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Certificate of Deposit On May 31, 2017, Elmer Corp. purchased a 120-day, 9% certificate of deposit for $50,000. The CD was redeemed on September 28, 2017. Identify and analyze the transactions or adjustments on Elmer's books to account for: b. The accrual of interest adjustment for interest earned through June 30, the end of the company's fiscal year. Assume 360 days in a year. Activity Operating v Accounts Interest Receivable Increase, Interest Revenue Increase v Statement(s) Balance Sheet and Income Statement v Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be s to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answers to the nearest dollar.

Certificate of Deposit On May 31, 2017, Elmer Corp. purchased a 120-day, 9% certificate of deposit for $50,000. The CD was redeemed on September 28, 2017. Identify and analyze the transactions or adjustments on Elmer's books to account for: b. The accrual of interest adjustment for interest earned through June 30, the end of the company's fiscal year. Assume 360 days in a year. Activity Operating v Accounts Interest Receivable Increase, Interest Revenue Increase v Statement(s) Balance Sheet and Income Statement v Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be s to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answers to the nearest dollar.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Certificate of Deposit On May 31, 2017, Elmer Corp. purchased a 120-day, 9% certificate of deposit for $50,000. The CD was redeemed on September 28, 2017. Identify and analyze the transactions or adjustments on Elmer's books to account for: b. The accrual of interest adjustment for interest earned through June 30, the end of the company's fiscal year. Assume 360 days in a year. Activity Operating v Accounts Interest Receivable Increase, Interest Revenue Increase v Statement(s) Balance Sheet and Income Statement Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be s to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Balance Sheet Income Stateme Stockholders' Assets Liabilities + Equity Revenues Interest Receivable No Entry v Interest Revenue No Ent 1 c. The redemption of the CD. Assume 360 days in a year. Activity Investing and Operating Accounts Cash Increase, Short-Term Investments - CD Decrease, Interest Receivable Decrease, Interest Revenue Increase Statement(s) Balance Sheet and Income Statement v Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Balance Sheet Incom Stockholders' Assets Liabilities + Equity Revenues = Cash v No Entry v Interest Revenue v Interest Receivable v No Entry v No Entry v Short-Term Investments - CD V -50,000 V No Entry v No Entry v
Transcribed Image Text:Certificate of Deposit On May 31, 2017, Elmer Corp. purchased a 120-day, 9% certificate of deposit for $50,000. The CD was redeemed on September 28, 2017. Identify and analyze the transactions or adjustments on Elmer's books to account for: b. The accrual of interest adjustment for interest earned through June 30, the end of the company's fiscal year. Assume 360 days in a year. Activity Operating v Accounts Interest Receivable Increase, Interest Revenue Increase v Statement(s) Balance Sheet and Income Statement Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be s to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Balance Sheet Income Stateme Stockholders' Assets Liabilities + Equity Revenues Interest Receivable No Entry v Interest Revenue No Ent 1 c. The redemption of the CD. Assume 360 days in a year. Activity Investing and Operating Accounts Cash Increase, Short-Term Investments - CD Decrease, Interest Receivable Decrease, Interest Revenue Increase Statement(s) Balance Sheet and Income Statement v Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Balance Sheet Incom Stockholders' Assets Liabilities + Equity Revenues = Cash v No Entry v Interest Revenue v Interest Receivable v No Entry v No Entry v Short-Term Investments - CD V -50,000 V No Entry v No Entry v
Allowance Method for Accounting for Bad Debts At the beginning of 2017, Miyazaki Company's Accounts Receivable balance was $105,000, and the balance in Allowance for Doubtful Accounts was $1,950. Miyazaki's sales in 2017 were $787,500, 80% of which were on credit. Collections on account during the year were $502,500. The company wrote off $3,000 of uncollectible accounts during the year. 2. Identify and analyze the adjustments to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. a. Identify and analyze the adjustments to recognize bad debts assuming that bad debts expense is 3% of credit sales. 2 Activity Operating v Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement v Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. If a contra account is decreased, it will have the effect of increasing the corresponding financial statement item. Balance Sheet Inc Stockholders' Assets Liabilities + Equity Revenues Allowance for Doubtful Accounts No Entry v No Entry v Bad Debts 3. What is the net realizable value of accounts receivable on December 31, 2017, under each assumption in part (2)? 2 Using the percentage of sales approach, the net realizable value of the receivables is? $ Using the percentage of year-end receivables approach, the net realizable value of the receivables is? $
Transcribed Image Text:Allowance Method for Accounting for Bad Debts At the beginning of 2017, Miyazaki Company's Accounts Receivable balance was $105,000, and the balance in Allowance for Doubtful Accounts was $1,950. Miyazaki's sales in 2017 were $787,500, 80% of which were on credit. Collections on account during the year were $502,500. The company wrote off $3,000 of uncollectible accounts during the year. 2. Identify and analyze the adjustments to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. a. Identify and analyze the adjustments to recognize bad debts assuming that bad debts expense is 3% of credit sales. 2 Activity Operating v Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement v Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. If a contra account is decreased, it will have the effect of increasing the corresponding financial statement item. Balance Sheet Inc Stockholders' Assets Liabilities + Equity Revenues Allowance for Doubtful Accounts No Entry v No Entry v Bad Debts 3. What is the net realizable value of accounts receivable on December 31, 2017, under each assumption in part (2)? 2 Using the percentage of sales approach, the net realizable value of the receivables is? $ Using the percentage of year-end receivables approach, the net realizable value of the receivables is? $
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