E10-1 Determining Financial Statement Effects of Transactions Involving Notes Payable [LO10-2] Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Hudson's Bay Company (HBC) is Canada's largest department store. Each Christmas, HBC builds up its inventory to meet the needs of Christmas shoppers. A large portion of Christmas sales are on credit. As a result, HBC often collects cash from the sales several months after Christmas. Assume that on November 1, 2020, HBC borrowed $6 million cash from Downtown Bank and signed a promissory note that matures in six months. The interest rate was 7.5 percent payable at maturity. The accounting period ends December 31. Required: 1. Indicate the accounts, amounts, and effects (+ for increase, - for decrease, and NE for no effect) of the (a) issuance of the note on November 1, (b) impact of the adjusting entry on December 31, 2020, and (c) the payment of the note and interest on April 30, 2021, on the accounting equation. (Enter your answers in whole dollars. Enter any decreases to accounts with minus sign.) Liabilities Shareholders'Equity Date Assets (a) Nov. 1, 2020 (b) Dec. 31, 2020 (c) Apr. 30, 2021

E10-1 Determining Financial Statement Effects of Transactions Involving Notes Payable [LO10-2] Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Hudson's Bay Company (HBC) is Canada's largest department store. Each Christmas, HBC builds up its inventory to meet the needs of Christmas shoppers. A large portion of Christmas sales are on credit. As a result, HBC often collects cash from the sales several months after Christmas. Assume that on November 1, 2020, HBC borrowed $6 million cash from Downtown Bank and signed a promissory note that matures in six months. The interest rate was 7.5 percent payable at maturity. The accounting period ends December 31. Required: 1. Indicate the accounts, amounts, and effects (+ for increase, - for decrease, and NE for no effect) of the (a) issuance of the note on November 1, (b) impact of the adjusting entry on December 31, 2020, and (c) the payment of the note and interest on April 30, 2021, on the accounting equation. (Enter your answers in whole dollars. Enter any decreases to accounts with minus sign.) Liabilities Shareholders'Equity Date Assets (a) Nov. 1, 2020 (b) Dec. 31, 2020 (c) Apr. 30, 2021

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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E10-1 (Algo) Determining Financial Statement Effects of Transactions Involving Notes Payable [LO 10-2] Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mitt Corporation builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mitt Corporation sales are on credit. As a result, Mitt Corporation often collects cash from its sales several months after Christmas. Assume on November 1, 2021, Mitt Corporation borrowed $6.7 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 7.00 percent payable at maturity. The accounting period ends December 31. Required: 1. Indicate the accounts, amounts, and effects of the (a) issuance of the note on November 1: (b) impact of the adjusting entry on December 31, 2021; and (c) the payment of the note and interest on April 30, 2022, on the accounting equation. (Do…
3. Conceptual Connection: The weighted average for the 4 years (rounded to three decimals) is If credit sales for 2024 are $400,000, what rate would you recommend to estimate bad debts? A rate closer to Feedback Check My Work 1 & 2. Use the data from prior years to calculate losses from uncollectible accounts as a percentage of credit sales. Consider how the loss rate has changed over the years. Feedback 4. If credit sales for 2024 are $400,000 and using the rate you recommended above, record bad debt expense for 2024. Round your answer to three decimal places. Bad Debt Expense 27,600 X Allowance for Doubtful Accounts Record adjusting entry for bad debt expense estimate Check My Work 4. Make the best estimate of bad debt expense you can. 0.069. Increase 0.082 X would be more conservative. 5. Conceptual Connection: Using the data from 2020 through 2023, estimate the change in income from operations in total for those 4 years assuming (a) the average gross margin is 25% and (b) 50% of…
Combong.bangibnsaEX 22-18 V Total cash collected in July, $163,050 Schedule of cash collections of accounts receivable OBJ. 5 Pet Place Supplies Inc., a pet wholesale supplier, was organized on May 1, 2016. Projected sales for each of the first three months of operations are as follows: May $134,000 June 155,000 00 July 169,000 All sales are on account. Sixty-five percent of sales are expected to be collected in boxit the month of the sale, 30% in the month following the sale, and the remainder in the e second month following the sale. ni vionel SHOW Prepare a schedule indicating cash collections from sales for May, June, and July. ME HOW
Problem 9-15 A firm has no cash sales (all sales are on credit and are collected 28 days after the sale). If the receivables are $164,000, what is the level of sales? Assume there are 365 days in a year. Round your answer to the nearest dollar. $
Problem 6Red Ribbon sells cakes and pastry items to well known hotels and resorts along Bukidnon province. The hotels are allowed creditbased on the track record of the hotels. The total amounts received or receivable from sales by Red Ribbon in for the second quarter ofthe current year were P2,200,000 VAT inclusive. The products were sold partly on a cash bases and partly on account. Based onreliable estimates, 60% of the total sales were sold on account.15. How much is the value added tax on the sales account for the second quarter?
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33 - What is the record to be made when the company pays a debt that arises from the purchase of goods on credit, by paying a check from a customer by endorsement?A) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT COMMERCIAL GOODS XX SELLERS XXB) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT SELLERS XX CHECKS RECEIVED XXC) THE CODE AND NAME OF THE ACCOUNT WILL BE DEBT COMMERCIAL GOODS XX CHECKS RECEIVED XXD) CODE AND NAME OF THE ACCOUNT WILL BE DEBT SELLERS XX CHECK GIVEN AND PAYMENT ORDERS. XXE) THE CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT CHECK GIVEN
PROBLEM 2 Harris Supply Co. has the following transactions related to notes receivable during the last 2 months of the year. Nov. 1 Loaned $90,000 cash to B. Woods on a 1-year, 7% note. Dec. 11 Sold goods to R.P. Mayrl, Inc. receiving a $4,500, 90-day, 4% note. 16 Received a $12,000, 6-month, 9% note to settle an open account from M. Kline. 31 Accrued interest revenue on all notes receivable. Instructions: Journalize the transactions for Harris Supply Co. (Omit cost of goods sold entries.)
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