If a business collects cash when the gift card is sold, how can gift card sales in December result in revenues in January?
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If a business collects cash when the gift card is sold, how can gift card sales in December result in revenues in January?
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- Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. FederalWay, Incorporated, is one of America's most prestigious retailers. Each Christmas season, FederalWay builds up its inventory to meet the needs of Christmas shoppers. A large portion of these Christmas sales are on credit. As a result, FederalWay often collects cash from the sales several months after Christmas. Assume that on November 1 of this year, FederalWay borrowed $4.3 million cash from Third Fifth Bank to meet short-term obligations. FederalWay signed an interest-bearing note and promised to repay the $4.3 million in six months. The annual interest rate was 10 percent. All interest will accrue and be paid when the note is due in six months. FederalWay's accounting period ends December 31. Required: Note: For all requirements, If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your…In Ramadan month and in Christmas, consumers increase their preferences for cash versus demand deposits. Explain the effect this has on 1- Primary deposits 2- Derivative deposits 3- Credit multiplier 4- Money multiplier 5- Monetary base 6- The money supplyHalle’s Berry Farm establishes a $200 petty cash fund on September 4 to pay for minor cash expenditures. The fund is replenished at the end of each month. At the end of September, the fund contains $30 in cash. The company has also issued a credit card and authorized its office manager to make purchases. Expenditures for the month include the following items:Entertainment for office party (petty cash) $170Lawn maintenance (credit card) 420Postage (credit card) 575Fuel for deliveries (credit card) 285Required:1. Record the establishment of the petty cash fund on September 4.2. Record credit card expenditures during the month. The credit card balance is not yet paid.3. Record petty cash expenditures during the month.
- Using Baulmol's inventory-theoretic approach to the demand for money, illustrate the stream of cash payments and the transactions demand for money and indicate the respective average money holdings of the following individuals from January to May: a. Pearl receives C8,000.00 monthly salary, doesn't want to deal with bank bureaucracy so cashes all her income at the beginning of the month. b. Alexis receives C10,000.00 and takes advantage of her bank's savings product by investing half of her salary at the beginning of the month and withdraws all by the 15th of the month.Sparks Corporation has a cash balance of $24,100 on April 1. The company must maintain a minimum cash balance of $6,500. During April, expected cash receipts are $49,000. Cash disbursements during the month are expected to total $68,500. Ignoring interest payments, during April the company will need to borrow:Honeybee Hippie is a retail store specializing in women’s clothing. The store has established a liberal return policy for the holiday season in order to encourage gift purchases. Any item purchased during November and December may be returned through January 31, with a receipt, for cash or exchange. If the customer does not have a receipt, cash will still be refunded for any item less than $200. If the item is more than $200, a check is mailed to the customer.Whenever an item is returned, a store clerk completes a return slip, which the customer signs. The return slip is placed in a special box. The store manager visits the return counter approximately once every two hours to authorize the return slips. Clerks are instructed to place the returned merchandise on the proper rack on the selling floor as soon as possible.This year, returns at Honeybee Hippie reached an all-time high. There are a large number of returns of less than $200 without receiptsHow can sales clerks employed at…
- Roswell Company purchasesinventory from Clear Pool Supplies on June 1. The sales terms on the invoice from Clear PoolSupplies are 3/10, n/30. What does this mean? What is Roswell’s potential savings, if any? Howmuch time does the company have to take advantage of these savings?What is the correct accounting entry for a cash discount of $5,000 received by a company from a supplier?Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Nordstrom, Inc., is one of America's most prestigious retailers. Each Christmas season, Nordstrom builds up its inventory to meet the needs of Christmas shoppers. A large portion of these Christmas sales are on credit. As a result, Nordstrom often collects cash from the sales several months after Christmas. Assume that on November 1 of this year, Nordstrom borrowed $4.8 million cash from Bank of America to meet short-term obligations. Nordstrom signed an interest-bearing note and promised to repay the $4.8 million in six months. The annual interest rate was 8%. All interest will accrue and be paid when the note is due in six months. Nordstrom's accounting period ends December 31. Required: 1. Determine the financial statement effects for each of the following: (a) the issuance of the note on November 1, (b) the impact of the adjusting entry at the end of the…
- Preparing a Schedule of Cash Collections on Accounts Receivable Kailua and Company is a legal services firm. All sales of legal services are billed to the client (there are no cash sales). Kailua expects that, on average, 20% will be paid in the month of billing, 50% will be paid in the month following billing, and 25% will be paid in the second month following billing. For the next 5 months, the following sales billings are expected: May $84,000 June 100,800 July 77,000 August 86,700 September 92,000 Required: Prepare a schedule showing the cash expected in payments on accounts receivable in August and in September. If an amount box does not require an entry, leave it blank or enter "0". Be sure to enter percentages as whole numbers. Kailua and Company Schedule August September June: 2$ % July: 2$ % 24 % August: 2$On March 19 Gunderson’s Hardware received a $20,800 invoice dated March 15. Cash discount terms were 3/10, n/30. On March 24, Gunderson sent an $8,320 partial payment. What is the outstanding amount due on this invoice? What is the outstanding on this invoice?Ramona’s Clothing is a retail store specializing in women’s clothing. The store has established a liberal return policy for the holiday season in order to encourage gift purchases. Any item purchased during November and December may be returned through January 31, with a receipt, for cash or exchange. If the customer does not have a receipt, cash will still be refunded for any item under $75. If the item is more than $75, a check is mailed to the customer.Whenever an item is returned, a store clerk completes a return slip, which the customer signs. The return slip is placed in a special box. The store manager visits the return counter approximately once every two hours to authorize the return slips. Clerks are instructed to place the returned merchandise on the proper rack on the selling floor as soon as possible.This year, returns at Ramona’s Clothing have reached an all-time high. There are a large number of returns under $75 without receipts.a. How can salesclerks employed at…