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8-1 Reporting and Analyzing Receivables Ex. 229 The Garvey Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 6% of accounts receivable will eventually be uncollectible. Selected account balances at December 31, 2013, and December 31, 2014, appear below: 12/31/201312/31/2014 Net Credit Sales$400,000$500,000 Accounts Receivable80,000100,000 Allowance for Doubtful Accounts4,000? Instructions (a)Record the following.
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9-1 Reporting and Analyzing Long-Lived Assets CHAPTER 9 REPORTING AND ANALYZING LONG-LIVED ASSETS TRUE-FALSE STATEMENTS 1.All plant assets (fixed assets) must be depreciated for accounting purposes. 2.When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account. 3.When purchasing delivery equipment, sales taxes and motor vehicle licenses should be.
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9-1 Reporting and Analyzing Long-Lived Assets 191.Research and development costs a.are classified as intangible assets. b.must be expensed when incurred under generally accepted accounting principles. c.should be included in the cost of the patent they relate to. d.are capitalized and then amortized over a period not to exceed 20 years. 192.A computer company has $2,500,000 in research.
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9-1 Reporting and Analyzing Long-Lived Assets 141.All of the following are factors that a company should consider before a write-down impairment of an asset is recorded except a.an appraisal of the asset. b.market trends. c.company profits. d.obsolescence of the asset. 142.Brevard Corporation purchased a taxicab on January 1, 2013 for $25,500 to use for its shuttle business..
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9-1 Reporting and Analyzing Long-Lived Assets 131.Equipment costing $40,000 with a salvage value of $8,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for.
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8-1 Reporting and Analyzing Receivables 161.Young Company lends Dobson industries $40,000 on August 1, 2014, accepting a 9-month, 12% interest note. If Young prepares it financial statements as of December 31, 2014, what adjusting entry must it make? a.Interest Receivable2,000 Interest Revenue2,000 b.Accounts Receivable2,000 Interest Receivable2,000 c.Cash2,000 Interest Revenue2,000 d.Notes Receivable2,000 Interest Revenue2,000 162.Young Company lends Dobson industries $40,000 on August.
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8-1 Reporting and Analyzing Receivables SHORT-ANSWER ESSAY QUESTIONS S-A E 259 List the characteristics of promissory notes. List the reasons for obtaining promissory notes from customers. What action relating to promissory notes must be taken at the end of the accounting period? S-A E 260 Two methods can be used in accounting for uncollectible accounts. Identify and contrast.
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9-1 Reporting and Analyzing Long-Lived Assets 21.Capital expenditures are expenditures that increase the company's investment in productive facilities. 22.Ordinary repairs should be recognized when incurred as revenue expenditures. 23.A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership. 24.A permanent decline in the market value of an asset is.
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9-1 Reporting and Analyzing Long-Lived Assets 31.A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value. 32.The return on assets ratio indicates how efficiently a company uses its assets. 33.The return on assets ratio can be computed from the.
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9-1 Reporting and Analyzing Long-Lived Assets 121.Newell Company purchased a machine with a list price of $96,000. They were given a 10% discount by the manufacturer. They paid $600 for shipping and sales tax of $4,500. Newell estimates that the machine will have a useful life of 10 years and a residual.
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8-1 Reporting and Analyzing Receivables EXERCISES Ex. 224 On January 10 Donna Stark uses her Baver Co. credit card to purchase merchandise from Baver Co. for $2,600. On February 10, she is billed for the amount due of $2,600. On February 12 Stark pays $1,600 on the balance due. On March 10 Stark is.
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9-1 Reporting and Analyzing Long-Lived Assets 211.Equipment with a cost of $300,000 has an estimated salvage value of $20,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the first full year, during which the.
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8-1 Reporting and Analyzing Receivables 171.The maturity value of a $40,000, 12%, 3-month note receivable is a.$41,200. b.$40,480. c.$44,800. d.$40,400. 172.Nance Co. holds Gant Inc.’s $25,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is: a.Cash25,000 Notes Receivable25,000 b.Accounts Receivable25,750 Notes Receivable25,000 Interest Revenue750 c.Cash25,750 Notes Receivable25,000 Interest Revenue750 d.Accounts Receivable25,750 Notes Revenue25,000 Interest.
