7-2 Homework Chapter 7.odp - Harwell Company manufactures...

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Harwell Company manufactures automobile tires. On July 15, 2013, the company sold 1,400 tires tothe Nixon Car Company for $40 each. The terms of the sale were 3/10, n/30. Harwell uses thegross method of accounting for cash discounts.
Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2013, accountsreceivable totaled $655,000. The allowance method is used to account for uncollectible accounts.The allowance for uncollectible accounts had a credit balance of $38,000 at the beginning of 2013and $24,000 in receivables were written off during the year as uncollectible. Also, $1,800 in cashwas received in December from a customer whose account previously had been written off. Thecompany estimates bad debts by applying a percentage of 15% to accounts receivable at the end othe year.
On June 30, 2013, the Esquire Company sold some merchandise to a customer for $54,000. Inpayment, Esquire agreed to accept a 7% note requiring the payment of interest and principal onMarch 31, 2014. The 7% rate is appropriate in this situation.

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Term
Spring
Professor
N/A
Tags
Debt, 1966, 1986, Generally Accepted Accounting Principles, Harwell Company

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