Professional Documents
Culture Documents
Emil Family Importers sold goods to Acme Decorators for $20,000 on November 1, 2020,
accepting Acme’s $20,000, six-month, 6% note.
Solution
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Brief Exercise 7-09
Assume instead that Emil uses reversing entries. Prepare any appropriate reversing entry at January
1, 2021, and the May 1, 2021 entry for the collection of the note and interest. (Credit account titles
are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts. Record
journal entries in the order presented in the problem.)
choose a transaction
enter an account title enter a debit amount enter a credit amount
date
Cash 20600
5/1/21
Prepare the journal entry for Keyser Woodcrafters to record the sale. (Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts.)
Calculate the company’s accounts receivable turnover ratio for 2015 and 2016. (Round answers to
2 decimal places, e.g. 15.25.)
select an option
Yes
Solution
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2015:
Net Sales
Average Trade Receivables (net)
$21,514
$3,009 + = 7.08 times
$3,069
2
2016:
Net Sales
Average Trade Receivables (net)
$21,719
$2,979 + = 7.25 times
$3,009
2
Yes, As indicated from these ratios, BCE Inc.’s accounts receivable turnover ratio improved in 2016
(to 7.25 times from 7.08 times in 2015). BCE’s average collection period improved as well, to 50.34
days from 51.55 days in 2015).
Exercise 7-01 a
1. A commercial savings account with $600,000 and a commercial chequing account balance of
$900,000 are held at First National Bank. There is also a bank overdraft of $35,000 in a chequing
account at the Royal Scotia Bank. No other accounts are held at the Royal Scotia Bank.
2. Fashion has agreed to maintain a cash balance of $100,000 at all times in its chequing account at
First National Bank to ensure that credit is available in the future.
3. Fashion has a $5-million investment in a Commercial Bank of Montreal money-market mutual
fund. This fund has chequing account privileges.
4. There are travel advances of $18,000 for executive travel for the first quarter of next year.
(Employees will complete expense reports after they travel.)
5. A separate cash fund in the amount of $1.5 million is restricted for the retirement of long-term
debt.
6. There is a petty cash fund of $3,000.
7. A $1,900 IOU from Marianne Koch, a company officer, will be withheld from her salary in January
2021.
8. There are 20 cash floats for retail operation cash registers: 8 at $475, and 12 at $600.
9. The company has two certificates of deposit, each for $500,000. These certificates of deposit
each had a maturity of 120 days when they were acquired. One was purchased on October 15
and the other on December 27.
10 Fashion has received a cheque dated January 12, 2021, in the amount of $25,000 from a
. customer owing funds at December 31. It has also received a cheque dated January 8, 2021, in
the amount of $11,500 from a customer as an advance on an order that was placed on December
29 and will be delivered February 1, 2021.
11
Fashion holds $2.1 million of commercial paper of Rocco Leone Co., which is due in 60 days.
.
12
Currency and coin on hand amounted to $7,700.
.
13 Fashion acquired 1,000 shares of Sortel for $3.90 per share in late November and is holding them
. for trading. The shares are still on hand at year end and have a fair value of $4.10 per share on
December 31, 2020.
(a)
Calculate the amount of cash to be reported on Fashion’s statement of financial position at December
31, 2020.
Solution
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Exercise 7-01 a
Exercise 7-03
Show how the information above should be presented on the statement of financial position of LeBlanc
Inc. at December 31, 2020.
LeBlanc Inc.
Statement of Financial Position
choose the accounting period
December 31, 2020
enter a subtotal
of the two
select a balance sheet item
previous
Total from customers amounts
256000
Solution
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Exercise 7-03
Dr. Cr.
Accounts receivable $105,000
Allowance for doubtful
1,950
accounts
Sales revenue (all on credit) $684,000
Sales returns and allowances 30,000
Solution
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Give the entry for bad debt expense for the current year assuming historical records show that, based
on accounts receivable aging, the following percentages will not be collected: (Credit account titles
are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts.)
