Problem 1. What is meant by the net realizable value for accounts receivable?
Problem 2. What is aging of accounts receivable, and how is it used to account for uncollectible accounts?
Problem 3. How is the accounts receivable turnover computed? What information does this ratio provide?
Problem 4. Describe what is meant by the term "goodwill."
Problem 5. How do the percent of revenue method and the percent of receivables method to estimate uncollectible accounts expense differ? What are two ways in which estimating uncollectible accounts improves the accuracy of the financial statements?
Problem 6. Mia-Tora Company purchased a fast-food restaurant for $1,400,000. The fair market vales of the assets purchased were as follows. No liabilities were assumed.
Equipment $320,000
Land 200,000
Building 650,000
Franchise 100,000
a. How will Springhill account for the impairment of the goodwill?
b. Prepare the journal entry to record the permanent impairment of goodwill.
Problem 7. CJ's Pizza purchased a delivery van on January 1, 2011, for $25,000. In addition, CJ's paid sales tax and title fees of $1,000 for the van. The van is expected to have a four year life and a salvage value of $6,000
Using the straight line method, compute the depreciation expense for 2011 and 2012.