
b) Civil Engineering students are introduced to the principles and importance of quality control. Effectiveness of quality control in any given company cannot be quantified by customers. The variability of quality control results often lead to the loss of competitive edge. If this is limitation, then explain.
c) Administration and site work during a contract can be divided into many important areas which require some degree of control, the ultimate responsibility for which lies with the site manager. Examine the various aspects in a building project where quality could be determined.. AN,
In: Civil Engineering
1.Which of the following transactions will affect the balance
of? Owner, Capital?
A.
collection on account
B.
paid accounts payable
C.
paid rent expense for the month
D.
purchased land for cash
2..Which of the following appears on both the income statement and statement of? owner's equity? A. Net income B. ?Owner, Capital, ending balance C. Total revenues D. ?Owner, Withdrawals
3.A liability created when a business receives cash from
customers in advance of providing services or delivering goods is
called? a(n) ________.
A.
notes receivable
B.
unearned revenue
C.
accrued liability
D.
service revenue
In: Accounting
This corporation sells office products and performs accounting services.
S & B uses the Perpetual Inventory system and had the following balances:
S & B Office Supplies and Services
Trial Balance
November 1, 2018
|
Title |
Debit |
Credit |
|
Cash |
9,000 |
|
|
Accounts Receivable |
2,240 |
|
|
Supplies |
860 |
|
|
Equipment |
25,000 |
|
|
Accumulated Depreciation |
1,000 |
|
|
Accounts Payable |
3,400 |
|
|
Unearned Service Revenue |
4,000 |
|
|
Salaries and Wages Payable |
1,700 |
|
|
Common Stock |
20,000 |
|
|
Retained Earnings |
7,000 |
|
|
Totals |
$37,100 |
$37,100 |
During the month of November, the following summary transactions were completed.
Nov. 1 Paid November Rent $375
8 Paid $3,550 for salaries due employees, of which 1,850 is for November and $1,700 is for October.
10 Received $1,900 cash from customers in payment of account.
11 Purchased merchandise on account from dd’s Discount Supply $8,000, terms 2/10, n/30.
12
Sold merchandise on account for $5,500, terms 2/10, n/30. The cost
of the
merchandise sold was $4,000.
15 Received credit from dd’s Discount Supply for merchandise returned $300.
19
Received collections in full, less discounts, from customers
billed
on sales of $5,500 on November 12.
20 Paid dd’s Discount Supply in full, less discount.
22 Received $2,300 Cash for services performed in November.
25 Purchased equipment on account $5,000.
27 Purchased supplies on account $1,700.
28 Paid creditors $3,000 of accounts payable due.
29 Paid Salaries $1,300.
29 Performed services on account and billed customers $700.
29 Received $675 from customers for services to be performed in the future.
Adjustment Data:
Instructions:
In: Accounting
|
Revenue Recognition The Company generally recognizes sales, which include shipping fees where applicable, net of estimated returns, at the time the member takes possession of merchandise or receives services. When the Company collects payments from customers prior to the transfer of ownership of merchandise or the performance of services, the amounts received are generally recorded as deferred sales, included in other current liabilities on the consolidated balance sheets, until the sale or service is completed. The Company reserves for estimated sales returns based on historical trends in merchandise returns, net of the estimated net realizable value of merchandise inventories to be returned and any estimated disposition costs. Amounts collected from members, which under common trade practices are referred to as sales taxes, are recorded on a net basis. The Company evaluates whether it is appropriate to record the gross amount of merchandise sales and related costs or the net amount earned as commissions. Generally, when Costco is the primary obligor, is subject to inventory risk, has latitude in establishing prices and selecting suppliers, can influence product or service specifications, or has several but not all of these indicators, revenue and related shipping fees are recorded on a gross basis. If the Company is not the primary obligor and does not possess other indicators of gross reporting as noted above, it records the net amounts as commissions earned, which is reflected in net sales. The Company accounts for membership fee revenue, net of estimated refunds, on a deferred basis, whereby revenue is recognized ratably over the one-year membership period. The Company’s Executive Members qualify for a 2% reward (up to a maximum of $750 per year on qualified purchases), which can be redeemed at Costco warehouses. The Company accounts for this reward as a reduction in sales. The sales reduction and corresponding liability (classified as accrued member rewards on the consolidated balance sheets) are computed after giving effect to the estimated impact of non-redemptions based on historical data. The net reduction in sales was $970, $900, and $790 in 2013, 2012, and 2011, respectively. |
Required:
a. a. Explain in plain English how Costco recognizes revenue from annual memberships.
b. Does Costco recognize revenue in consistence with the revenue recognition principle in GAAP? Explain your answer.
