Chapter_7_Cash_And_Receivables_Extra_Class_Problems_And_Solutions

Chapter_7_Cash_And_Receivables_Extra_Class_Problems_And_Solutions

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Intermediate Accounting I Class Problems Chapter 7 1. Sales Discounts Saturn Company made sales of $25,000 with terms of 1/10, n/30. Within the discount period it received payment from customers owing $15,000; after the discount period it received payment from customers owing $10,000. a. Prepare journal entries for the transactions described above assuming Saturn uses the gross method of recording sales. b. Prepare journal entries for the transactions described above assuming Saturn uses the net method of recording sales. 2. Sales Discounts The Lambert Corporation sells merchandise at a list price of $60,000 with accompanying terms 2/10, n/30 on December 8, 2005. By December 18, 2005, Lambert had collected from customers for merchandise originally billed at $34,000. By December 31, 2005 (Lambert’s FYE), additional collections had been received on sales originally billed at $18,000 and sales returns and allowances of $1,500 had been granted by Lambert. By January 15, 2006, all remaining balances due had been collected. Assume a 12/31 fiscal year end. Required: a. Prepare the journal entries using (a) the gross method and (b) the net method to record all the items above. b. Calculate the accounts receivable balance that would be reported under the (a) gross method and (b) net method on the Lambert Corp.’s December 31, 2005 balance sheet. 3. Accounts Receivable and Bad Debt Expense Tiger Tank, Inc. had net sales in 2005 of $1,200,000. At year-end, the balance in Accounts Receivable was $250,000 (debit balance), and the balance in the Allowance for Doubtful Accounts is $2,100 (credit balance). Calculate bad debt expense and record the journal entry necessary under each of the following scenarios: a) Tiger Tank estimates that 2% of net sales are uncollectible b) Tiger Tank estimates that 10% of accounts receivable are uncollectible c) Based on an accounts receivable aging schedule, Tiger Tank estimates that total uncollectible accounts receivable are $24,600.
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4. Accounts Receivable and Bad Debt Expense An examination of the accounting records of Keegan Corp. disclosed the following information for 2005: Cash sales, $680,000, Net credit sales $500,000, Accounts receivable (12/31/2005), $200,000, Allowance for doubtful accounts (12/31/2005, prior to adjustment), $1,500 debit. Required:
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This note was uploaded on 02/12/2012 for the course ACCT 3001 taught by Professor Moffitt during the Spring '08 term at LSU.

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Chapter_7_Cash_And_Receivables_Extra_Class_Problems_And_Solutions

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