homework 5 - 20,000 Discount Amor±zed 3,358 Cr Interest...

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Tyler Testman Acct 3110 11/25/14 Homework 5 Question 1 a. Target Corp. estimates future write-offs on the entire credit card portfolio collectively based on historical experience of delinquencies, risk scores, aging trends and industry risk trends. b. The accounts are written off when they become 180 days past due. Question 2 a. Dr. Cash 100,000 Note Receivable 400,000 Cr. Sales Revenue 490,313 Discount on Note Receivable 9,687 Dr. Cost of Goods Sold 250,000 Cr. Inventory 250,000 b. Interest Received Interest Revenue Discount Amortized Discount Balance Carrying Value 1/1/2012 10,692 389,308 12/31/201 2 20,000 23,358 3,358 7,334 392,666 12/31/201 3 20,000 23,560 3,560 3,774 396,226 12/31/201 4 20,000 23,774 3,774 0 400,000 c. Journal Entries 12/31/12: Dr. Cash
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Unformatted text preview: 20,000 Discount Amor±zed 3,358 Cr. Interest Revenue 23,358 12/31/13: Dr. Cash 20,000 Discount Amor±zed 3,560 Cr. Interest Revenue 23,560 12/31/14 Dr. Cash 420,000 Discount Amortzed 3,774 Cr. Note Receivable 400,000 Interest Revenue 23,774 Queston 3 a. Using codifcaton, under secton 835-30-10, you would use The 10% inTeresT raTe because ThaT is The raTe an independenT borrower and lender in similar circumsTances would arrive aT. b. Dr. NoTe Receivable 80,000 Cr. Sales Revenue 66,116 DiscounT on NoTe 13,884 c. 12/31/13: Dr. DiscounT on NoTe 6,612 Cr. InTeresT Revenue 6,612 12/31/14: Dr. DiscounT on NoTe 7,273 Cr. InTeresT Revenue 7,273...
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