Solutions to Receivables practice problems

Solutions to Receivables practice problems - Solutions to...

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Solutions to Chapter 7 (Receivables/Securitizations) Practice Problems EXERCISE 7-8 (5–10 minutes) (a) Allowance for Doubtful Accounts . .................... 8,000 Accounts Receivable . ............................... 8,000 (b) Accounts Receivable . ......................................... $900,000 Less: Allowance for Doubtful Accounts . ......... 40,000 Net realizable value . .................................. $860,000 (c) Accounts Receivable . ......................................... $892,000 Less: Allowance for Doubtful Accounts . ......... 32,000 Net realizable value . .................................. $860,000 EXERCISE 7-12 (15–20 minutes) 7/1 Accounts Receivable—Legler Co. . .................... 9,800 Sales ($10,000 X 98%) . .............................. 9,800 7/5 Cash [$12,000 X (1 – .09)] . .................................. 10,920 Loss on Sale of Receivables . ............................. 1,080 Accounts Receivable ($12,000 X 98%) . .... 11,760 Sales Discounts Forfeited . ........................ 240 (Note : It is possible that the company already recorded the Sales Discounts Forfeited. In this case, the credit to Accounts Receivable would be for $12,000. The same point applies to the next entry as well.)
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EXERCISE 7-12 (Continued) 7/9 Accounts Receivable . ....................................... 180 Sales Discounts Forfeited ($9,000 X 2%) . ....................................... 180 Cash . .................................................................. 5,640 Finance Charge ($6,000 X 6%) . ......................... 360 Notes Payable . ......................................... 6,000 7/11 Accounts Receivable—Legler Co. . .................. 200 Sales Discounts Forfeited ($10,000 X 2%) . ...................................... 200 This entry may be made at the next time financial statements are prepared. Also, it may occur on 12/29 when Legler Company’s receivable is adjusted. 12/29 Allowance for Doubtful Accounts .
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This note was uploaded on 11/05/2011 for the course ACCT 401 taught by Professor Winchel during the Spring '10 term at South Carolina.

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Solutions to Receivables practice problems - Solutions to...

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