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8-1 Reporting and Analyzing Receivables COMPLETION STATEMENTS               244.Notes and accounts receivable that result from sales transactions are often called ______________ receivables.               245.Two accounting problems associated with accounts receivable are (1) ______________ and (2) ______________ accounts receivable.               246.The net amount expected to be collected in cash from receivables is the _____________.               247.When credit.
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9-1 Reporting and Analyzing Long-Lived Assets 161.Nix Corporation sold equipment for $20,000. The equipment had an original cost of $60,000 and accumulated depreciation of $30,000. Ignoriing the tax effect, as a result of the sale a.net income will increase $20,000. b.net income will increase $10,000. c.net income will decrease $10,000. d.net income will decrease $20,000. 162.Morton’s Courier.
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9-1 Reporting and Analyzing Long-Lived Assets 111.A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the.
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8-1 Reporting and Analyzing Receivables 201.If a company sells its accounts receivables to a factor a.the seller pays a commission to the factor. b.the factor pays a commission to the seller. c.there is a gain on the sale of the receivables. d.the seller defers recognition of sales revenue until the account is collected. 202.A captive finance company.
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8-1 Reporting and Analyzing Receivables Be. 214 Assuming that the allowance method is being used, prepare general journal entries without explanations to record the following transactions. January 1Sold merchandise to Mary Baden for $500 on account. February 1Received $300 from Baden. July 1Wrote off Baden’s account as uncollectible. September 1Unexpectedly received payment in full from Baden. Be. 215 The.
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9-1 Reporting and Analyzing Long-Lived Assets MULTIPLE CHOICE QUESTIONS 46.A company purchased land for $350,000 cash. Real estate brokers' commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be.
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8-1 Reporting and Analyzing Receivables S-A E 267 Customer purchases using credit cards are a significant source of revenue for many retailers. From the standpoint of a retailer, briefly discuss some advantages and disadvantages of a retail store having its own credit card as opposed to accepting one of the national credit cards.
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8-1 Reporting and Analyzing Receivables IFRS QUESTIONS               1.Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP? a.The use of allowance accounts and the allowance method. b.How to record discounts. c.How to record factoring. d.All of these answer choices are essentially the same for IFRS and GAAP.               2.Which receivables accounting and.
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8-1 Reporting and Analyzing Receivables Ex. 243 Shafer Company has the following accounts in its general ledger at July 31: Accounts Receivable $49,000 and Allowance for Doubtful Accounts $3,400. During August, the following transactions occurred. Aug.15Sold $30,000 of accounts receivable to More Factors, Inc. who assesses a 2% finance charge. 25Made sales of $2,500 on.
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8-1 Reporting and Analyzing Receivables Be. 220 Trent Distributors has the following transactions related to notes receivable during the last two months of the year. Dec.              1Loaned $16,000 cash to E. Kinder on a 1-year, 6% note.               16Sold goods to J. Jones, receiving a $4,800, 60-day, 7% note.               31Accrued interest revenue on all notes.
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9-1 Reporting and Analyzing Long-Lived Assets 61.Ramirez Company acquires land for $210,000 cash. Additional costs are as follow. Removal of shed$    2,000 Filling and grading6,000 Salvage value of lumber of shed1,280 Broker commission4,520 Paving of parking lot40,000 Closing costs3,400 Ramirez will record the acquisition cost of the land as a.$224,640. b.$227,200. c.$225,920. d.$210,000. 62.Wesley Hospital installs a new parking lot. The paving cost $45,000.
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9-1 Reporting and Analyzing Long-Lived Assets 71.Ryan, Inc. purchased a delivery truck with a $42,000 list price. The company was given a $4,200 cash discount by the dealer, and paid $2,100 sales tax. Annual insurance on the truck is $1,050. As a result of the purchase, by how much will Ryan, Inc..
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8-1 Reporting and Analyzing Receivables Ex. 234 Hachey Company has accounts receivable of $95,100 at March 31, 2014. An analysis of the accounts shows these amounts.    Balance, March 31        Month of Sale            2014    2013 March$65,000$75,000 February12,6008,000 December and January10,1002,400 November and October    7,400    1,100 $95,100$86,500 Credit terms are 2/10, n/30. At March 31, 2014, there is.