In: Accounting
How to make a Revenue Recognition memo with this information?
Background: Using Implementation Guidance Heavenly Tours Heavenly Tours (HT) was the brainchild of four college friends: Bart, Ava, Carla and Dave. They wanted to create a one-stop, high-touch, discounted tour experience for visitors to two local theme parks. Park Survival provides various simulated survival experiences. Park Adrenaline provides numerous adventures guaranteed to provide visitors with adrenaline rushes. Bart is responsible for managing the relationship with both parks and obtaining discounted admissions for HT’s customers. Ava is responsible for the tour guides, who help customize the experience for visitors. Carla is responsible for working with high-end restaurants in the area surrounding the parks to obtain discounts on food and beverages. Dave is responsible for merchandise, which can be sold to HT’s customers. Historically, HT has reported all cash collected as revenue. A private investor is requesting financial information prepared in accordance with generally accepted accounting principles before investing in HT. The investor has indicated a particular interest in HT’s total revenues. The four friends are meeting with their local accountant to discuss next steps. The accountant informs them they will need to analyze each revenue stream to determine whether HT is acting as a principal or an agent. The accountant states this determination is necessary for proper accounting treatment because when a principal satisfies a performance obligation, the gross amount of consideration is recorded as revenue; however, when an agent satisfies a performance obligation, only the amount of the fee or commission earned is recorded as revenue. Background: The accountant asked Bart to explain the relationship with both parks. Bart explained that he had been able to obtain a 15% discount from Park Survival. HT customers can access Park Survival’s website and use a discount password provided by HT. Under this agreement, HT’s customers are charged 90% of the full entrance price on their credit card when their order is accepted on Park Survival’s website. Once the order is processed on Park Survival’s website, the customer is given a pass that can be used for entrance to Park Survival and 5% is remitted to HT. The negotiations with Park Adrenaline had been more difficult because it was a newer park and in need of cash. Accordingly, HT purchased 100 passes for 90% of the face value. These passes are good for one year from the date of purchase. Any passes that are not used during the year would simply expire. HT has obtained the right to each pass purchased to provide the pass holder with access to the park. HT is free to sell these passes to its customers at any price, as long it doesn’t exceed the face value of the pass. The customer pays an agreed-upon amount when an order is accepted on HT’s website. Park Adrenaline retained the full responsibility for fulfilling its obligation to customers who entered the park with a pass purchased from HT.
ASSIGNMENT REQUIREMENTS:
Read ASC 606-10-55-36 through 40 in ASC 606, Revenue from Contracts with Customers, discussing implementation guidance for principal versus agent determination.
Review the examples in ASC 606-10-55-316 through 334F.
1. For each park, determine if HT is a principal or an agent and, accordingly, how the revenue should be recorded.
2. Prepare a professional accounting research memorandum in proper form with reference to the appropriate sections of the FASB codification.
3. In the memo provide a thorough explanation of your conclusions and the rationale behind your conclusion referencing the appropriate sections of the FASB codification.
In: Accounting
At June 30, 2017, the end of its most recent fiscal year, Sheffield Computer Consultants’ post-closing trial balance was as follows:
| Debit | Credit | |||
|---|---|---|---|---|
| Cash | $5,650 | |||
| Accounts receivable | 1,300 | |||
| Supplies | 750 | |||
| Accounts payable | $430 | |||
| Unearned service revenue | 1,210 | |||
| Common stock | 3,900 | |||
| Retained earnings | 2,160 | |||
| $7,700 | $7,700 |
The company underwent a major expansion in July. New staff was
hired and more financing was obtained. Sheffield conducted the
following transactions during July 2017, and adjusts its accounts
monthly.
