3101 Homework Solutions ch0.07 - Acct 3101 Intermed Acctg 1...

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Acct 3101 Intermed. Acctg 1 Homework Solutions Text: Kieso et al. 13 th ed. Chapter 7 EXERCISE 7-14 1. Cash ......................................................................... ................................................................................. 18,000 Loss on Sale of Receivables ($20,000 X 10%) .................................................. 2,000 Accounts Receivable .................................... 20,000 2. Cash ....................................................................... 50,600 Finance Charge ($55,000 X 8%) .......................... 4,400 Notes Payable ............................................... 55,000 3. Bad Debt Expense .................................................. 5,850 Allowance for Doubtful Accounts [($82,000 X 5%) + $1,750] ....................... 5,850 4. Bad Debt Expense .................................................. 6,450 Allowance for Doubtful Accounts ($430,000 X 1.5%) .................................... 6,450 File: 3101 homework solutions ch.07 Page 1
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EXERCISE 7-15 Computation of net proceeds: Cash received .............................................................................. $190,000 Less: Recourse liability ............................................................. 2,000 Net proceeds ............................................................................... $188,000 Computation of gain or loss: Carrying value ............................................................ $200,000 Net proceeds ................................................................ 188,000 Loss on sale of receivables ......................................... $ 12,000 The following journal entry would be made: Cash ............................................................................. $190,000 Loss on Sale of Receivables ....................................... 12,000 Recourse Liability .............................................. 2,000 Accounts Receivable .......................................... 200,000 File: 3101 homework solutions ch.07 Page 2
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EXERCISE 7-17 (a) July 1 Cash ................................................................ ......................................................................... 378,000 Due from Factor ............................................ 16,000* Loss on Sale of Receivables .......................... 6,000** Accounts Receivable ........................... 400,000 * *(4% X $400,000) = $16,000 **(1 1/2% X $400,000) = $6,000 (b) July 1 Accounts Receivable ...................................... 400,000 Due to SEK Corp ................................ 16,000 Financing Revenue .............................. 6,000 Cash ...................................................... 378,000 File: 3101 homework solutions ch.07 Page 3
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EXERCISE 7-22 1. April 1 Petty Cash .................................................... 200 Cash ................................................... 200 2.
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