Financial Accounting (5th Edition) (What's New in Accounting)
5th Edition
ISBN: 9780134727790
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 4, Problem 2EIA
1.
To determine
Discuss the ethical issue related to the loan from Person D’s parents.
2.
To determine
Discuss the reason for considering current ratios 1.5 or higher by the creditors.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
As part of the review of her business Rita has been looking into what she is owed by
various customers and how many debts are outstanding. Rita has been able to gather
the following information about her customers and credit sales. Rita has reached out to
an old University friend to get some advice about the likelihood of the amounts owed to
her being uncollectible.
Age of Customer Debt
Amounts owed
Estimate of % that
(including GST)
will not be collected.
1-30 days overdue
14,107.50
5%
31– 180 days overdue
6,204.00
16 %
181 – 365 days overdue
2,458.50
25 %
1 year + overdue
517.00
100 %
23,287.00
Perfect Cover Insurance Brokers sales data for the past year is
Credit Sales and Commissions
$42,900
$11,600
$ 2,400
(returns are only available on credit sales)
Cash Sales and Commissions
Sales Returns
Industry data shows that 5% of credit transactions are likely to go bad.
Rita has also informed you that the current balance in her allowance for doubtful debts
account is 500 Dr after a recent…
As part of the review of her business Rita has been looking into what she is owed by
various customers and how many debts are outstanding. Rita has been able to gather
the following information about her customers and credit sales. Rita has reached out to
an old University friend to get some advice about the likelihood of the amounts owed to
her being uncollectible.
Age of Customer Debt
Amounts owed
Estimate of % that
(including GST)
will not be collected.
1-30 days overdue
14,107.50
5%
31– 180 days overdue
6,204.00
16 %
181 – 365 days overdue
2,458.50
25 %
1 year + overdue
517.00
100 %
23,287.00
Perfect Cover Insurance Brokers sales data for the past year is
$42,900
$11,600
$ 2,400
(returns are only available on credit sales)
Čredit Sales and Commissions
Cash Sales and Commissions
Sales Returns
Industry data shows that 5% of credit transactions are likely to go bad.
Rita has also informed you that the current balance in her allowance for doubtful debts
account is 500 Dr after a recent…
please see attached - thank you in advance
Chapter 4 Solutions
Financial Accounting (5th Edition) (What's New in Accounting)
Ch. 4 - Prob. 1DQCh. 4 - What are some reasons why a merchandiser might...Ch. 4 - Why do businesses use subsidiary ledgers?Ch. 4 - Prob. 4DQCh. 4 - How many accounts are involved in recording the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - What is the difference between a single-step and...Ch. 4 - Prob. 10DQ
Ch. 4 - Which account does a merchandiser use that a...Ch. 4 - The two main inventory accounting systems are the...Ch. 4 - Prob. 3SCCh. 4 - Prob. 4SCCh. 4 - Prob. 5SCCh. 4 - Prob. 6SCCh. 4 - Prob. 7SCCh. 4 - Prob. 8SCCh. 4 - Prob. 9SCCh. 4 - Prob. 10SCCh. 4 - Prob. 11SCCh. 4 - Prob. 12SCCh. 4 - Inventory methods (Learning Objective 2) 5-10 min....Ch. 4 - Prob. 2SECh. 4 - Prob. 3SECh. 4 - Prob. 4SECh. 4 - Prob. 5SECh. 4 - Prob. 6SECh. 4 - Prob. 7SECh. 4 - Journalizing sales and return transactions...Ch. 4 - Prob. 9SECh. 4 - Prob. 10SECh. 4 - Prob. 11SECh. 4 - Prob. 12SECh. 4 - Calculating gross profit percentage and net income...Ch. 4 - Prob. 14AECh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 16AECh. 4 - Prob. 17AECh. 4 - Prob. 18AECh. 4 - Prob. 19AECh. 4 - Prob. 20AECh. 4 - Prob. 21AECh. 4 - Preparing a single-step income statement (Learning...Ch. 4 - Prob. 23AECh. 4 - Prob. 24AECh. 4 - Prob. 25AECh. 4 - Prob. 26BECh. 4 - Prob. 27BECh. 4 - Prob. 28BECh. 4 - Prob. 29BECh. 4 - Prob. 30BECh. 4 - Journalizing inventory sales, returns, and freight...Ch. 4 - Prob. 32BECh. 4 - Prob. 33BECh. 4 - Prob. 34BECh. 4 - Prob. 35BECh. 4 - Prob. 36BECh. 4 - Prob. 37BECh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 39APCh. 4 - Prob. 40APCh. 4 - Prob. 41APCh. 4 - Prob. 42APCh. 4 - Prob. 43APCh. 4 - Prob. 44APCh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 46BPCh. 4 - Prob. 47BPCh. 4 - Journalizing inventory purchases, sales, returns,...Ch. 4 - Prob. 49BPCh. 4 - Prob. 50BPCh. 4 - Prob. 51BPCh. 4 - Prob. 1CECh. 4 - Continuing Problem In this problem, we continue...Ch. 4 - Continuing Financial Statement Analysis Problem...Ch. 4 - Prob. 1EIACh. 4 - Prob. 2EIACh. 4 - Prob. 1FACh. 4 - Prob. 1IACh. 4 - Prob. 1SBACh. 