Question

1. Raj uses the net invoice method to record sales on account. Raj made sales of

     $40,000 with terms 3/15, net 45. The customer pays after 25 days. Journalize:

Date	Accounts	Debit	Credit
	Interest Revenue		1,200

2. Leonard had credit sales of $1,200,000, a balance in accounts receivable of

    $250,000 and an allowance for uncollectible accounts of a $2,100 credit balance.

    How much will Bad Debt Expense be if:

1. Leonard estimates uncollectibles at 2% of credit sales: Hint: $24,000
2. Leonard estimates uncollectibles at 10% of accounts receivable: Hint: $22,90

3. Drebin Security Systems sold merchandise to a customer in exchange for a $50,000,

     9-month, noninterest-bearing note when an equivalent loan would carry 10%  

     interest. Drebin would record sales revenue on the date of sale equal to:

           Hint: 46,250 = sales revenue

4. Sheldon factored $200,000 of accounts receivable with Penny Factors on a with

     recourse basis. Penny assesses a 5% finance charge. Sheldon estimates the fair

     value of the recourse obligation to be $1,500. Penny Factors pays Sheldon 90% of

     the factored receivables. Sheldon estimates that the value of the final 10% of

     receivables is $16,000. Journalize the sale of the receivables.

Date	Accounts	Debit	Credit

           Hint: Loss = $4,000

5. Coastal Shores Inc. (CSI) was completely destroyed by Hurricane Fred on August 5,

      2013. At January 1, CSI reported an inventory of $170,000. Sales from January 1,

      2013, to August 5, 2013, totaled $480,000 and purchases totaled $195,000 during

      that time. CSI normally shows a gross profit percentage of 40%. The estimated

      inventory loss due to Hurricane Fred would be: Hint: $77,000

Answer 1

1.

Cash	40,000
Accounts Receivable		38,800
Sales Discounts Forfeited		1,200

2.

a)

If the bad debt is estimated as 2% of credit sales, then the bad debt expense to be recognized is ($1200000*0.02)

=$24000

At the end of year, the allowance for uncollectible accounts will show at ($24000+$2100)

=$26100

b)

If the bad debt is estimated at 10% of accounts receivable of 250,000 which comes out to $25000

The bad debt expense to be recognized at

$25000-$2100

=$22900

At the end of year, the allowance for uncollectible accounts will show at $25000

3)

The sales will be recorded at the present value of $50,000

Let the present value be “x”. Then, as per equation

X + (x*10/100*9/12) = 50000

1.075x=50000

X=$46512(approximately)

Please note that as per HomeworkLib policy, an expert is allowed to solve only 4 sub part of a question or a first independent question. Though I solved many more than that. Please repost for the rest. For any query in these please get into comments. Thanks