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9-1 Reporting and Analyzing Long-Lived Assets 181.On May 1, 2014, Irwin Company purchased the copyright to Quick Computer Tutorials for $90,000. It is estimated that the copyright will have a useful life of 5 years. The amount of amortization expense recognized for the year 2014 would be a.$18,000. b.$12,000. c.$9,000. d.$9,600. 182.Which of the following is not.
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8-1 Reporting and Analyzing Receivables Ex. 232 The percentage of receivables approach to estimating bad debts expense is used by Hayes Company. On February 28, the firm had accounts receivable in the amount of $585,000 and Allowance for Doubtful Accounts had a credit balance of $370 before adjustment. Net credit sales for February.
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8-1 Reporting and Analyzing Receivables S-A E 263 An article in the Wall Street Journal indicated that companies are selling receivables at a record rate. Why do companies sell their receivables? S-A E 264 Your friend Mark has opened an office supply store. He will extend open credit to local businesses and is concerned about.
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9-1 Reporting and Analyzing Long-Lived Assets 201.A company has the following assets: Buildings and Equipment,     less accumulated depreciation of $5,000,000$35,000,000 Copyrights2,400,000 Patents10,000,000 Land12,000,000 The total amount reported under Property, Plant, and Equipment would be a.$59,400,000. b.$47,000,000. c.$57,000,000. d.$49,400,000. 202.Plant assets are ordinarily presented in the balance sheet a.at current market values. b.at replacement costs. c.at cost less accumulated depreciation. d.in a separate section along with intangible.
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9-1 Reporting and Analyzing Long-Lived Assets 11.Recording depreciation each period is an application of the matching principle. 12.The Accumulated Depreciation account represents a cash fund available to replace plant assets. 13.In calculating depreciation, both plant asset cost and useful life are based on estimates. 14.The declining-balance method of depreciation is called an accelerated depreciation method.
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8-1 Reporting and Analyzing Receivables Ex. 226 The December 31, 2013, balance sheet of the Kramer Company had Accounts Receivable of $650,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2014, the following transactions occurred: sales on account $1,550,000; sales returns and allowances, $100,000; collections from customers, $1,250,000; accounts.
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8-1 Reporting and Analyzing Receivables BRIEF EXERCISES Be. 210 Presented below are various receivable transactions entered into by Renner Tool Company. Indicate whether the receivables are reported as accounts receivable, notes receivable, or other receivables on the balance sheet. a.Advanced $1,000 to a trusted employee. b.Accepted a $2,000 promissory note from a customer as payment on.
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8-1 Reporting and Analyzing Receivables Ex. 236 Record the following transactions in general journal form for the Newell Company. July1Received a $9,000, 8%, 3-month note, dated July 1, from Lois Patton in payment of her open account. Oct.1Received notification from Lois Patton that she was unable to honor her note at this time. It is.
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9-1 Reporting and Analyzing Long-Lived Assets 101.The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that a.is used for tax purposes. b.must be used for financial statement purposes. c.is required by the SEC. d.expenses an asset over a single year because capital acquisitions must be expensed in the year purchased. 102.Which of the following methods.
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8-1 Reporting and Analyzing Receivables MATCHING 258.Match the items below by entering the appropriate code letter in the space provided. A.Aging the accounts receivableF.Percentage of receivables basis B.Direct write-off methodG.Promissory note C.Obligation dueH.Dishonored note D.Trade receivablesI.Cash net realizable value E.Accounts receivable turnover J.Credit card sales ____              1.A written promise to pay a specified amount on demand or at a.
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8-1 Reporting and Analyzing Receivables Ex. 238 Compute the maturity value as indicated for each of the following notes receivable. 1.An $8,000, 6%, 3-month note dated April 20. Maturity value $____________. 2.A $20,000, 9%, 72-day note dated March 5. Maturity value $____________. 3.A $12,000, 5%, 30-day note dated September 10. Maturity value $____________. 4.A $9,000, 7%, 6-month note dated.
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8-1 Reporting and Analyzing Receivables Be. 222 The following data exists for Mather Company. 20142013 Accounts Receivable$  80,000$  70,000 Net Sales560,000410,000 Calculate the accounts receivable turnover and the average collection period for accounts receivable in days for 2014. Be. 223 Donaldson Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance.
