Prepare responses to the following assignment from the e-tex
Not what you're looking for?
Can you help me with the following assignment? I don't quite understand everything...
Prepare responses to the following assignment from the e-text, financial accounting: Tools for Business Decision Making 4th ed., by Kimmel, Weygandt and Kieso
Chapter 8 Question 3 and 4
3. What are the essential features of the allowance method of accounting for bad debts?
4. Lauren Anderson cannot understand why the cash realizable value does not decrease when an uncollectible account is written off under the allowance method. Clarify this point for Lauren.
Chapter 8: Exercise E8-5
Hachey Company has accounts receivable of $95,100 at March 31st, 2007. An analysis of the accounts shows these amounts
Balance, March 31
Month of Sale 2007 2006
March $65,000 $75,000
February $12,600 $8,000
December & January $10,100 $2,400
November & October $7,400 $1,100
Credit terms are 2/10, n/30. At March 31st, 2007, there is a $2,200 credit balance in Allowance for Doubtful prior to adjustment. The company uses, the percentage of receivables basis for estimating uncollectible accounts. The company's estimates for bad debts are shown on page 402.
Estimated Percentage
Age of Accounts uncollectible
Current 2%
1-30 days past due 7%
31-90 days past due 30%
Over 90 days 50%
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31st, 2007, to record bad debts expense.
(c) Discuss the implications of the changes in the aging schedule from 2006 to 2007.
Prepare responses to the following assignment from the e-text, Financial and Managerial Accounting: The Basis for Business Decision 13th ed., by Williams, Haka, and Bettner
Chapter 9: Exercise E9.9
For several years, a number of Food Lion, Inc., grocery stores were unprofitable. The company closed, and continues to close, some of these locations. It is apparent that the company will not be able to recover the cost of the assets associated with the closed stores. Thus, the current value of these impaired assets mist be written down (see the Case in Point on page 381).
A recent Food Lion income statement reports a $9.5 million charge against income pertaining to the write-down of impaired assets.
(a) Explain why Food Lion must write down the current carrying value of its unprofitable stores.
(b) Explain why the recent $9.5million charge to write down these impaired assets is considered a non-cash expense.
Purchase this Solution
Solution Summary
Prepare responses to the following assignment from the e-text, financial accounting: Tools for Business Decision Making 4th ed., by Kimmel, Weygandt and Kieso
Chapter 8 Question 3 and 4
3. What are the essential features of the allowance method of accounting for bad debts?
4. Lauren Anderson cannot understand why the cash realizable value does not decrease when an uncollectible account is written off under the allowance method. Clarify this point for Lauren.
Chapter 8: Exercise E8-5
Hachey Company has accounts receivable of $95,100 at March 31st, 2007. An analysis of the accounts shows these amounts
Balance, March 31
Month of Sale 2007 2006
March $65,000 $75,000
February $12,600 $8,000
December & January $10,100 $2,400
November & October $7,400 $1,100
Credit terms are 2/10, n/30. At March 31st, 2007, there is a $2,200 credit balance in Allowance for Doubtful prior to adjustment. The company uses, the percentage of receivables basis for estimating uncollectible accounts. The company's estimates for bad debts are shown on page 402.
Estimated Percentage
Age of Accounts uncollectible
Current 2%
1-30 days past due 7%
31-90 days past due 30%
Over 90 days 50%
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31st, 2007, to record bad debts expense.
(c) Discuss the implications of the changes in the aging schedule from 2006 to 2007.
Prepare responses to the following assignment from the e-text, Financial and Managerial Accounting: The Basis for Business Decision 13th ed., by Williams, Haka, and Bettner
Chapter 9: Exercise E9.9
For several years, a number of Food Lion, Inc., grocery stores were unprofitable. The company closed, and continues to close, some of these locations. It is apparent that the company will not be able to recover the cost of the assets associated with the closed stores. Thus, the current value of these impaired assets mist be written down (see the Case in Point on page 381).
A recent Food Lion income statement reports a $9.5 million charge against income pertaining to the write-down of impaired assets.
(a) Explain why Food Lion must write down the current carrying value of its unprofitable stores.
(b) Explain why the recent $9.5million charge to write down these impaired assets is considered a non-cash expense.
Solution Preview
Your homework solution is below. Thank you for using BrainMass.
----------------------
3. What are the essential features of the allowance method of accounting for bad debts?
1) Uncollectible A/R are estimated and matched against sales in the same period.
2) Estimated uncollectible accounts are debited to bad debt expense and credited to allowance for doubtful accounts by an adjustment at the end of each accounting period.
3) Actual uncollectibles are debited to allowance for doubtful accounts and credited to A/R when the account is written off.
4. Lauren Anderson cannot understand why the cash realizable value does not decrease when an uncollectible account is written off under the allowance method. Clarify this point for Lauren.
The decrease in the realizable cash value happens when the estimated uncollectibles are journalized at the end of the accounting period. The transaction reduces A/R and the allowance for doubtful accounts by the same amount as the account that is being written off, and assumed no longer collectible. The cash realizable ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.