11 pinkston textiles decides to sell 600000 of its

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11. Pinkston Textiles decides to sell $600,000 of its accounts re- ceivable to First Factors Inc. First Factors assesses a service charge of 3% of the amount of receivables sold. Prepare the journal entry that Pinkston Textiles makes to record this sale. 12. Your roommate is uncertain about the advantages of a promissory note. Compare the advantages of a note re- ceivable with those of an account receivable. 13. How may the maturity date of a promissory note be stated? 14. Indicate the maturity date of each of the following prom- issory notes: Date of Note Terms (a) March 13 one year after date of note (b) May 4 3 months after date (c) June 20 30 days after date (d) July 1 60 days after date 15. Compute the missing amounts for each of the following notes. Annual Total Principal Interest Rate Time Interest (a) ? 9% 120 days $ 600 (b) $30,000 10% 3 years ? (c) $60,000 ? 5 months $2,000 (d) $45,000 8% ? $1,200 16. In determining interest revenue, some financial institu- tions use 365 days per year and others use 360 days. Why might a financial institution use 360 days? 17. Cain Company dishonors a note at maturity. What are the options available to the lender? 18. General Motors Corporation has accounts receivable and notes receivable. How should the receivables be reported on the balance sheet? 19. The accounts receivable turnover ratio is 8.14, and aver- age net receivables during the period are $400,000. What is the amount of net credit sales for the period? 20. What percentage does PepsiCo ’s allowance for doubtful accounts represent as a percent of its gross receivables? BRIEF EXERCISES BE9-1 Presented below are three receivables transactions. Indicate whether these receivables are reported as accounts receivable, notes receivable, or other receivables on a balance sheet. (a) On July 1,Keyser Co.sold merchandise on account to Maxfield Inc.for $15,200,terms 2/10,n/30. (b) On July 8, Maxfield Inc. returned merchandise worth $3,800 to Keyser Co. (c) On July 11, Maxfield Inc. paid for the merchandise. BE9-3 During its first year of operations, Henley Company had credit sales of $3,000,000; $600,000 remained uncollected at year-end. The credit manager estimates that $35,000 of these receivables will become uncollectible. (a) Prepare the journal entry to record the estimated uncollectibles. (b) Prepare the current assets section of the balance sheet for Henley Company.Assume that in addition to the receivables it has cash of $90,000, merchandise inventory of $130,000, and prepaid expenses of $7,500. Identify different types of receivables. (SO 1) Record basic accounts receivable transactions. (SO 2) Prepare entry for allowance method and partial balance sheet. (SO 3, 9) PDF Watermark Remover DEMO : Purchase from to remove the watermark
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BE9-4 At the end of 2010, Delong Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $54,000. On January 24, 2011, the company learns that its receivable from Ristau Inc. is not collectible, and management authorizes a write-off of $5,400.
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