The adjusted trial balance for Wisdom Company, as of December 31, 2019, is shown below: Wisdom Company Adjusted Trial Balance As at December 31, 2019 Dr Cr Accounts receivable 19,800 Machinery 44,800 Cash 22,600 Accumulated depreciation - Machinery Depreciation expense - Machinery 2,000 21,000 Rental expense 44,000 Salary expense 35,580 Electricity expense 2,400 Accounts payable 3,500 Notes payable 30,000 Interest payable 3,980 Share Capital 10,000 Retained earnings as at January 1, 2019 23,000 Marketing revenue Dividends 20,000 110,000 Supplies Unearned marketing revenue Supplies expense 35,000 1,250 28,250 Interest expense Required: 2,300 229,730 229,730

(a) Prepare the Income Statement of Wisdom Company for the year ended December 31, 2019. (b) Prepare the Statement of Retained Earnings of Wisdom Company for the year ended December 31, 2019. (c) Prepare the Statement of Financial Position of Wisdom Company as at December 31, 2019.

CP8-4 Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3]

[The following information applies to the questions displayed below.]

Case

Azzahra is a book publisher, publishes and distributes educational and non-educational books and sell them to libraries and bookstores within Saudi Arabia and in the Arabian Gulf Region (AGR).

Azzahra employs a professional editorial team. All printing and binding activities are outsourced. The annual revenue total 250 millions Saudi Riyals which are disbursed as follows:

Cash expenditures are 150 million Saudi Riyals. Non-cash expenditures are 50 million Saudi Riyals. While revenues may be paid in different currencies, all processed out in the main center in Riyadh and using Saudi Riyal.

Requirement

Suppose you are a member of the professional editorial team and your task is to audit the revenue and accounts receivable. You probably would like to perform your audit in the following order:

1- Establish audit objectives

2- Determine the scope of the audit

3- Apply the Seven Habits of Highly Effective People (expected outcomes).

4- Understand the auditee (gather relevant information, analytical procedures, control

analysis, process flow, process risks)

5- Identify and assess risks

6- Identify key controls

7- Evaluate controls

8- Create test plan

9- Develop work program

10- Gather evidences

11- Evaluate evidences and reach conclusion

12- Develop observation and formulate recommendation.

Laundromat is trying to enhance the services it provides to? customers, mostly college students. It is looking into the purchase of new? high-efficiency washing machines that will allow for the? laundry's status to be checked via smartphone.

FulmarFulmar

estimates the cost of the new equipment at

$178,000.

The equipment has a useful life of 9 years.

FulmarFulmar

expects cash fixed costs of

$80,000

per year to operate the new? machines, as well as cash variable costs in the amount of

15%

of revenues.

FulmarFulmar

evaluates investments using a cost of capital of

6?%.

Requirement 1. Calculate the payback period and the discounted payback period for this? investment, assuming

FulmarFulmar

expects to generate

$ 190 comma 000$190,000

in incremental revenues every year from the new machines.? (Round your answer to two decimal? places.)

Requirements:

PROBLEM ONE The following information pertains to Life Corporation

Month Sales (units) Sales (dollars)

July 1,500 $30,000

August 1,700 34,000

September 1,600 32,000

October 1,700 40,800

November 2,100 54,600

December 2,350 51,700

January 2,300 57,000

February 1,900 51,000

March 1,750 44,000

April 1,600 41,600

May 1,500 30,000

June 1,400 32,200

Of sales, 30% are in cash with the remainder on account.

Accounts Receivable is collected from customers in the following manner:

Month of sale 30%

Month following sale 60%

Second month following sale 10%

Life Corporation desires ending inventory for finished goods to be 30% of next month’s sales.

Each unit requires three pounds of material, each pound costs $2.75. Life Corporation desires ending inventory of raw materials should be 50% of next month’s needs. Materials are purchased on account. Payments are 40% in the month of purchase with the remainder paid in the following month. The previous month’s ending Accounts Payable balance was $11,162. In addition, each unit requires one hour of labor, each labor hour costs $15.

REQUIRED:

1. Prepare a Revenue budget for December, including revenue, cash collections, and accounts receivable.

2. Prepare a Production Budget for December.

3. Prepare a Raw Materials Purchases Budget for December, including cash disbursements.

4. Prepare the Direct Labor Budget including payments.

Custom Auto Parts started this year with the following balances:

      Cash: $60,000

      Merchandise Inventory: $8,000

      Land: $12,000

      Accounts Payable: $0

      Common Stock: $50,000

      Retained Earnings: $30,000

During the year they had the following transactions:

Purchase $60,000 of merchandise inventory on account, terms 2/10,n/30.

