value: 3.00 points Chamberlain Enterprises Inc. reported the following receivabl
ID: 2462996 • Letter: V
Question
value: 3.00 points Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2016, year-end balance sheet Current assets Accounts receivable, net of $29,000 in allowance for uncollectible accounts Interest receivable Notes receivable $ 243,000 8,600 310,000 Additional Information: 1. The notes receivable account consists of two notes, a $70,000 note and a $240,000 note. The $70,000 note is dated October 31, 2016, with principal and interest payable on October 31, 2017·The $240,000 note is dated June 30, 2016, with principal and 6% interest payable on June 30, 2017. 2. During 2017, sales revenue totaled $1,390,000, $1,305,000 cash was collected from customers, and $27,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable. 3. On March 31, 2017, the $240,000 note receivable was discounted at the Bank of Commerce. The bank's discount rate is 10%. Chamberlain accounts for the discounting as a sale. Required 1. Not including sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain's 2017 income statement? Revenue: Expense: F7 2 3 4 6Explanation / Answer
(1) Revenue includes notes sale of $24000 (i.e. 240000- 10% discount with Bank)
Expenses in includes Bad Debts $5800 and Interest expense of note from Jan to Mar 17 = $3495 ( 240000 / 103% * 2).
(2) Accounts receivable in 2017 balance sheet = 1390000 - 1305000 -27000 = 58000 - 10% i.e. $5800 = $52200
(3) Accounts receivable turnover ratio for 2017= $1390000 / $52200 = 26.62 times
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