4 - Prob. 1WC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- b. Discuss whether there has or has not been any violation of ethical conduct.arrow_forwardDelia Alvarez, the owner of Delia's Lawn Service, wants to borrow money to buy new lawn equipment. A local bank has asked for financial statements. Alvarez has asked you to prepare financial statements for the year ended December 31. You have been given the unadjusted trial balance on page 175, and you suspect that Alvarez expects you to base your statements on this information. You are concerned, however, that some of the account balances may need to be adjusted. In your post, write how you would explain to Alvarez what additional information you need before preparing the financial statements. Alvarez is not familiar with accounting issues. Therefore, explain why you need this information, the potential impact of this information on the financial statements, and the importance of making these adjustments before approaching the bank for a loan.arrow_forwardDirections: Identify the accounting principles that are being violated in the situation below. 1. Upon recording of sales, the accountant notice that the duplicate sales invoice had two amounts. The accountant records the amount of 50,000 instead of 45,000 in the sales journal. 2. The owner-manager bought a computer for personal use. The invoice was given to the bookkeeper and record as an asset of the business. 3. Liwliwa bought a computer for her newly open laundry business and an invoice was given to the accountant and recorded in her salon business due to lack of available cash.arrow_forward
- On June 1, 2021, Alan Harper buys a copier machine for his business and finances this purchase with cash and a note. When journalizing this transaction, he will a .make a compound entry. b make a simple entry. c use two journal entries. d list the credit entries first, which is proper form for this type of transaction.arrow_forwardPaul has extended $3,500 credit to one of his largest clients for the purchase of two fireproof filing cabinets. Paul paid $1,250 each for the filing cabinets. Since he has not extended credit in the past, he is uncertain how to record the transaction on the balance sheet and income statement. He is using the accrual method of accounting. What are the entries Paul will need to make on his financial statements? A. Record $2,500 in sales; increase accounts receivable by $3,500; and record $1,000 in profit to balance the transactions. B. When the client pays Paul, he should record $3,500 in sales, $2,500 in COGS, and $1,000 in profit. C. Record $3,500 in sales; create an accounts receivable account and add $3,500 to it; decrease inventory by $2,500; increase COGS by $2,500. D. Record $3,500 in sales; create an accounts receivable account and add $3,500 to it; decrease inventory by $3,500; increase COGS by $3,500.arrow_forwardcan you please help with a, b, and c using the information in the photo. this is for my accounting homeworkarrow_forward
- Consider the following statements as you answer the next question: i. Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice. ii. In purchasing books, Allison filled out a form on a bookstore's web site. iii. The bookstore's web site verified Allison's credit limit. iv. William, a warehouse worker, prepared Allison's books for shipment. All of the following steps in the sales / collection process are represented in the four statements except: A. The first step. B. The second step. C. The sixth step. D. The last step.arrow_forwardVishnuarrow_forwardTo practice how the use of debits, credits, and double entry accounting affect individual T accounts and thus The Accounting Formula, consider the following situations. Prepare T accounts as required and write the corresponding accounting formula. Kimchi purchased a small cafe' in a town with P600,000 of her own money. Help her prepare her T accounts for her first month of operations using the following 1. information. a. Kimchi invested P600,000 cash in the cafe'. Cash Owners' Equity b. Kimchi purchased P3,500 in food, all of which is to be paid next month (accounts payable). Food Inventory Accounts Payable C. Kimchi generated P10,000 in revenue, all received in cash. Cash Revenue d. Kimchi paid her employees P3,600 this month with payroll checks (cash account). Cash Salaries and Wagesarrow_forward
- To practice how the use of debits, credits, and double entry accounting affect individual T accounts and thus The Accounting Formula, consider the following situations. Prepare T accounts as required and write the corresponding accounting formula. Kimchi purchased a small cafe' in a town with P600,000 of her own money. Help her prepare her T accounts for her first month of operations using the following 1. information. a. Kimchi invested P600,000 cash in the cafe'. Cash Owners' Equity b. Kimchi purchased P3,500 in food, all of which is to be paid next month (accounts payable). Food Inventory Accounts Payable С. Kimchi generated P10,000 in revenue, all received in cash. Cash Revenue d. Kimchi paid her employees P3,600 this month with payroll checks (cash account).arrow_forwardPrepare the following for the year ended 31 December 2020 i. Accounts payable and accounts receivables accounts ii. Income statement iii. Balance sheetarrow_forwardPlease solve all the MCQ with detailed answer for both correct and incorrect answersarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License