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Unformatted text preview: E8-1. Analyzing accounts receivable(AICPA adapted)To find the amount of gross sales, start by determining credit sales. We can do this with the accounts receivable T-account below.Accounts ReceivableBeginning AR $80,000 $1,000 Accounts written offCredit salesX35,000 Cash collectedEnding AR $74,000 $80,000 + X - $1,000 - $35,000 = $74,000X = $30,000 = credit salesNow that we know the amount of credit sales, we can add cash sales to this amount to find gross sales.Credit sales$30,000Cash sales30,000Gross sales$60,000E8-8.Aging accounts receivable(AICPA adapted)The estimated uncollectible accounts at December 31, 2008 total:0-30 days$60,000x5%=$3,00031-60 days4,000x10%= 400Over 60 days2,000x70%= 1,400$4,800So Vale should report an allowance for uncollectible accounts of $4,800.P11-5. Understanding the Fair Value OptionNote: I included this only because it reinforced the ideas of marking to market that we covered with trading securities and with options. I won’t ask anything about this on the exam, but I realized that I will likely not cover this section before the final, so it seemed like I should at least give one problem that will get you to see the idea of the fair value option.Requirement 1:Mason would make the following entry to record the borrowing and initial purchase of its corporate bond investment:January 1, 2008:DR Cash $500,000CR Loan payable$500,000DR Marketable securities—Corporate bonds$500,000CR Cash$500,000Mason Manufacturing would make the following entries to record the fair value of its corporate bond investment at the end of each quarter. Unrealized holding losses and gains reflect the fair value change over the period, and...
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This note was uploaded on 01/20/2012 for the course ACCOUNTING 101 taught by Professor Unknown during the Spring '08 term at Carnegie Mellon.
- Spring '08