Exam 5: Accounting for Receivables and Inventory Cost Flow

Riley Corporation accepted credit cards for $107,200 of services performed in 2012.The credit card company charged a 3% service fee and paid Riley as soon as it received the credit card receipts. Required: Based on this information only,determine a)the amount of revenue that Riley should report on its 2012 income statement. b)the amount of expense that Riley should report on its 2012 income statement. c)the amount of assets that Riley has at the end of 2012. d)Riley's cash flows from operating activities for 2012.

Interest and notes receivable are reported on the balance sheet in the order of liquidity.

Loaning money to another company through a promissory note is an asset source transaction.

On September 30,2012,Falls Company collected the accrued interest revenue on a one-year note receivable dated October 1,2010.Show the effect of the collection of previously-accrued interest on Falls' financial statements.

Related to this note receivable,what amount of interest income would Siebens report on its 2013 income statement?

Mohr Manufacturing,Inc.had the following sales during 2012:

To estimate the amount of its uncollectible accounts receivable,a company might

A promissory note involves a maker,payee,and principal.Explain what each is.

Hines Enterprises loaned $4,000 to Baldwin Company on October 1,2010,for one year at 8% interest. Required: Show the effects on the financial statements model (below)of a)the loan to Baldwin b)the adjusting entry at December 31,2010 c)accrual of interest and collection of the note and related interest on October 1,2011 Indicate dollar amounts of increases and decreases.For cash flows,indicate whether the item is an operating activity (OA),investing activity (IA),or financing activity (FA).If an element is not affected by an event,indicate with NA.

The accounting principle that requires a company to provide financial statement users with information about the accounting methods it has selected (including inventory cost flow methods)is

In an inflationary period,which inventory cost flow method,LIFO or FIFO,will produce the smaller amount of net income? Explain.

On December 31,2012,Falls Company recognized the accrued interest revenue on a one-year note receivable dated October 1,2012.Show the effect of the accrual of interest on Falls' financial statements.

Guerrero Company engaged in the following events during 2012: 1.Began operations by issuing common stock to investors for $40,000 cash 2.Provided services to customers on account,$95,000 3.Collected $72,000 cash from accounts receivable 4.Paid salaries of $55,000 for the year 5.Adjusted accounts to reflect estimate that 2 percent of service revenues on account would be uncollectible Required: Determine Guerrero's a.net income for 2012 b.net cash flow from operating activities c.balance in accounts receivable at the end of 2012 d.net realizable value of accounts receivable at the end of 2012 e.total assets as of December 31,2012

A company that uses the allowance write-off method of accounting for uncollectible accounts does not prepare a year-end adjusting entry to estimate its uncollectibles.

For a company that uses the allowance method,the write-off of an uncollectible account receivable is an asset use transaction.

The amount of net realizable value of receivables on the company's 2012 balance sheet was

The Repair Shop provided $618,000 of services to customers during 2012.All customers paid for the services with credit cards.The company submitted the credit card receipts to the credit card company immediately,and the credit card company paid cash in the amount of face value less a 4 percent service charge. Required: Record the credit card sales and collection of the receivables in the horizontal statements model,below.Show dollar amounts of increases and decreases.For cash flows,indicate whether the item is an operating activity (OA),investing activity (IA),or financing activity (FA).Use NA to indicate that an element is not affected by an event.

An aging of Sernett Company's accounts receivable at the end of 2012 yielded the following information about the lengths of time that the receivables had been outstanding: The balance in the Allowance for Doubtful Accounts before adjustments was $310. Based on the preceding information, a)What should be the balance in the Allowance for Doubtful Accounts after the adjusting entry? b)What is the amount of uncollectible accounts expense that should be reported on the income statement?

Potter Co.used the allowance method to account for uncollectible accounts expense.On June 20,2012,Potter wrote off an uncollectible account in the amount of $8,000.Show the effect of this write-off.

The face value of Accounts Receivable less the balance in the Allowance for Doubtful Accounts is equal to the net realizable value of the receivables.