B to what extent was francis equipment co able to

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(b) To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts:
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3e342596ae0fe030578ba3dc28b9f82c86a0c05b.xlsx, Problem 7-3 Solution, Page 12 of 13, 03/03/2016, 09:54:16 Name: Solution Date: Instructor: Course: was $555,000 and the Allowance for Doubtful Accounts had a credit balance of $40,000 The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below. Days Account Outstanding Amount Probability of Collection Less than 16 days $300,000 0.98 Between 16 and 30 days 100,000 0.90 Between 31 and 45 days 80,000 0.85 Between 46 and 60 days 40,000 0.80 Between 61 and 75 days 20,000 0.55 Over 75 days 15,000 0.00 Instructions: Days Account Outstanding Amount Probability of Collection Doubtful Accts: 0-15 days $300,000 0.98 $6,000 16 - 30 days 100,000 0.90 10,000 31 - 45 days 80,000 0.85 12,000 46 - 60 days 40,000 0.80 8,000 61 - 75 days 20,000 0.55 9,000 Over 75 days 15,000 0.00 Balance for Allowance for Doubtful Accounts $45,000 Accounts Receivable ($555,000 - $15,000) $540,000 Less: Allowance for Doubtful Accounts 45,000 Accounts Receivable - Net $495,000 The year-end bad debt adjustment would decrease before-tax income $20,000 as computed below: Estimated amount required in the Allowance for Doubtful Accounts $45,000 25,000 Required charge to expense $20,000 Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse P7-3 (Bad-Debt Reporting—Aging) Manilow Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Manilow’s Accounts Receivable account (a) What is the appropriate balance for the Allowance for Doubtful Accounts at the year-end? The accounts which have been outstanding over 75 days ($15,000) and have zero probability of collection would be written off immediately by a debit to Allowance for Doubtful Accounts for $15,000 and a credit to Amounts Receivable for $15,000 . It is not considered when determining the proper amount for the Allowance for Doubtful Accounts. (b) Show how Accounts Receivable would be presented on the balance sheet. (c) What is the dollar effect of the year-end bad debt adjustment on the before-tax income? Balance in the account after write-off of uncollectible accounts but before adjustment ($40,000 - $15,000)
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3e342596ae0fe030578ba3dc28b9f82c86a0c05b.xlsx, Problem 7-3, Page 13 of 13, 03/03/2016, 09:54:16 Name: Date: Instructor: Course: was $555,000 and the Allowance for Doubtful Accounts had a credit balance of $40,000 The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below. Days Account Outstanding Amount Probability of Collection Less than 16 days $300,000 0.98 Between 16 and 30 days 100,000 0.90 Between 31 and 45 days 80,000 0.85 Between 46 and 60 days 40,000 0.80 Between 61 and 75 days 20,000 0.55 Over 75 days 15,000 0.00 Instructions: Days Account Outstanding Amount Probability of Collection Doubtful Accts: 0-15 days $300,000 0.98 Formula 16 - 30 days 100,000 0.90 Formula 31 - 45 days 80,000 0.85 Formula 46 - 60 days 40,000 0.80 Formula 61 - 75 days 20,000 0.55 Formula Over 75 days 15,000 0.00 Formula Formula Enter text answer here.
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