Cambridge College

The individual accounts receivable ledger accounts provide business managers information on the status of individual customer accounts, which is necessary for managing collections. Managers need to know which customers owe money, how much they owe, and how long the amount owed has been outstanding. 2. The major advantages of the use of special journals are substantial savings in record-keeping expenses and a reduction of record-keeping errors. 3. a. 400 b. None 4. a. 400 b. 1 ...

1. The end-of-period spreadsheet illustrates the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and into the financial statements. In doing so, the spreadsheet illustrates the impact of the adjustments on the financial statements. 2. a. Current assets are composed of cash and other assets that may reasonably be expected to be realized in cash or sold or used up, usually within one year or less, through the normal operations of the business...

APPENDIX B REVERSING ENTRIES 7,050 Ex. B–1 a. (1) Sales Salaries Expense............................................. Salaries Payable ................................................... Accrued salaries ($11,750 ÷ 5 days = $2,350; $2,350 × 3 days). 7,050 (2) Accounts Receivable ................................................ Fees Earned .......................................................... Accrued fees earned. 51,300 51,300 b. (1) Sal...

Access the FASB’s Codification Research System at the FASB website ( ). Required: Determine the specific citation for accounting for each of the following items: 1. Accounts receivables from related parties should be shown separately from trade receivables. 2. The definition of cash equivalents. 3. The requirement to value notes exchanged for cash at the cash proceeds. 4. The two conditions that must be met to accrue a loss on an accounts receivable.

Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2013. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Required: 1. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2013, assuming that the gross method of accounting for cash discounts is used. 2. Prepare the journal entries to record the sale on Novem...

Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2013, accounts receivable totaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $32,000 at the beginning of 2013 and $21,000 in receivables were written off during the year as uncollectible. Also, $1,200 in cash was received in December from a customer whose account previously had been written off. The company estimates...

On June 30, 2013, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2014. The 6% rate is appropriate in this situation. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2013 interest accrual, and the March 31, 2014 collection. 2. If the December 31 adjusting ...

On January 1, 2013, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2014. The 2013 income statement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. The stock’s book value was $16,000. The company’s fiscal year ends on December 31. Required: 1. What is the note’s effective interest rate? 2. Reconstruct the journal e...

Microsoft Corporation reported the following information in its financial statements for three successive quarters during the 2011 fiscal year ($ in millions): Required: Compute the receivables turnover ratio and the average collection period for the second and third quarters. Assume that each quarter consists of 91 days.

At January 1, 2013, NCI Industries, Inc. was indebted to First Federal Bank under a $240,000, 10% unsecured note. The note was signed January 1, 2011, and was due December 31, 2014. Annual interest was last paid on December 31, 2011. NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. First Federal agreed to reduce last year’s interest and the remaining two years’ interest payments to $11,555 each and delay all payments until...