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9-1 Reporting and Analyzing Long-Lived Assets 171.The following information is provided for Nguyen Company and Northwest Corporation. (in $ millions)Nguyen CompanyNorthwest Corporation Net income 2014$275$390 Net sales 20141,5004,100 Total assets 12/31/121,0002,400 Total assets 12/31/131,0503,000 Total assets 12/31/141,1504,000 If Nguyen and Northwest are in the same industry and the industry average for return on assets is equal to 30%, which.
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9-1 Reporting and Analyzing Long-Lived Assets 151.A truck costing $45,000 and on which $39,000 of accumulated depreciation has been re-corded was discarded as having no value. The entry to record this event would include a a.gain of $6,000. b.loss of $6,000. c.credit to Accumulated Depreciation for $39,000. d.credit to Accumulated Depreciation for $45,000. 152.Equipment that cost $72,000.
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9-1 Reporting and Analyzing Long-Lived Assets 51.Which of the following would not be included in the Equipment account? a.Installation costs. b.Freight costs. c.Cost of trial runs. d.Electricity used by the machine. 52.Which of the following assets does not decline in service potential over the course of its useful life? a.Equipment. b.Furnishings. c.Land. d.Fixtures. 53.The four subdivisions for plant assets are a.land, land improvements,.
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8-1 Reporting and Analyzing Receivables Be. 217 Strickman Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions: January5Sold merchandise to Sue Land for $1,800, terms n/15. April15Received $400 from Sue Land on account. August21Wrote off as uncollectible the balance of the Sue Land account when she declared bankruptcy. October5Unexpectedly.
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8-1 Reporting and Analyzing Receivables Ex. 240 These transaction took place for Sanders Co. 2013 May1Received a $15,000, 1-year, 9% note in exchange for an outstanding account receivable from T. Foley. Dec.31Accrued interest revenue on the T. Foley note. 2014 May1Received principal plus interest on the T. Foley note. (No interest has been accrued since December 31, 2013.) Instructions Record.
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8-1 Reporting and Analyzing Receivables 181.The financial statements of the Nelson Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Nelson? a.3.8 times b.6 times c.10.0 times d.7.5 times 182.The financial statements of the.
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8-1 Reporting and Analyzing Receivables Ex. 230 Erickson Company had a $300 credit balance in Allowance for Doubtful Accounts at December 31, 2014, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:               Estimated Percentage          Uncollectible  Current Accounts$170,0001% 1–30 days past due15,0003% 31–60 days past due12,0006% 61–90 days past due5,00015% Over.
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8-1 Reporting and Analyzing Receivables 151.A note receivable is a negotiable instrument which a.eliminates the need for a bad debts allowance. b.can be transferred to another party by endorsement. c.takes the place of checks in a business firm. d.can only be collected by a bank. 152.When a company receives an interest-bearing note receivable, it will a.debit Notes Receivable.
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8-1 Reporting and Analyzing Receivables Ex. 227 An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Dec.17Cash .......................................2,940 Sales Discounts ................................60 Accounts Receivable ........................3,000 (To record collection of 12/4 sales, terms 2/10, n/30) 27Cash .......................................1,200 Bad Debt Expense ..........................1,200 (Collection of account previously written off as uncollectible under allowance method) 31Bad Debt Expense.
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8-1 Reporting and Analyzing Receivables 191.In the table below the information for four companies is provided. CompanyAccounts Receivable turnoverAverage collection period Martin13.926.3 Lewis13.327.4 Danforth10.435.1 Garner14.525.2 Industry Average13.028.1 Assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations? a.Martin b.Lewis c.Danforth d.Garner 192.Simonic Retailers accepted $90,000 of Citibank Visa credit card charges for.
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9-1 Reporting and Analyzing Long-Lived Assets 91.Equipment was purchased for $90,000. Freight charges amounted to $4,200 and there was a cost of $12,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $18,000 salvage value at the end of its 5-year useful life. Depreciation.
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9-1 Reporting and Analyzing Long-Lived Assets 81.The cost of a long-term asset is expensed a.when it is paid for. b.as the asset benefits the company. c.in the period in which it is acquired. d.in the period in which it is disposed of. 82.The book value of an asset is equal to the a.asset's fair value less its historical.
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