Question: 35 Moon Hardware is planning to factor some of its receivables. The cash received will be used to pay for inventory purchases. The factor has indicated that it will require "recourse" on the sold receivables. Explain to the controller of Moon Hardware what "recourse" is and how the recourse will be reflected in Moon's financial statements after the sale of the receivables. Question: 36 StorageTek Corporation gathered the following information from its accounting records for the year ended December, 31, 2016, prior to adjustment: Net credit sales for the year = $1,150,000, Accounts Receivable (Dec 31, 2016) = $93,000, Allowance for Uncollectible Accounts, prior to adjustment (Dec 31, 2016) = $6,000 debit balance. Storage Tek Corporation uses the allowance method of accounting for bad debts and estimates bad debts at 2.5% of net credit sales. Required: A) Prepare the adjusting entry on December 31, 2016. B) Determine the balance in the Allowance for Uncollectible Accounts account after the adjusting entry is recorded. C) Show how the receivables would be reported on the December 31, 2016, Balance Sheet for StorageTek Corporation.
Question: 35 Moon Hardware is planning to factor some of its receivables. The cash received will be used to pay for inventory purchases. The factor has indicated that it will require "recourse" on the sold receivables. Explain to the controller of Moon Hardware what "recourse" is and how the recourse will be reflected in Moon's financial statements after the sale of the receivables. Question: 36 StorageTek Corporation gathered the following information from its accounting records for the year ended December, 31, 2016, prior to adjustment: Net credit sales for the year = $1,150,000, Accounts Receivable (Dec 31, 2016) = $93,000, Allowance for Uncollectible Accounts, prior to adjustment (Dec 31, 2016) = $6,000 debit balance. Storage Tek Corporation uses the allowance method of accounting for bad debts and estimates bad debts at 2.5% of net credit sales. Required: A) Prepare the adjusting entry on December 31, 2016. B) Determine the balance in the Allowance for Uncollectible Accounts account after the adjusting entry is recorded. C) Show how the receivables would be reported on the December 31, 2016, Balance Sheet for StorageTek Corporation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Question: 35
Moon Hardware is planning to factor some of its receivables. The cash received will
be used to pay for inventory purchases. The factor has indicated that it will require
"recourse" on the sold receivables. Explain to the controller of Moon Hardware
what "recourse" is and how the recourse will be reflected in Moon's financial
statements after the sale of the receivables.
Question: 36
StorageTek Corporation gathered the following information from its accounting
records for the year ended December, 31, 2016, prior to adjustment: Net credit sales
for the year = $1,150,000, Accounts Receivable (Dec 31, 2016) = $93,000, Allowance
for Uncollectible Accounts, prior to adjustment (Dec 31, 2016) = $6,000 debit
balance. Storage Tek Corporation uses the allowance method of accounting for bad
debts and estimates bad debts at 2.5% of net credit sales.
Required:
A) Prepare the adjusting entry on December 31, 2016.
B) Determine the balance in the Allowance for Uncollectible Accounts account after
the adjusting entry is recorded.
C) Show how the receivables would be reported on the December 31, 2016, Balance
Sheet for StorageTek Corporation.
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