Allowance method: It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account. To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

Question

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 1

Question

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

The completed Payroll Register for the February and March biweekly pay periods is provided, assuming benefits went into effect as anticipated. Required: Using the payroll registers, complete the General Journal entries as follows: February 10 Journalize the employee pay. February 10 Journalize the employer payroll tax for the February 10 pay period. Use 5.4 percent SUTA and 0.6 percent FUTA. No employees will exceed the FUTA or SUTA wage base. February 14 Issue the employee pay. February 24 Journalize the employee pay. February 24 Journalize the employer payroll tax for the February 24 pay period. Use 5.4 percent SUTA and 0.6 percent FUTA. No employee will exceed the FUTA or SUTA wage base. February 28 Issue the employee pay. February 28 Issue payment for the payroll liabilities. March 10 Journalize the employee pay. March 10 Journalize the employer payroll tax for the March 10 pay period. Use 5.4 percent SUTA and 0.6 percent FUTA. No employees will exceed the FUTA or SUTA wage base.…

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Answer 2

Question

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

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Answer 3

Question

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

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Answer 4

Question

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

Answer 6

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

Answer 7

Chapter 8, Problem 8.2EX

A.

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for MGM Resorts.

Answer 8

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

Answer 9

B.

To determine

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

Answer 10

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

Answer 11

C.

To determine

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

Answer 12

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Ch. 8 - What are the three classifications of receivables?Ch. 8 - Dans Hardware is a small hardware store in the...Ch. 8 - What kind of an account (asset, liability, etc.)...Ch. 8 - After the accounts are adjusted and closed at the...Ch. 8 - A firm has consistently adjusted its allowance...Ch. 8 - Which of the two methods of estimating...Ch. 8 - Neptune Company issued a note receivable to...Ch. 8 - Prob. 8DQ Ch. 8 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 8 - Prob. 10DQ

Solution Summary: The author explains the allowance method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period.

To compute: The percentage of allowance for doubtful accounts to the accounts receivable for J & J manufactures.

To discuss: The possible reasons for the difference in percentage of allowance for doubtful accounts to the accounts receivable between MGM Resorts and J & J manufactures.

Chapter 8 Solutions