Bronson Distributors owes a supplier $100,000 on open account. The amount is payable in three months. What is the theoretically correct way to measure the reportable amount for this liability? In practice though how might it be reported and why do you think this will be the case?
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- Camping World Ltd sells tents and camping equipment on credit. The accounting records at 30 June 2022 reveal the following. Ignore GST. Credit sales (for the year) Credit sales returns and allowances (for the year) Accounts Receivable (at 30 June 2022) Allowance for Doubtful Debts (credit balance at 30 June 2021) In the past, the company's yearly bad debts expense had been estimated at 3% of net credit sales revenue. Management requested the accountant prepare a comparison between the net credit sales method and an aged analysis of receivables to determine which method may be more appropriate for use in accounting for bad and doubtful debts. A historical analysis was performed and identified the following percentages to calculate potential bad debts: Accounts not yet due Accounts overdue 10-30 days 31-60 days 61-120 days 121 days and over Balance $1 391 000 117 000 424 450 1 950 $228 280 79 300 57 200 33 020 26 650 $424 450 % estimated uncollectable 1/2 3 12 30 45 Required: (a) Prepare…You have recorded a revolving line of credit on your company’s financial statements due within the next ten (10) months as a long-term liability. The board of directors of the company has asked you to explain why you have done so. The company has been in default with its loan covenants, but prior to the issuance of the financial statements, the bank granted a waiver. Why would recording the loan as a long-term liability from a business standpoint of view make sense apart from compliance with promulgated standards? (Identify the criteria that should be met prior to reflecting the loan)You have recorded a revolving line of credit on your company’s financial statements due within the next ten (10) months as a long-term liability. The board of directors of the company has asked you to explain why you have done so. The company has been in default with its loan covenants, but prior to the issuance of the financial statements, the bank granted a waiver. 1. What criteria should be met prior to reflecting this loan as a long-term liability? (Find in the codification what makes this a long-term debt and is this correct? Find out the circumstances in which we would have to reclassify this as a long-term liability)
- What is the net realizable value of the receivables which should be presented in the statement of financial position?At 30 September 2020, Wall had an allowance for doubtful account of P37,000. During the year ended 30 September 2021 the company wrote off accounts totaling P18,000 and recovered P5,000 of accounts written off, and at the end of the year, it is decided that the doubtful account expense should be P20,000. 56) How much is the balance of allowance for doubtful accounts on September 30,2021? a. 44,000 b. 30,000 During the year, Jantz Company made an entry to write off a P4,000 uncollectible account. Before this entry was made, the balance in accounts receivable was P80,000 and the balance in C. 62,000 d. None of these the allowance account was P4,500. 57)The net realizable value of accounts receivable after the write-off entry was a. P80,000. b. P79,500. Use the following information for the next two questions: A trial balance before adjustments included the following: c. P71,500. d. P75,500. Debit Credit Sales P425,000 Sales returns and allowance P14,000 53,000 Accounts receivable…You have recorded a revolving line of credit on your company's financial statements due within the next ten (10) months as a long-term liability. The board of directors of the company has asked you to explain why you have done so. The company has been in default with its loan covenants, but prior to the issuance of the financial statements, the bank granted a waiver. With reference to the above scenario, answer the following questions in 1 - 2 paragraphs each. What is a line of credit? What promulgated accounting literature would your use to support your rationale described in your scenario? What criteria should be met prior to reflecting this loan as a long-term liability? Why would recording the loan as a long-term liability from a business standpoint of view make sense apart from compliance with promulgated standards? What footnote disclosure would be necessary for the line of credit?
- I just need help making an income and balance sheet.How do I solve this?On December 31, 2020, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2021, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $10,000. Required: Assume that on February 2, 2021, Extreme Fitness received a payment of $500 from one of the customers whose balance had been written off. Prepare the journal entries to record this transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the reversal of a customer account previously written off in the amount of $500. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit View general journal Record entry Clear entry >
- Which of the following contingent liabilities would require a company to record a note to the financial statements? The liability is possible and is esti- mated to be $35,000. The liability is probable and cannot be reasonably estimated. The liability is probable and estimat- ed to be $40,000. The liability is remote and cannot be estimated. The liability is remote and estimated to be $15,000. The liability is possible and cannot be reasonably estimated.On December 31, 2020, Extreme Fitness has adjusted balances of $820,000 in Accounts Receivable and $59,000 in Allowance for Doubtful Accounts. On January 2, 2021, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $12,000. Required: Assume that on February 2, 2021, Extreme Fitness received a payment of $700 from one of the customers whose balance had been written off. Prepare the journal entries to record this transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 Record the reversal of a customer account previously written off in the amount of $700. Note: Enter debits before credits. Transaction 1 General Journal Accounts Receivable Allowance for Doubtful Accounts Debit CreditOn December 31, 2020, Extreme Fitness has adjusted balances of $960,000 in Accounts Receivable and $87,000 in Allowance for Doubtful Accounts. On January 2, 2021, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $26,000. Required: a. What amount would the company report as its net accounts receivable on December 31, 2020? b.Prepare the journal entry to write off the accounts on January 2, 2021. c-1. Assuming no other transactions occurred between December 31, 2020, and January 3, 2021, what amount would the company report as its net accounts receivable on January 3, 2021? c-2. Has net accounts receivable changed from December 31, 2020?
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