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    Cash equilvalents, allowance method, bad debt estimate

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    1. Cashmere Soap Corporation had the following items listed in its trial balance at 12/31/09:

    What amount will Cashmere Soap include in its year-end balance sheet as cash and cash equivalents?
    A. $ 9,450.
    B. $12,450.
    C. $ 7,450.
    D. $19,650.

    2. A company uses the allowance method to account for bad debts. What is the effect on each of the following accounts of the collection of an account previously written off?

    A.
    B.
    C.
    D.

    3. San Mateo Company had the following account balances at December 31, 2009 before recording bad debt expense for the year:

    San Mateo is considering the following approaches for estimating bad debts for 2009:
    • Based on 3% of credit sales
    • Based on 6% of year-end accounts receivable

    What amount should San Mateo charge to bad debt expense at the end of 2009 under each method?

    A.
    B.
    C.
    D.

    4. Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2009. The note, along with interest at 6%, is due on June 30, 2010. On September 30, 2009, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did Ireland receive from Cloverdale Bank?
    A. $40,600.
    B. $36,000.
    C. $39,220.
    D. $36,820 .

    5. The following information pertains to Jacobsen Co.'s accounts receivable at December 31, 2009:

    During 2009, Jacobsen wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years. Jacobsen's December 31, 2008, allowance for uncollectible accounts was $40,000. Under the aging method, what amount of allowance for uncollectible accounts should Jacobsen report at December 31, 2009?
    A. $28,000.
    B. $31,400.
    C. $55,400.
    D. $49,400.

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    https://brainmass.com/business/allowance-method/cash-equivalents-allowance-method-bad-debt-estimate-329876

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    1. Cashmere Soap Corporation had the following items listed in its trial balance at 12/31/09:

    What amount will Cashmere Soap include in its year-end balance sheet as cash and cash equivalents?
    A. $ 9,450 (Treasury bills maturing after 3 months & equity securities rates fluctuate)
    B. $12,450.
    C. $ 7,450.
    D. $19,650.

    2. A company uses the allowance method to account for bad debts. What is the effect on each of the following accounts of the collection of an account previously written off?

    A. ...

    Solution Summary

    The solution computes Cash equivalents, allowance method, bad debt estimate, discounted note.

    $2.19

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