Web Wizard, Inc., has provided information technology services
for several years. The company uses the percentage of credit sales
method to estimate bad debts for internal monthly reporting
purposes. At the end of each quarter, the company adjusts its
records using the aging of accounts receivable method. The company
entered into the following selected transactions during the first
quarter of 2017:
| Number of Days Unpaid | |||||||||||||||
| Customer | Total | 0-30 | 31-60 | 61-90 | Over 90 | ||||||||||
| Altavista Tourism | $ | 200 | $ | 100 | $ | 80 | $ | 20 | |||||||
| Bayling Bungalows | 400 | $ | 400 | ||||||||||||
| Others (not shown to save space) | 17,000 | 6,800 | 8,400 | 1,000 | 800 | ||||||||||
| Xciting Xcursions | 400 | 400 | |||||||||||||
| Total Accounts Receivable | $ | 18,000 | $ | 7,300 | $ | 8,480 | $ | 1,020 | $ | 1,200 | |||||
| Estimated uncollectable (%) | 2 | % | 10 | % | 20 | % | 40 | % | |||||||
1-a. For items (a) through (j), analyze the amount and effects on specific financial statement accounts and the overall accounting equation. (Enter any decreases to the account with a minus sign.)
1-b. Prepare the journal entries for
the above items. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
2. Show how the receivables related to these
transactions would be reported in the current assets section of a
classified balance sheet. (Amounts to be deducted should be
indicated by a minus sign.)
3. Name the accounts related to Accounts
Receivable and Note Receivable that would be reported on the income
statement and indicate whether they would appear before or after
Income from Operations.
In: Accounting
PB8-4 Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3]
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Elite Events Corporation has provided event planning services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting purposes. At the end of each quarter, the company adjusts its records using the aging of accounts receivable method. The company entered into the following partial list of transactions during the first quarter. |
|
a. |
During January, the company provided services for $400,000 on credit. |
|
b. |
On January 31, the company estimated bad debts using 1 percent of credit sales. |
|
c. |
On February 4, the company collected $350,000 of accounts receivable. |
|
d. |
On February 15, the company wrote off a $4,000 account receivable. |
|
e. |
During February, the company provided services for $350,000 on credit. |
|
f. |
On February 28, the company estimated bad debts using 1 percent of credit sales. |
|
g. |
On March 1, the company loaned $10,000 to an employee who signed a 6% note, due in 9 months. |
|
h. |
On March 15, the company collected $4,000 on the account written off one month earlier. |
|
i. |
On March 31, the company accrued interest earned on the note. |
|
j. |
On March 31, the company adjusted for uncollectible accounts, based on the following aging analysis. Allowance for Doubtful Accounts has an unadjusted credit balance of $10,000. |
|
Number of Days Unpaid |
||||||||||
|
Customer |
Total |
0-30 |
31-60 |
61-90 |
Over 90 |
|||||
|
Aerosmith |
$ |
2,200 |
$ |
1,100 |
$ |
1,100 |
||||
|
Biggie Small |
2,200 |
$ |
1,100 |
$ |
1,100 |
|||||
|
Others (not shown to save space) |
103,000 |
40,000 |
43,000 |
10,000 |
10,000 |
|||||
|
ZZ Top |
8,000 |
8,000 |
||||||||
|
Total Accounts Receivable |
$ |
115,400 |
$ |
49,100 |
$ |
44,100 |
$ |
11,100 |
$ |
11,100 |
|
Estimated uncollectible (%) |
4% |
10% |
20% |
30% |
||||||
|
1. |
For items (a)–(j), analyze the amount and direction (+ or ?) of effects on specific financial statement accounts and the overall accounting equation. (Enter any decreases to account balances with a minus sign.) |
|
2. |
Prepare the journal entries for items (a)–(j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) |
|
3. |
Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet. |
|
4. |
Sales Revenue and Service Revenue are two income statement accounts that related to Accounts Receivable. Name two other accounts related to Accounts Receivable and Notes Receivable that would be reported on the income statement and indicate whether each would appear before, or after, Income from Operations. |
In: Accounting
Two large countries, the US and China, produce only two goods, manufactured goods and Financial services, using two factors of production, skilled and unskilled labour. The production of Financial services is relatively skill-labour intensive and manufacturing is unskilledlabour intensive. The US is relatively well endowed with skilled labour, whereas China is relatively well endowed with unskilled labour. Assume that each society's preferences over the two goods are identical.
(a) Draw the production possibilities frontier (PPF) for the US. Carefully explain the shape of the PPF. How will the PPF of China differ?
