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vesna_86 [32]
3 years ago
6

otato Company began the period with an accounts receivable balance of $2,693 and a balance in the allowance for doubtful account

s of $494 The following transactions occurred in Potato Company a. During the period, customer balances are written off in the amount of $668 b. At the end of the period, bad debt expense is estimated to be $749. What is the balance in Allowance for Doubtful Accounts after these transactions
Business
1 answer:
Sphinxa [80]3 years ago
7 0

Answer:

Potato Company

Balance in Allowance for Doubtful Accounts is $575 (Credit).

Explanation:

We can use a T-account for the Allowance for Doubtful Accounts to determine the balance:

                                      Allowance for Doubtful Accounts

a. Accounts Receivable         $668     Beginning Balance   $494

 Ending Balance                     <u>$575</u>  b. Bad Debt Expense  <u>$749</u>

                                              <u>$1,243</u>                                    <u>$1,243</u>

                                                                Ending Balance     $575

The allowance for doubtful accounts is a contra account to the Accounts Receivable account.  Its purpose to provide some estimation of the uncollectibles as a way of managing the credit risk involved in trade sales.

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On July 1, 2020, when the market rate of interest was 12%, TTS Corporation issued $100,000 of 10%, 10 year bonds, interest payab
lawyer [7]

Answer:

E) $12,000

Explanation:

the bonds were  issued at a discount for $93,000

the face value $100,0000

coupon rate 12%

even though the bonds were sold at a discount because the coupon rate was lower than the market rate,  the amount of cash paid as interest is based on the face value = $100,0000 x 12% = $12,000

the journal  entry to record the sale of the bonds would be:

Dr Cash 93,000

Dr Discount on bonds payable 7,000

    Cr Bonds payable 100,000

whatever method the company uses  to record interest, the amount of cash paid will  always be the same

5 0
3 years ago
g During Year 2, the company experienced the following events: Purchased inventory that cost $5,200 on account from Ross Company
meriva

Answer:

a) I used an excel spreadsheet to record the T-accounts

the closing entries would be:

Dr Sales revenue 12,100

Dr Purchase discounts 48

Dr Interest revenue 600

Dr Gain on sale of land 1,500

    Cr Income summary 14,248

Dr Income summary 8,512

    Cr Cost of goods sold 6,450

    Cr Sales returns 1,680

    Cr Sales discounts 242

    Cr Distribution costs 140

Dr Income summary 5,736

    Cr Retained earnings 5,736

b) Ross Company

Income Statement

For the year ended December 31, Year 2

Revenues:

  • Sales revenues $12,100
  • Sales returns ($1,680)
  • Sales discounts ($242)                         $10,178

Cost of goods sold                                       <u>($6,450)</u>

Gross profit                                                     $3,728

Expenses:

  • Distribution costs ($140)                          <u>($140)</u>

Operating income                                          $3,588

Other sources of income:

  • Gain on sale of land $1,500
  • Interest revenue $600                          <u>$2,100</u>

Net income before taxes                               $5,688

Download pdf
8 0
3 years ago
Selling the bonds at a premium has the effect of
ludmilkaskok [199]

Answer: Selling the bonds at a premium has the effect of causing the cost of borrowing money to be lower than the bond when interest is paid.

Explanation: When a bond is traded above the par value, it is being sold at premium. Since the bond is sold above it, the interest rate is higher but the cost to borrow money is lower. Purchasing a bond a premium is expensive because it is above market value but selling a bond at premium contributes to more money made off of the sale.

5 0
3 years ago
When economists use the term ceteris paribus, they are indicating that
yawa3891 [41]
Ceteris paribus mean other thing remaining the same.

so the correct answer should be B.
3 0
3 years ago
Weismann Co. issued 15-year bonds a year ago at a coupon rate of 4.9 percent. The bonds make semiannual payments and have a par
Neporo4naja [7]

Answer:

The price of the bond is $ 1,041.22  

Explanation:

In calculating the price of the bond i discounted the future cashflows consisting of coupon payment and par value at redemption using the discount factor 1/(1+r)^N where r is the semi-annual YTM and N is the relevant period of cash flow.

The remaining coupon payments imply 14 years as a year has passed since the bond was issued.

Find attached spreadsheet.

Download xlsx
6 0
3 years ago
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