| July | 1 | Purchased equipment, paying $4,800 cash and signing a 2-year note payable for $21,600. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. | |
| 2 | Issued 21,600 shares of common stock for $54,000 cash. | ||
| 3 | Paid $3,600 cash for a 12-month insurance policy effective July 1. | ||
| 3 | Paid the first 2 (July and August 2017) months’ rent for an annual lease of office space for $4,300 per month. | ||
| 6 | Paid $4,100 for supplies. | ||
| 9 | Visited client offices and agreed on the terms of a consulting project. Sheffield will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
| 10 | Collected $1,300 cash on account from Milani Brothers. This client was billed in June when Sheffield performed the service. | ||
| 13 | Performed services for Fitzgerald Enterprises. This client paid $1,210 in advance last month. All services relating to this payment are now completed. | ||
| 14 | Paid $430 cash for a utility bill. This related to June utilities that were accrued at the end of June. | ||
| 16 | Met with a new client, Thunder Bay Technologies. Received $13,000 cash in advance for future services to be performed. | ||
| 18 | Paid semi-monthly salaries for $11,900. | ||
| 20 | Performed services worth $30,200 on account and billed customers. | ||
| 20 | Received a bill for $2,400 for advertising services received during July. The amount is not due until August 15. | ||
| 23 | Performed the first phase of the project for Thunder Bay Technologies. Recognized $10,800 of revenue from the cash advance received July 16. | ||
| 27 | Received $16,200 cash from customers billed on July 20. |
Adjustment data:
| 1. | Adjustment of prepaid insurance. | |
| 2. | Adjustment of prepaid rent. | |
| 3. | Supplies used, $1,350. | |
| 4. | Equipment depreciation, $550 per month. | |
| 5. | Accrual of interest on note payable. | |
| 6. | Salaries for the second half of July, $11,900, to be paid on August 1. | |
| 7. | Estimated utilities expense for July, $860 (invoice will be received in August). | |
| 8. | Income tax for July, $1,300, will be paid in August. |
Prepare a classified balance sheet at July 31. (List Current Assets in order of liquidity.)
In: Accounting
At June 30, 2017, the end of its most recent fiscal year,
Sheffield Computer Consultants’ post-closing trial balance was as
follows:
| Debit | Credit | |||
|---|---|---|---|---|
| Cash | $5,650 | |||
| Accounts receivable | 1,300 | |||
| Supplies | 750 | |||
| Accounts payable | $430 | |||
| Unearned service revenue | 1,210 | |||
| Common stock | 3,900 | |||
| Retained earnings | 2,160 | |||
| $7,700 | $7,700 |
The company underwent a major expansion in July. New staff was
hired and more financing was obtained. Sheffield conducted the
following transactions during July 2017, and adjusts its accounts
monthly.
| July | 1 | Purchased equipment, paying $4,800 cash and signing a 2-year note payable for $21,600. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. | |
| 2 | Issued 21,600 shares of common stock for $54,000 cash. | ||
| 3 | Paid $3,600 cash for a 12-month insurance policy effective July 1. | ||
| 3 | Paid the first 2 (July and August 2017) months’ rent for an annual lease of office space for $4,300 per month. | ||
| 6 | Paid $4,100 for supplies. | ||
| 9 | Visited client offices and agreed on the terms of a consulting project. Sheffield will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
| 10 | Collected $1,300 cash on account from Milani Brothers. This client was billed in June when Sheffield performed the service. | ||
| 13 | Performed services for Fitzgerald Enterprises. This client paid $1,210 in advance last month. All services relating to this payment are now completed. | ||
| 14 | Paid $430 cash for a utility bill. This related to June utilities that were accrued at the end of June. | ||
| 16 | Met with a new client, Thunder Bay Technologies. Received $13,000 cash in advance for future services to be performed. | ||
| 18 | Paid semi-monthly salaries for $11,900. | ||
| 20 | Performed services worth $30,200 on account and billed customers. | ||
| 20 | Received a bill for $2,400 for advertising services received during July. The amount is not due until August 15. | ||
| 23 | Performed the first phase of the project for Thunder Bay Technologies. Recognized $10,800 of revenue from the cash advance received July 16. | ||
| 27 | Received $16,200 cash from customers billed on July 20. |
Adjustment data:
| 1. | Adjustment of prepaid insurance. | |
| 2. | Adjustment of prepaid rent. | |
| 3. | Supplies used, $1,350. | |
| 4. | Equipment depreciation, $550 per month. | |
| 5. | Accrual of interest on note payable. | |
| 6. | Salaries for the second half of July, $11,900, to be paid on August 1. | |
| 7. | Estimated utilities expense for July, $860 (invoice will be received in August). | |
| 8. | Income tax for July, $1,300, will be paid in August. |
Prepare a post-closing trial balance at July 31.
|
SHEFFIELD COMPUTER CONSULTANTS |
|---|
In: Accounting
3. Carter Inc. has the following information for July:
Cash T-Account Balance, July 31 $8,069
Cash as per Bank Statement, July 31; $6,522
Deposits in Transit $3000
Service Charges $27
Outstanding Checks $550
Interest Earned on Account $30
EFT Accounts Receivable Collection from Customers $900
a.) Prepare a bank reconciliation dated July 31.
b.) Prepare any journal entries necessary to make the accounting records correct and complete.
c.) What amount of cash should be reported on the July 31 Balance Sheet?
In: Finance
(1 point) A $3500 bond paying interest at j1j1 = 10% matures on June 1, 2030. On July 22, 2004, it was purchased for $3551 plus bond interest. On April 3, 2009, it was sold for $3443 plus bond interest. Estimate the yield j1j1 by the method of averages.
In: Accounting