TutorialBadger recorded $500,000 of net sales for the year of which 2% is estimated to be uncollectible.
MGMT 210 6-5 Assignment 6
Brief Exercise 7-1 Accounting for Bad DebtsBadger recorded $500,000 of net sales for the year of which 2% is estimated to be uncollectible. Identify and analyze the adjustment required at the end of the year to record bad debts.Brief Exercise 7-3 Accounting for Notes ReceivableOn November 1, 2014, Gopher received a $50,000, 6%, 90-day promissory note. Identify and analyze the adjustment required on December 31, the end of the companys fiscal year.Exercise 9-2 Current LiabilitiesThe following items represent liabilities on a firms balance sheet:a. An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed.b. An amount of money owed to a creditor on a note due April 30, 2015.c. An amount of money owed to a creditor on a note due August 15, 2016.d. An amount of money owed to employees for work performed during the last week in December.e. An amount of money owed to a bank for the use of borrowed funds due on March 1, 2015.f. An amount of money owed to a creditor as an annual installment payment on a ten-year note.g. An amount of money owed to the federal government based on the companys annual income.Required1. For each item, state whether it should be classified as a current liability on the December 31, 2014, balance sheet. Assume that the operating cycle is shorter than one year. If the item should not be classified as a current liability, indicate where on the balance sheet it should be presented.2. For each item identified as a current liability in part (1), state the account title that is normally used to report the item on the balance sheet.3. Why would an investor or a creditor be interested in whether an item is a current or a longterm liability?Exercise 9-5 Current Liabilities and RatiosSeveral accounts that appeared on Kruses 2014 balance sheet are as follows:Accounts Payable $ 55,000Equipment $950,000Marketable Securities 40,000 Taxes Payable 15,000Accounts Receivable 180,000 Retained Earnings 250,000Notes Payable, 12%, due in 60 days 20,000 Inventory 85,000Capital Stock 1,150,000 Allowance for Doubtful Accounts 20,000Salaries Payable 10,000 Land 600,000Cash 15,000Required1. Prepare the Current Liabilities section of Kruses 2014 balance sheet.2. Compute Kruses working capital.3. Compute Kruses current ratio. What does this ratio indicate about Kruses condition?
AnswerAccounting help