320CheckFigures_07 - The debit for the finance charge...

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CHAPTER 7 Cash and Receivables EXERCISE 7-9 The balance in the allowance account starts on the debit side. This is not a typo. It just means they must have had more write-offs than the beginning balance in the allowance account during the period. EXERCISE 7-13 The debit for the finance charge should be called “finance charge” in the first entry. The 10% rate is an annual rate. This is a 3-month loan. EXERCISE 7-14 The debit for the finance charge should be called “loss on sale of receivables” in the first entry.
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Unformatted text preview: The debit for the finance charge should be called finance charge in the second entry. EXERCISE 7-16 The loss on sale of receivables is $8,000. EXERCISE 7-17 The loss on sale of receivables is $6,000. The revenue from the sale should be called Financing revenue for Mays Finance Corporation. EXERCISE 7-18 Use 12% as the effective market rate because it is the interest cost for the borrowers in these transactions. 1. Gain on sale of the land is $310,000 2. Service revenue is $221,164 7-1...
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