Question : 152. AT&T's financial statements for the 2013 and 2012 fiscal years : 1412697

152.

AT&T's financial statements for the 2013 and 2012 fiscal years contained the following information:

 

In addition, the statement of cash flows disclosed bad debt expense of $954 million in 2013 and $1,117 million in 2012.

Required:

1. Determine the amount of actual bad debt write-offs made during 2013.
2. Determine the amount of cash collected from customers during 2013.
3. Compute the receivables turnover ratio for 2013.

($ in millions)
 

153.

Tokyo Imports sold merchandise to Tall-Mart, receiving a six-month, noninterest-bearing note for $100,000. The implied discount rate on the note is 10% per annum. Tokyo uses a periodic inventory system.

Required:

1. Prepare the journal entry to record the sale.
2. Compute the effective rate of interest. 
 
 

154.

Montana Minerals sold coal to Beta Electric, receiving a six-month, noninterest-bearing note for $200,000. The implied discount rate on the note is 8% per annum. Montana uses a periodic inventory system.

Required:

1. Prepare the journal entry to record the sale.
2. Compute the effective rate of interest. 
 
 

155.

On January 1, 2016, Happy Tubs sold a hot tub to Monica, receiving a two-month, noninterest-bearing note in exchange for a hot tub that normally sells for $8,000. The note is for an amount that achieves an effective interest rate of 10% per year.

Required:

1. Prepare the journal entry to record the sale.
2. Prepare any adjusting entry necessary on December 31, 2016.
3. Prepare any adjusting entry necessary on December 31, 2017. 
 
 

To achieve an effective rate of interest of 10%, the note must have a face amount equal to $8,000 + (10% × $8,000 = $800) + (($8,000 + 800) × 10% = $880) = $9,680.

 

156.

On December 1, 2016, General Mole borrowed $400,000 at 12% interest and pledged $500,000 in accounts receivable as collateral. Additionally, General Mole was charged a finance fee equal to 1% of the accounts receivable assigned. At the end of December, $300,000 of the assigned receivables were collected and remitted to the lender along with accrued interest.

Required:

Prepare journal entries to record the borrowing, the assignment of receivables, the collection on the receivables, and the recognition of interest expense.