A_Series_SolutionsChap8

A_Series_SolutionsChap8 - SOLUTIONS TO EXERCISES - SERIES A...

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Unformatted text preview: SOLUTIONS TO EXERCISES - SERIES A - CHAPTER 8 EXERCISE 8-1A a. and c. Big As Auto Service T-Accounts Assets = Liabilities + Stockholders Equity Cash Retained Earnings 2005 2005 2. 25,000 cl 300 cl 30,000 Bal. 25,000 Bal. 29,700 2006 3. 31,000 Service Revenue Bal. 56,000 2005 cl 30,000 1. 30,000 Accounts Receivable Bal.-0- 2005 2006 1. 30,000 2. 25,000 2. 35,000 Bal. 5,000 Bal. 35,000 2006 2. 35,000 1. 280 Bad Debts Expense 3. 31,000 2005 Bal. 8,720 3. 300 cl 300 Bal.-0- Allow. For Doubt. Accts. 2006 2005 4. 350 3. 300 1 Bal. 350 Bal. 300 2006 8-5 1. 280 4. 350 2 Bal. 370 1 $30,000 x 1% = $300 2 $35,000 x 1% = $350 Note: Closing entries for 2006 were not made because they were not necessary to answer the questions. 8-6 EXERCISE 8-1A (cont.) b. (1)Net Income for 2005: $29,700 ($30,000 - $300) c. Net Cash Flow from Operating Activities: $25,000 d. Balance of Accounts Receivable, 12/31/2005: $5,000 e. Net Realizable Value of Accounts Receivable, 12/31/2005: $4,700 ($5,000 - $300) c. (1)Net Income for 2006: $34,650 ($35,000 - $350) d. Net Cash Flow from Operating Activities: $31,000 e. Balance of Accounts Receivable, 12/31/2006: $8,720 f. Net Realizable Value of Accounts Receivable, 12/31/2006: $8,350 ($8,720 - $370) 8-7 EXERCISE 8-2A Event Assets = Liab. + Stk. Equity Rev. Exp. = Net Inc. Cash Flow Cash A. Rec. All for DA = + Ret. Earn. 1. NA + NA NA + + NA + NA 2. +- NA NA NA NA NA NA + OA 3. NA-- NA NA NA NA NA NA 4. NA NA + NA- NA +- NA EXERCISE 8-3A a. Analyze the Accounts Receivable account: Accounts Receivable Beginning Balance $ 3,000 Plus: Revenue on Account 12,000 Less: Write-off (150) Less: Ending Balance (3,500) Collections of Accounts Rec. $11,350 b. Analyze the Allowance for Doubtful Accounts account: Allowance for Doubtful Accounts Beginning Balance $120 Less: Write-off (150) Less: Ending Balance (200) Bad Debts Expense $230 Note to Instructor: This information can also be shown in T-Account format. EXERCISE 8-4A Selected T-Accounts: Cash Allowance for Doubt Acct. Sales Revenue 2b. 150 Bal. 2,400 3. 218,000 4. 220,000 1. 2,100 2a. 150 5. 2,180 Accounts Receivable Bal. 2,630 Bad Debts Expense Bal. 84,000 5. 2,180 2a. 150 1. 2,100 3. 218,000 2b. 150 4. 220,000 Bal. 79,900 2007 transactions: 1. Bad accounts written off: $2,100 2a. Reinstated previously written off accounts: 150 2b. Collected reinstated accounts: 150 3. Sales on account: 218,000 4. Collections of accounts receivable: 220,000 5. Bad Debts Expense (218,000 x 1%): 2,180 a. (1) Allowance for Doubtful Accounts, 12/31/07: $ 2,630 (2) Accounts Receivable, 12/31/07: 79,900 (3) Net Realizable Value ($79,900 $2,630): 77,270 b. Bad Debts Expense 2007 ($218,000 x 1%): $2,180 c. The recovery of previously written off accounts will cause two...
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This note was uploaded on 04/01/2008 for the course ACIS 2115 taught by Professor Jayardley during the Spring '07 term at Virginia Tech.

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A_Series_SolutionsChap8 - SOLUTIONS TO EXERCISES - SERIES A...

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