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Receivable cash restricted as compensating bal 100000

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ReceivableCash restricted as compensating bal. $100,000RestrictedCertified check from customer $9,800Postage stamps $620Supplies
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Chapter 9 / Exercise 1
Accounting
Reeve/Warren
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E7-2 (Determining Cash Balances)4.Checking account balance$37,000Money market account balance$48,000(has checking privileges)NSF check from customer$800
E7-2 (Determining Cash Balances)4.Checking account balance $37,000Money market account balance$48,000(has checking privileges)NSF check from customer$800Receivable5.Checking account balance $700,000Cash restricted for plant expansion $500,000Short-term treasury bills$180,000Cash advances from customer$900(not included in checking account)Cash advance to company executive$7,000(payable on demand)Refundable deposit paid to gov’t$26,000(to guarantee performance)
E7-2 (Determining Cash Balances)4.Checking account balance $37,000Money market account balance$48,000(has checking privileges)NSF check from customer$800Receivable5.Checking account balance $700,000Cash restricted for plant expansion $500,000LT AssetShort-term treasury bills$180,000ST InvestmentCash advances from customer$900Cr Liability(not included in checking account)Cash advance to company executive$7,000Receivable(payable on demand)Refundable deposit paid to gov’t$26,000Receivable(to guarantee performance)
Classification of ReceivablesTrade ReceivablesAccounts ReceivableNotes ReceivablesNon-trade ReceivablesAdvances to officers, employees, affiliatesDividends and interest receivableRefunds and depositsCurrent vs. Noncurrent
Accounts ReceivablesMeasurement – the exchange price duePresent value ignored due to immaterialityInvoice serves as evidenceTrade discounts – reductions in the priceSold net of the discounts at point of saleCash (sales) discounts – incentive for prompt paymenti.e., 2/10, n/30Gross method vs. Net MethodGross – assumes customer will miss the discount periodNet – assumes customer will pay within the discountperiod
E 7-5 Recording Sales Gross vs. NetOn June 3, Arnold sells to Chester merchandise having a sales price of $3,000with the terms 2/10, n/60 fob shipping point.Assume that Arnold receives payment on June 12.$3,000 X 98% = $2,940Gross MethodNet Method6/3 AR3,000AR2,940Sales3,000Sales2,9406/12Cash2,940Cash discounts60AR3,000Contra-Sales Account
Cash Discounts – Gross vs. Net MethodOn June 3, Arnold sells to Chester merchandise having a sales price of $3,000with the terms 2/10, n/60 fob shipping point.Assume that Arnold receives payment on June 12.$3,000 X 98% = $2,940Gross MethodNet Method6/3 AR3,000AR2,940Sales3,000Sales2,9406/12Cash2,940Cash discounts60AR3,000

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The document you are viewing contains questions related to this textbook.
Accounting
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Chapter 9 / Exercise 1
Accounting
Reeve/Warren
Expert Verified

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