BE 7-18 Discounting a note L07-8 On March 31, Dower Publishing discounted a $30.
ID: 2591787 • Letter: B
Question
BE 7-18 Discounting a note L07-8 On March 31, Dower Publishing discounted a $30.000 note at a local bank. The note was dated February 28 required the payment of the principal amount and much cash will Dower receive from the bank on March 31? and interest at 6% on May 31 The bank's discount rate is 8%. How BE 7-19 Receivables turnover Camden Hardware's credit sales for the year were $320,000. Accounts receivable at the beginning and end of the year were $50.000 and $70,000, respectively. Calculate the accounts receivable turnover ratio and the average collection period for the year. L07-8 BE 7-20 Bank Reconciliation . Appendix 7A Marin Company's general ledger indicates a cash balance of $22.340 as of September 30. 2018. Early in October Marin received a bank statement indicating that during September Marin had an NSF check of $1,500 returned to a customer and incurred service charges of $45. Marin also learned it had incorrectly recorded a check received from a customer on September 15 as $500 when in fact the check was for $550. Calculate Marin's cor- rect September 30, 2018, cash balance. Shan Enterprises received a bank statement listing its May 31, 2018, bank balance as $47,582. Shan determined BE 7-21 Bank Reconciliation Appendix 7A hecks outstanding of $7.224. Calculate Shan's correct May 31, 2018, cash balance. BE 7-22 Impairments of Accounts Receivable Einhorn Industries believes it is not probable that Thaler Inc. will default on an account receivable, but given the possibility of default, Einhorn believes it will collect $30,000 less than the receivable's current carrying value on Einhorn's balance sheet. Under current GAAP, how much impairment charge should Einhorn recognize? Appendix 7B Assume the same facts as in BE 7-22, but that Einhorn determines credit losses using the CECL model intro- duced in ASU 2016-13 and required in 2020. How much credit loss should Einhorn recognize? BE 7-23 Credit Losses on Accounts Receivable (CECL Model) e Appendix 7BExplanation / Answer
7-18
Maturity value 30,450
Discount (406)
Cash proceeds 30,044
Explanation:
Face amount $ 30,000
Interest to maturity ($30,000 × 6% × 3/12) 450
Maturity value 30,450
Discount ($30,450 × 8% × 2/12) (406)
Cash proceeds $ 30,044
7-19
A
Receivables Turnover Ratio
Net credit sales/Average accounts receivable (net) =Receivables turnover ratio
320,000/60,000=5.33times
B
Total number of days/Receivables turnover ratio=Average collection period
365/5.33=68days
Explanation:
Receivables turnover= $320,000/$60,000*= 5.33 times
($50,000 + $70,000) ÷ 2 = $60,000*
Calculate Marin’s correct September 30, 2018, cash balance.
Balance per books $22,340
Add: Error in recording cash receipt 50
Deduct: NSF checks (1,500)
Service charges (45)
Corrected cash balance 20,845
Explanation:
Error in recording cash receipt ($550 – 500) = $50
7-21
Calculate Shan’s correct May 31, 2018, cash balance.
Balance per bank statement 47,582
Add: Deposits outstanding 2,500
Deduct: Checks outstanding (7,224)
Corrected cash balance 42,858
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