The goods delivered in Event 1 were delivered FOB shipping point. Freight costs of $1,500 were paid in cash by the responsible party

Returned $3,000 of goods purchased in Event 1

Paid the balance due on the goods purchased in Event 1 and recorded the cash discount.

Recognized $59,000 of cash revenue from the sale of merchandise and recognized $45,000 of cost of goods sold from such sale.

The goods sold in Event 5 were delivered to the customers FOB destination. Freight costs of $1,400 were paid in cash by the responsible party.

Paid $9,000 in cash for selling and administrative expenses.

Sold the land for $14,500 in cash.

Using Excel, assuming a perpetual inventory system, record each transaction in the horizontal statements model.

After completing the recording of the transactions, prepare a multistep income statement. Include common size percentages on the income statement.

I need help with this part below!!

The following events occur for The Underwood Corporation during 2018 and 2019, its first two years of operations. June 12, 2018 Provide services to customers on account for $38,000. September 17, 2018 Receive $22,500 from customers on account. December 31, 2018 Estimate that 45% of accounts receivable at the end of the year will not be received. March 4, 2019 Provide services to customers on account for $53,000. May 20, 2019 Receive $10,000 from customers for services provided in 2018. July 2, 2019 Write off the remaining amounts owed from services provided in 2018. October 19, 2019 Receive $42,500 from customers for services provided in 2019. December 31, 2019 Estimate that 45% of accounts receivable at the end of the year will not be received.

Required:

1. Record transactions for each date.

2. Post transactions to the following accounts: Cash, Accounts Receivable, and Allowance for Uncollectible Accounts.

3. Calculate the net realizable value of accounts receivable at the end of 2018 and 2019

The following events occur for The Underwood Corporation during 2018 and 2019, its first two years of operations.
  
  

June 12, 2018   Provide services to customers on account for $29,000.
September 17, 2018   Receive $15,000 from customers on account.
December 31, 2018   Estimate that 40% of accounts receivable at the end of the year will not be received.
March 4, 2019   Provide services to customers on account for $44,000.
May 20, 2019   Receive $10,000 from customers for services provided in 2018.
July 2, 2019   Write off the remaining amounts owed from services provided in 2018.
October 19, 2019   Receive $35,000 from customers for services provided in 2019.
December 31, 2019   Estimate that 40% of accounts receivable at the end of the year will not be received.

1. Record transactions for each date.

2. Post transactions to the following accounts: Cash, Accounts Receivable, and Allowance for Uncollectible Accounts.

3. Calculate the net realizable value of accounts receivable at the end of 2018 and 2019.

You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made by your company. Each proposal is independent of the other. Answer all questions. Showing your work may earn you partial credit.

Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks.   Sales are projected to increase by $150,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 10% are projected to be uncollectible. Additional collection costs are projected to be 2% of incremental sales (whether they actually end up collected or not), and production and selling costs are projected to be 78% of sales. Your firm expects to pay a total of 30% of its income after expenses in taxes.

1. Compute the incremental income after taxes that would result from these projections:

2. Compute the incremental Return on Sales if these new credit customers are accepted:

If the receivable turnover ratio is expected to be 4 to 1 and no other asset buildup is needed to serve the new customers…

3. Compute the additional investment in Accounts Receivable
4. Compute the incremental Return on New Investment

5. If your company requires a 20% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers? Explain.

Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days.

1. If the company currently averages $40,000 in collections per day, how many dollars will this suggested cash management system free up?

2. If all freed up dollars would be used to pay down debt that has an interest rate of 6%, how much money could be saved each year in interest expense?

3. Do the numbers suggest that this new system should be implemented if its total annual cost is $5200? Explain.

The bank portion of the bank reconciliation for Blossom Company at October 31, 2021, was as follows:

The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following:

Additional information from the bank statement:

The cash records per books for November follow. Two errors were made by Blossom Company.

A) Prepare a bank reconciliation at November 30.

B) Prepare the necessary adjusting entries at November 30. (Note: The correction of any errors in the recording of cheques should be made to Accounts Payable. The correction of any errors in the recording of cash receipts should be made to Accounts Receivable.) (Credit account titles are automatically indented when the 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.)