Assignment Three Solutions - CHAPTER SIX SOLUTIONS Solution...

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CHAPTER SIX SOLUTIONS Solution to Assignment Problem Six - 1 2010 Results The results for 2010 would be as follows: Cash Sales $112,000 Sales On Account 96,000 Advances From Customers 12,000 Amounts Received And Receivable $220,000 Add (First Year Of Operations) Nil Deduct: 2010 Reserve For Undelivered Merchandise ( 12,000) 2010 Reserve For Doubtful Debts ( 11,000) Net Effect $197,000 2011 Results The results for 2011 would be as follows: Cash Sales $146,000 Sales On Account 123,000 Advances From Customers 16,000 Amounts Received And Receivable $285,000 Add: 2010 Reserve For Undelivered Merchandise 12,000 2010 Reserve For Doubtful Debts 11,000
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Deduct: 2011 Reserve For Undelivered Merchandise ( 16,000) 2011 Actual bad debt write-off (13,000) 2011 Reserve For Doubtful Debts ( 10,000) Net Effect $269,000
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Solution to Assignment Problem Six - 6 The minimum net business income of Fairway Distribution would be calculated as follows: Accounting Income As Reported $273,000 Additions: Item 2 - Amortization 78,500 Item 3 - Cost Of Advertising In Foreign Newspaper (Note 1) 3,500 Item 3 - Donations To Charities (Note 2) 1,260 Item 3 - Cost Of Real Estate Appraisal (Note 3) 1,470 Item 3 - Cost Of Landscaping (Note 4) 5,260 Item 3 - Mrs. Fairway’s Management Fee (Note 5) 123,000 Subtotal
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This note was uploaded on 11/03/2010 for the course COMM 355 taught by Professor Trancheung during the Winter '10 term at The University of British Columbia.

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Assignment Three Solutions - CHAPTER SIX SOLUTIONS Solution...

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