Accounts receivable : Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business. Bad debt expense: Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense. To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

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Answer 1

Question

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

Accounting Question

REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

Question

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

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Answer 3

Question

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

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Answer 4

Question

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

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Answer 5

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

Answer 6

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

Answer 7

Chapter 7, Problem 7.10BYP

(1)

To determine

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.

Answer 8

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

Answer 9

(2)

To determine

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

Answer 10

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

Answer 11

(3)(a)

To determine

To indicate: The effects of accounts receivable in the period of the change.

Answer 12

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

Answer 13

(b)

To determine

To indicate: The effects of cash flow from operation in the period of the change.

Answer 14

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

Answer 15

(c)

To determine

To indicate: The effects of accounts receivable in subsequent periods.

Answer 16

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

Answer 17

(d)

To determine

To indicate: The effects of cash flow from operation in subsequent periods.

Answer 18

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

Answer 19

(4)

To determine

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

Answer 20

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Answer 21

Expert Solution & Answer

Answer 22

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Answer 23

Ch. 7 - Prob. 7.1Q Ch. 7 - Prob. 7.2Q Ch. 7 - Prob. 7.3Q Ch. 7 - Prob. 7.4Q Ch. 7 - Prob. 7.5Q Ch. 7 - Prob. 7.6Q Ch. 7 - Distinguish between the gross and net methods of...Ch. 7 - Briefly explain the accounting treatment for sales...Ch. 7 - Explain the typical way companies account for...Ch. 7 - Briefly explain the difference between the income...

Solution Summary: The author explains that SA Company has been recently engaged in factoring or securitizing the accounts receivable.

At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.

To indicate: The effects of accounts receivable in the period of the change.

To indicate: The effects of cash flow from operation in the period of the change.

To indicate: The effects of accounts receivable in subsequent periods.

To indicate: The effects of cash flow from operation in subsequent periods.

To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.

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Chapter 7 Solutions