# Practice do it review 1 concord corporation is a

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Practice Do It! Review 1 Concord Corporation is a growing company whose ability to raise capital has not been growing as quickly as its expanding assets and sales. Concord Corporation’s local banker has indicated that the company cannot increase its borrowing for the foreseeable future. Concord Corporation’s suppliers are demanding payment for goods acquired within 30 days of the invoice date, but Concord Corporation’s customers are slow in paying for their purchases (60–90 days). As a result, Concord Corporation has a cash flow problem. Concord Corporation needs \$166,700 to cover next Friday’s payroll. Its balance of outstanding accounts receivable totals \$784,500. To alleviate this cash crunch, the company sells \$170,600 of its receivables. Record the entry that Concord Corporation would make. (Assume a 2% service charge.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
To speed up the collection of cash, Neumann sells \$170,600 of its accounts receivable to a factor. Assuming the factor charges Neumann a 2% service charge. Service charge expense = \$170,600 × 2% = \$3,412 Solution CLOSE Practice Exercise 1 Bad Debt Expense takes into account any existing balance in the allowance account. (b) Allowance for Doubtful Accounts = [(\$76,300 x 10%) – \$1,180] = \$6,450 (c) Allowance for Doubtful Accounts = [(\$76,300 x 8%) + \$550] = \$6,654
Solution CLOSE Practice Exercise 2 Calculation of interest revenue: Bohr’s note : \$67,200 x 7% x 2/12 = \$784 Pine’s note : 1,800 x 6% x 20/360 = 6 Murdock’s note : 12,000 x 7% x 15/360 = 35 Total accrued interest = \$825
(The computation of interest assumes a 360 day year)