Calculate the true cash balance. (LO 1). Use the following information to calculate the true reconciled cash balance:
Bank statement shows interest earned for month $50
Bank statement shows service charges for month $10
Book shows deposits in transit $75
Book shows outstanding checks $25
Balance per Books Bank
$100 $90
Interest earned for month __________________
Service charges for month ____________________
Deposits in transit ______________________
Outstanding checks ____________________
Balance ________________________
True cash balance ______________
What is the companys true cash balance at April 30?
13B. Determine bad debts expense using the percentage of sales method. (LO 3). Following are the 2010 year-end balances before adjustments:
Accounts receivable (AR) $ 80,000
Allowance for uncollectible accounts $ (2,000)
Net sales $250,000
Using the percentage of sales method, the company estimates 3% of sales will become uncollectible. What is the bad debts expense for 2010? What will be the net realizable value of accounts receivable on the year-end balance sheet?
14B. Determine bad debts expense using the accounts receivable method. (LO 3). Carpet Emporium ended its first year with $300,000 of accounts receivable and estimates that 2% of that amount will never be paid. No account has been specifically identified as non-paying at the date of the year-end balance sheet. What will the income statement for the year show as the bad debts expense if Carpet Emporium uses the allowance method of accounting for bad debts?
15B. Write off uncollectible accounts. (LO 3). Building Supplies Corporation has determined that a customer's accounts receivable balance of $35,700 is uncollectible. Use the accounting equation to show how Building Supplies Corporation would write off the account
using (a) the direct write-off method and (b) the allowance method for bad debts.
17B. Analyze notes receivable. (LO 5). When Moss Planters Corporation was contacted by Green's Garden Center asking for a time extension on its outstanding balance of $1,000, Moss Planters Corporation offered to convert the accounts receivable into a short-term note. Green's agreed to the offer and, on June 1, signed a three-month promissory note at an interest rate of 4%.
What is the principal amount of the note? What is the due date of the note? How much will Green's Garden Center repay on the due date of the note?
18B. Calculate accounts receivable turnover ratio. (LO 7). Ross Company had the follow- ing balances:
Calculate the accounts receivable turnover ratio for 2010. On average, how many days does it take Ross Company to collect its accounts receivable?