(b) Suppose there is no trade between the two countries. Explain why, in a competitive equilibrium, the relative price of Financial services must be lower in the US than in China.
(c) Explain why the neoclassical (Hecksher-Ohlin) theory of trade implies there must be an increase in the goods available for consumption in both countries as a result of opening to free trade. Does this imply that all households in each economy will gain from trade? Explain.
(d) Provide a coherent economic argument to justify a protectionist policy in China that imposes a tariff on Financial services from the US. What problems may arise in following such a strategy in the long run?
In: Economics
Two large countries, the US and China, produce only two goods,
manufactured goods and financial services, using two factors of
production, skilled and unskilled labour. The production of
financial services is relatively skill-labour intensive and
manufacturing is unskilled-labour intensive. The US is relatively
well endowed with skilled labour, whereas China is relatively
well endowed with unskilled labour. Assume that each society‘s
preferences over the two goods are identical.
(a) Draw the production possibilities frontier (PPF) for the US.
Carefully explain the shape of the PPF. How will the PPF of China
differ?
(b) Suppose there is no trade between the two countries. Explain
why, in a competitive equilibrium, the relative price of financial
services must be lower in the US than in China.
(c) Explain why the neoclassical (HecksherOhlin) theory of trade
implies there must be an increase in the goods available for
consumption in both countries as a result of opening to free trade.
Does this imply that all households in each economy will gain from
trade? Explain.
(d) Provide a coherent economic argument to justify a protectionist
policy in China that imposes a tariff on financial services from
the US. What problems may arise in following such a strategy in the
long run?
In: Economics
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Powerjob Inc. provides employment consulting services. The company adjusts its accounts monthly but performs closing entries annually on December 31. The firms’s unadjusted trial balance dated December 31, 2019 is shown below. Other data: 1. Accrued but unrecorded and uncollected consulting fees earned at December 31 total : $25000. 2. The company determined that $15000 of previously unearned consulting fees had been earned at December 31. 3. Office supplies on hand at December 31 total $300 4. The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years. 5. The company prepaid its nine-month rent agreement on June 1, 2019. 6. The company prepaid its six-month insurance policy on December 1, 2019 7. Accrued but unpaid salaries total $12000 at December 31,2019. 8. On September 1, 2019, the company borrowed $60000 by signing an eight-month, 4 percent note payable. The entire amount, plus interest, is due March 31, 2020.
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Instructions: a. Prepare the necessary adjusting journal entries on December 31, 2019. Also prepare an adjusted trial balance dated December 31, 2019 (20 points). b. From the adjusted trial balance prepared in part a, prepare an income statement and statement of retained earnings for the year ended December 31, 2019. Also prepare the company’s balance sheet dated December 31, 2019 (20 points). c. Prepare the necessary year-end closing entries (15 points). d. Prepare an after-closing trial balance (15 points). e. Compute the company’s average monthly insurance expense for January through November 2019 (10 points). f. Compute the company’s average monthly rent expense for January through May 2019 (10 points). g. If the company purchased all of its office equipment when it first incorporated, for how long has it been in business as of December 31, 2019? (10 points). |
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In: Accounting
In: Economics
Did US, Mexico, or Canada benefit most from NAFTA? Which benefited the least? Explain
In: Economics
From a regulatory theory perspective explain the differences in disclosure requirements for US companies and Australian companies.
In: Accounting
On September 1, the balance of the Accounts Receivable control account in the general ledger of Montgomery Company was $10,520. The customers’ subsidiary ledger contained account balances as follows: Hurley $1,450, Andino $2,290, Fowler $2,080, and Sogard $4,700. At the end of September, the various journals contained the following information. Sales journal: Sales to Sogard $750, to Hurley $1,100, to Giambi $1,360, and to Fowler $1,120. Cash receipts journal: Cash received from Fowler $1,370, from Sogard $2,130, from Giambi $330, from Andino $1,710, and from Hurley $1,190. General journal: An allowance is granted to Sogard $110. -Set up control and subsidiary accounts and enter the beginning balances. -Post the various journals. Post the items as individual items or as totals, whichever would be the appropriate procedure. -Prepare a schedule of accounts receivable and prove the agreement of the controlling account with the subsidiary ledger at September 30, 2017. -
In: Accounting
Indicate whether True, False, or Uncertain. Then provide a brief statement indicating WHY true or false, or if the statement is ambiguous, what would need to be altered to the statement to make it clearly true or false.
a) Publicly provided insurance may crowd out the purchases of those who would pay for private insurance.
b) The existence of moral hazard provides an argument for both market failure and government failure in insurance markets.
c) If there were no free-riding, the level of public goods provided by the government will be optimal for every individual.
In: Economics