Help with Ch. 7 Homework Revised for Brief Exercises 7-12, 16 and 17

Help with Ch. 7 Homework Revised for Brief Exercises 7-12, 16 and 17

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Help with Chapter 7 Homework Brief Exercise 7–4 Income before tax in 2017 will be reduced by $2,500, the amount of the cash discounts. $25,000 x 10 = $250,000 x 1% = $2,500 Brief Exercise 7–5 Income before tax in 2016 will be reduced by $2,500, the anticipated amount of cash discounts. $25,000 x 10 = $250,000 x 1% = $2,500 Brief Exercise 7–6 Estimated returns = $10,600,000 x 8% = $848,000 Less: Actual returns (720 ,000 ) Remaining estimated returns $128,000 Sales returns .................................................................... 128,000 ........................................... Allowance for sales returns .................................................................................. 128,000 Inventory—estimated returns ........................................ 76,800 ................................................. Cost of goods sold ($128,000 x 60%) .................................................................................... 76,800 Brief Exercise 7–8 Singletary cannot combine the two types of receivables under U.S. GAAP, as the director is a related party. Under IFRS a combined presentation would be allowed. 1
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Brief Exercise 7–9 (1) Bad debt expense = $1,500,000 x 2% = $30,000 (2) Allowance for uncollectible accounts: Beginning balance $25,000 Add: Bad debt expense 30,000 Deduct: Write-offs (16 ,000 ) Ending balance $39,000 Brief Exercise 7–10 (1)Allowance for uncollectible accounts: Beginning balance $ 25,000 Deduct: Write-offs (16,000) Required allowance (33 ,400 )* Bad debt expense $24,400 (2) Required allowance = $334,000** x 10% = $33,400 * Accounts receivable: Beginning balance $ 300,000 Add: Credit sales 1,500,000 Deduct: Cash collections (1,450,000) Write-offs (16 ,000 ) Ending balance $ 334,000** Please note that it turns out that Brief Exercises 7-12, 7-16 and 7-17 in the computer do not map to Brief Exercises 7-12, 7-16 and 7-17 the at the end of the chapter that were included in the Ch. 7 Homework Help File originally posted. Therefore I am providing this additional information so you have examples of the brief exercises you will get on the computer. Brief Exercise 7-12 Note receivable On December 1, 2013, Davenport Company sold merchandise to a customer for $35,000. In 2 -2-2
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payment for the merchandise, the customer signed a 6% note requiring the payment of interest and principal on March 1, 2014. How much interest revenue will the company recognize during 2013 and 2014? 2013 2014 Interest revenue $175 $350 Explanation: 2013 interest revenue: $35,000 × 6% × 1/12 = $175 2014 interest revenue: $35,000 × 6% × 2/12 = $350 Brief Exercise 7-16 Discounting a note On March 31, Dower Publishing discounted a $50,000 note at a local bank. The note was dated February 28 and required the payment of the principal amount and interest at 8% on May 31.
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