Exam 7: Receivables and Investments

The comparative financial statements for the years ended December 31,2017 and 2016 for Sophia Company reported the following information. Answer these questions concerning Sophia Company's receivables: Balance Sheet: Cash and cash equivalents \ 77,000 \ 81,600 Accounts receivables, less allowance for doubtful accounts of \ 80(2017) and \ 82(2016) 2,700 2,300 Income Statement: Net sales for the year \ 9,700 \ 8,800 Net income for the year 950 1,070 Statement of Cash Flows: Net cash provided by operating activities \1 ,000 \1 ,100 Increase in accounts receivable (460) (280) A)What is the gross amount of accounts receivable for Sophia at December 31,2017? Why is this amount different than the amount of receivables shown in the 2017 column of the balance sheet? ? B)What is the net realizable value of accounts receivable for Sophia at December 31,2017? What does this amount represent?

Assume that on December 13,2017,Royal Company sells a computer to Savco Corp.at an invoice price of $25,000.Because Savco is short of cash,it gives Royal a 90-day,12% promissory note.(Assume a 360-day year for interest calculations. ) ? Required 1)What is the total amount of interest that will be due on the maturity date? 2)What adjustments will Royal make to record receipt of the note? 3)If Royal has a December 31 year-end,what adjusting journal entry is needed to record interest due but not yet received? 4)How much interest will Royal earn in 2017? 5)On what day will the note mature? 6)What adjustments will Royal record on the maturity date?

Beatrice Equipment Beatrice Equipment sells merchandise only on credit.For the year ended December 31,2017,the following data are available: ?? Sales \ 2,400,000 Sales returns and allowances 60,000 Accounts Receivable-January 1, 2017 270,000 Allowance for doubtful accounts-January 1, 2017 25,600 Collections during 2017 2,426,300 Accounts written off as uncollectible during 2017 23,700 -Refer to the data for Beatrice Equipment. ? Determine the balance of Accounts Receivable at December 31,2017.

The difference between the principal amount of a note and its maturity value is called __________.

What is the distinguishing characteristic between accounts receivable and notes receivable?

Corrigan Corp.purchased 1,000 shares of Microsoft common stock.What will determine whether the shares are classified as current assets or noncurrent assets?

The amount of cash the maker is to pay the payee on the maturity date of the note is called the __________.

If Rope Inc.receives $23,825 from credit card collections and has an average rate of 4.7% charged by the credit card company,its credit card sales during the period were

A note discounted with recourse means that if the original customer fails to pay the bank the total amount due on the maturity date of the note,the company that transferred the note to the bank is liable for the full amount.

The data presented below are for Falconi,Inc.for 2017. Credit sales during the year \ 2,100,000 Accounts receivable-December 31,2017 295,000 Allowance for doubtful accounts-December 31,2017 28,000 Bad debts expense for the year 17,000 -What is the effect on net accounts receivable when Falconi records its estimate for bad debts expense using the allowance method?

When Company X buys stock in Company Y,Company X is referred to as the investee.

If a company discounts a note at a bank,but still is contingently liable for the maturity value,then the note was discounted with __________.

The accounts receivable turnover ratio is computed by dividing __________ by average accounts receivable.

Which one of the following is an investing activity on the statement of cash flows?

Hemmer Company received a 12%,six-month promissory note with a face amount of $10,000 from Stutfeld Company for the sale of merchandise on December 1,2017. A) Which party is the maker? $\underline{\quad\quad}$ B) Which party is the payee? $\underline{\quad\quad}$ C) Determine the maturity value of the note.

Explain the distinction between a note receivable and an account receivable.

On November 2,2017,Quaint General Store concluded that a customer's $400 account receivable was uncollectible and that the account should be written off.What effect will this write-off have on Quaint's 2017 net income and balance sheet totals assuming the allowance method is used to account for bad debts?

Benton Corporation The data below are for Benton Corporation for 2017. ? Accounts Receivable-January 1,2017 \ 334,000 Credit sales during 2017 850,000 Collections from credit customers during 2017 725,000 Customer accounts written off as uncollectible during 2017 12,000 Allowance for doubtful accounts (credit balance) (after write-off of uncollectible accounts) 1,700 Estimated uncollectible accounts based on an aging analysis 13,200 ? -Refer to the data for Benton Corporation. ? What is the balance of Accounts Receivable at December 31,2017?

Hawthorne Industries' comparative balance sheets included accounts receivable of $221,400 at December 31,2016,and $205,900 at December 31,2017.Sales reported on Hawthorne's 2017 income statement amounted to $2,550,000.What amount of cash collections will Hawthorne will report in the Operating Activities category of its 2017 statement of cash flows assuming that the direct method is used? Show your calculations.

A subsidiary is a separate legal entity that is owned or controlled by another entity.