20A bank will only continue a credit line for one of its small business customers if the small business can keep an acid-test greater than 1. The company's reported current accounts are as follows:⚫ Cash: $6,000• Accounts receivable (net): $19,000• Inventory: $8,000• Short-term investment: $4,500⚫ Current liabilities: $17,000Which decision should the bank make?Close the credit line because the acid-test ratio is 0.45.Close the credit line because the acid-test ratio is 0.58.Maintain the credit line because the acid-test ratio is 2.21.Maintain the credit line because the acid-test ratio is 1.74.

Answered: 20 A bank will only continue a credit…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 23MC: Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It...

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Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency? A. $5,000 B. $5,050 C. $20,000 D. $19,950
Researching GAAP Situation Hamilton Company operates in an industry with numerous competitors. It is experiencing a shortage of cash and decides to obtain money from a large bank by using some of its receivables as collateral. Hamilton pledges 5100,000 of its receivables, is charged a 12% fee on this amount, and notifies these credit customers to make their payments directly to the bank. Hamilton transfers the receivables to the bank, and the bank assumes the servicing activities, but Hamilton is responsible for all bad debts which it reasonably estimates to be 2% of the receivables amount. When the balance of the receivables pledged is reduced to 3,000, Hamilton is required to repurchase the receivables, notify the remaining credit customers to make payments to it, and reassume the servicing activities. The bank has the right to sell the receivables, except to Hamiltons major competitor. Hamiltons president has asked you how to account for (and record) this transaction. Directions Research the related generally accepted accounting principles and prepare a short memo to the president that answers his question. Cite your reference and applicable paragraph numbers.
Can you also send me how to do this one? 2. Refer to the data below for XYZ Corporation. Credit sales during 2018 850,000 Accounts Receivable—January 1, 2018 334,000 Collections from credit customers during 2018 725,000 Estimated uncollectible accounts based on an aging analysis 13,200 Customer accounts written off as uncollectible during 2018 12,000 Allowance for doubtful accounts 1,700(after write-off of uncollectible accounts) Answer the following questions using the above data: A. What is the balance of Accounts Receivable at December 31, 2018? B. If the aging approach is used to estimate bad debts, what should the balance in Allowance for Doubtful Accountsbe after the bad debts adjustment? C. If the aging approach is used to estimate bad debts, what amount should be recorded as bed debts expense for2018?
On March 31,2020, XXX Company receive its bank statement. However, the closing balance of the account was unreadable. Attempts to contact the bank after hours did not secure the desired information. The following data are available in preparing a bank reconciliation: February 28,book balance Note collected by bank 1,460,000 100,000 Interest earned on note 10,000 NSF check of customer 130,000 Bank service charge on NSF check 2,000 Other bank services 3,000 Outstanding checks Deposit of February 28 placed in night depository 222,000 95,000 Check issued by YYY Company charged to XXX's Account 20,000 10. What is the cash balance per bank statement?
The bank that you own has the following balance sheet: Assets Liabilities $ 60 million Deposits $120 million Bank capital $420 million Reserves $500 million $100 million Securities Loans a) Record a bookkeeping immediately after the bank suffers a deposit outflow of $50 million when a required reserve ratio on deposits is 10%. What problem do you see on the T-account after the event? Assets Liabilities Reserves Deposits Bank capital Securities Loans b) What action(s) you want to take to rectify the situation? Make your suggestion(s) in terms of the T-account and explain them. Assets Liabilities
Which of the following has the highest relative likelihood of being defaulted in paying the outstanding loan? Company AB. Company EF. Company CD. Company GH.
(Do not provide solution in imge format. and also do not provide plagarised content otherwise i dislike.) provide explanation of formula. Your firm has an average receipt size of $90. A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 9,100 checks per day. The daily interest rate is 0.019 percent.If the bank charges a fee of $200 per day, what is the NPV of the lockbox project?NPV____What would the net annual savings be if the service were adopted?Net annual savings___
Please do not give solution in image format ? And Fast Answering Please And Explain Proper Step by Step.
View Policies Current Attempt in Progress Consider these transactions: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) Crane Company accepted a Visa card in payment of a $200 lunch bill. The bank charges a 3% fee. What entry should Crane make? (b) Larkspur, Inc. sold its accounts receivable of $61,600. What entry should Larkspur make, given a service charge of 3% on the amount of receivables sold? No. Account Titles and Explanation Debit Credit (a) (b) 一 OCT PADES 22 átv T MacBook Air ....
PROBLEM 1. The accounting records for Ortiz, Inc. revealed the following information on April 30, 2020: $51,000 Bank statement balance, April 30, 2020 Credit memo with bank statement for interest 15 earned during April on bank account Debit memo with bank statement for April's service charge 27 2,000 Deposits in transit on April 30 Cash on hand 500 1,000 NSF customer check on April 30 A $175 deposit made on April 3 was recorded incorrectly by the bank as The bank collected a customer's note receivable 125 (including 10% interest) Outstanding checks on April 30 Cash account balance, April 30, 2020 1,100 3,900 50,000 Required: Prepare a bank reconciliation using good format. b. Prepare any necessary adjusting journal entries for April 30, 2020. а.
Blue Company's bank reconciliation for January 31, 2020 does not balance. Cash balance per bank $5,300 Add: NSF check 1,490 Less: Bank service charge 25 Adjusted balance per bank $6,765 Cash balance per books $5,905 Less: Deposits in transit 950 Add: Outstanding checks 1,860 Adjusted balance per books $6,815 (a) Prepare a correct bank reconciliation. (List items that increase cash balance first.) BLUE COMPANYBank Reconciliation For the Month Ended January 31, 2020January 31, 2020For the Year Ended January 31, 2020 Cash balance per bank statementDeposits in transitBank service chargeNSF checkOutstanding checksAdjusted cash balance per bank $ LessAdd:…
Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.

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