Problem 12 Rosalie Co. uses the gross method to record sales made on credit. On June 10, 2020, it made sales of P100,000 with terms 2/10, n/30 to Finley Farms, Inc. On June 19, 2020, Rosalie received payment for 1/2 the amount due from Finley Farms. Rosalie’s fiscal year end is on June 30, 2020. What amount will be reported in the statement of financial position for the accounts receivable due from Finley farms, Inc.?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Problem 12
Rosalie Co. uses the gross method to record sales made on credit. On June 10, 2020, it made sales of P100,000 with terms 2/10, n/30 to Finley Farms, Inc. On June 19, 2020, Rosalie received payment for 1/2 the amount due from Finley Farms. Rosalie’s fiscal year end is on June 30, 2020. What amount will be reported in the
Problem 13
On the December 31, 2020 balance sheet of Mann Co., the current receivables consisted of the following:
Trade accounts receivable 93,000 Allowance for uncollectible accounts (2,000) Claim against shipper for goods lost in transit (November 2020) 3,000 Selling price of unsold goods sent by Mann on consignment at 130% of cost (not included in Mann’s ending inventory) 26,000 Security deposit on lease of warehouse used for storing some inventories 30,000 Total 150,000
On December 31, 2020, the correct total of Mann’s current net receivables was _________.
Problem 14:
The following information relates to Jay Co.’s accounts receivable for 2020: Accounts receivable, 1/1/20 650,000 Credit sales for 2020 2,700,000 Sales returns for 2020 75,000 Accounts written off during 2020 40,000 Collections from customers during 2020 2,150,000 Estimated future sales returns at 12/31/20 50,000 Estimated uncollectible accounts at 12/31/20 110,000
What amount should Jay report for accounts receivable, before allowances for sales returns and uncollectible accounts, at December 31, 2020? __________
Problem 15
Inge Co. determined that the net value of its accounts receivable at December 31, 2020, based on an aging of the receivables, was P325,000. Additional information is as follows:
Allowance for uncollectible accounts—1/1/20 30,000 Uncollectible accounts written off during 2020 18,000 Uncollectible accounts recovered during 2020 2,000 Accounts receivable at 12/31/20 350,000
For 2020, what would be Inge’s uncollectible accounts expense? __________
Problem 16
Delta, Inc. sells to wholesalers on terms of 2/15, net 30. Delta has no cash sales but 50% of Delta’s customers take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta’s trade receivables balances at December 31, 2020, revealed the following: Age Amount Collectible 0 - 15 days 100,000 100% 16 - 30 days 60,000 95% 31 - 60 days 5,000 90% Over 60 days 2,500 P500 167,500
In its December 31, 2020 balance sheet, what amount should Delta report of allowance for discounts? _________
Problem 17
At January 1, 2020, Jamin Co. had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past experience, 2% of Jamin’s credit sales have been uncollectible. During 2020 Jamin wrote off P325,000 of uncollectible accounts. Credit sales for 2020 were P9,000,000. In its December 31, 2020 balance sheet, what amount should Jamin report as allowance for uncollectible accounts? __________
Problem 18
The following accounts were abstracted from Roxy Co.’s unadjusted
Roxy estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2020, the allowance for uncollectible accounts should have a credit balance of __________.
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