Ch7BriefExercises - SOLUTIONS TO BRIEF EXERCISES BRIEF...

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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 7-1 Cash in bank—savings account ................................ $68,000 Cash on hand .............................................................. 9,300 Checking account balance ......................................... 17,000 Cash to be reported .................................................... $94,300 BRIEF EXERCISE 7-2 June 1 Accounts Receivable ............................ 50,000 Sales .............................................. 50,000 June 12 Cash ........................................................ 48,500* Sales Discounts .................................... 1,500 Accounts Receivable ................... 50,000 *$50,000 – ($50,000 X .03) = $48,500 BRIEF EXERCISE 7-3 June 1 Accounts Receivable ............................ 48,500* Sales .............................................. 48,500 June 12 Cash ........................................................ 48,500 Accounts Receivable ................... 48,500
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*$50,000 – ($50,000 X .03) = $48,500
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BRIEF EXERCISE 7-4 Bad Debt Expense ................................................. 28,000 Allowance for Doubtful Accounts ($1,400,000 X 2%) ...................................... 28,000 BRIEF EXERCISE 7-5 (a) Bad Debt Expense ........................................... 22,600 Allowance for Doubtful Accounts [(10% X $250,000) – $2,400] ................ 22,600 (b) Bad Debt Expense ........................................... 22,200 Allowance for Doubtful Accounts ($24,600 – $2,400) ................................ 22,200 BRIEF EXERCISE 7-6 11/1/10 Notes Receivable .................................... 30,000 Sales ............................................... 30,000 12/31/10 Interest Receivable ................................. 300 Interest Revenue ($30,000 X 6% X 2/12) ................ 300 5/1/11 Cash ......................................................... .................................................................. 30,900 Notes Receivable .......................... 30,000 Interest Receivable ....................... 300
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Interest Revenue ($30,000 X 6% X 4/12) ................. 600
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BRIEF EXERCISE 7-7 Notes Receivable ................................................... 20,000 Discount on Notes Receivable .................... 3,471 Cash ............................................................... 16,529 Discount on Notes Receivable ............................. 1,653 Interest Revenue $16,529 X 10% ............................................ 1,653 Discount on Notes Receivable ............................. 1,818 Interest Revenue ($16,529 + $1,653) X 10% .......................... 1,818 Cash ........................................................................
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