Percentage Estimated
Balance to Be Uncollectible
0–30 days outstanding $36,000 1%
31–60 days outstanding 48,000 5%
61–90 days outstanding 12,200 12%
Over 90 days
8,800 18%
outstanding
Solution
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Exercise 7-09 a1-a4
Allowance for Doubtful Accounts ($36,000 x 0.01 + $48,000 x 0.05 + $12,200 x 0.12 + $8,800 x
0.18) + $1,950 = $7,758
Give the entry for bad debt expense for the current year assuming allowance for doubtful accounts is
$1,950 but it is a credit balance and the allowance should be 4% of gross accounts
receivable. (Credit account titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter 0
for the amounts.)
Solution
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Give the entry for bad debt expense for the current year assuming allowance for doubtful accounts is
$1,950 but it is a credit balance and historical records show that the following percentages will not be
collected: (Credit account titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter 0
for the amounts.)
Percentage Estimated
Balance to Be Uncollectible
0–30 days outstanding $36,000 1%
31–60 days outstanding 48,000 5%
61–90 days outstanding 12,200 12%
Over 90 days
8,800 18%
outstanding
Solution
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Exercise 7-09 a1-a4
Allowance for Doubtful Accounts ($36,000 x 0.01 + $48,000 x 0.05 + $12,200 x 0.12 + $8,800 x
0.18) − $1,950 = $3,858
Solution
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PV ? Yield $(159,439)
I 12%
N 2
PMT 0
FV $200,000
Typ
0
e
Assuming Clearing’s fiscal year end is December 31, prepare the journal entry required at December
31, 2021. (For calculation purposes, use 5 decimal places as displayed in the factor table
provided. Credit account titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter 0
for the amounts.)
Solution
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Assuming Clearing’s fiscal year end is December 31, prepare the journal entry required at
December 31, 2022. (Round answers to 0 decimal places, e.g. 58,971. Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts.)
enter an account title to record maturity enter a debit amount enter a credit amount
Notes Receiva 200000
Solution
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Exercise 7-14 a-e
What are the amount and classification of the note on Clearing Corp.’s statement of financial position
as at December 31, 2021? (Round answer to 0 decimal places, e.g. 58,971.)
Solution
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The balance of the note at December 31, 2021 is $178,571 ($200,000 less discount balance of
$21,429). The note would be classified as a current asset on the statement of financial position as
the maturity date of the note of December 31, 2022 is within the next fiscal year.
Assume instead that Clearing reports under ASPE and uses the straight-line method to amortize the
discount on the note. What would the interest income be relating to the note for 2021 and
2022? (Round answer to 0 decimal places, e.g. 58,971.)
Solution
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2021 & 2022 interest income would be $20,281 per year. [($200,000 – 159,438) / 2 = $40,562 / 2
years = $20,281]
Exercise 7-18 a
Solution
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Exercise 7-18 a
Carrying amount of
$355,000
receivables
Net proceeds 318,400
Loss on disposal of receivables $36,600
Exercise 7-21 a
The petty cash was replenished on January 22 when the amount of cash in the fund was $225.15. In
June, after six months’ experience with the fund, management decided to increase the imprest fund to
$700.
(a)
Prepare the journal entries to establish the petty cash fund, to reimburse it on January 22, and to
increase the fund in June. (Credit account titles are automatically indented when amount is
entered. Do not indent manually. If no entry is required, select "No Entry" for the account
titles and enter 0 for the amounts. Round answers to 2 decimal places, e.g. 52.75. Record
journal entries in the order presented in the problem.)
choose a transaction date enter an account title enter a debit amount enter a credit amount
Jan. 22 Cash Over an 2.33
choose a transaction date enter an account title enter a debit amount enter a credit amount
June 30 Petty Cash 200
Solution
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Exercise 7-21 a
Jan.
Miscellaneous Expense = $28.62 + $19.40 = $48.02
22
Cash = ($500 – $225.15) = $274.85