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    Current Assets Minus Current Liabilities

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    1. Sullivan Co.'s accounts receivable show the following balances by age:

    Age of Receivable Balance
    0-30 days $600,000
    31-60 days 175,000
    61-120 days 70,000 more than 120 days 10,000

    The credit balance in the allowance for uncollectible accounts is $2,500. Sullivan Co. uses the following percentages to compute the estimated amounts of receivables that will eventually prove uncollectible: 0-30 days, 0.7%; 31-60 days, 1.2%; 61-120 days, 11%; and more than 120 days, 65%.

    Required:

    Prepare the adjusting journal entry.

    2. The following cash-basis income statement has been prepared for the first year of business.

    .
    Statement of Cash Receipts and Expenditures
    For the Year Ending December 31, Year 1
    Cash Receipts from Sales of Merchandise $25,000
    Less: Cash Expenditures for Merchandise and Services
    Merchandise $10,000
    Salaries 5,000
    Rent 7,000
    Total Cash Expenditures 22,000
    Excess of Cash Receipts over Cash Expenditures $ 3,000

    At year-end, the firm had inventory with a cost of $2,000 remaining. Also, customers owed $1,000 for goods that had already been delivered. The utilities for December were $500 and were billed to but not yet paid by the company. The rent of $3,500 for January, Year 2, was paid in December, Year 1.

    Prepare an accrual-basis income statement for the year.

    3. A friend of yours has prepared the following balance sheet for his bicycle shop but it has a problem. He thought his total assets did not reflect the assets available to the firm. He has asked you to take a look at this balance sheet and help him out.

    Assets
    Current Assets:

    Eric's Bike Shop, Inc.
    Balance Sheet
    As of December 31, Year 1

    Cash $15,000
    Merchandise Inventory 30,000
    Merchandise Sold, at cost 37,500
    Prepaid Insurance 1,000
    Advance from Customer (1,000) Total Current Assets $82,500
    Property, Plant, and Equipment:

    Shareholders' Equity:

    Required:

    Prepare a corrected balance sheet for Eric's Bike Shop, Inc.

    4. Compute the missing amount affecting retained earnings for Year 2 in each of the five independent cases that follow. Amounts shown are in millions.

    CASE A CASE B CASE C CASE D CASE E

    Retained earnings, Dec. 31,
    Year 1

    $95 B $75 $ 87 $175

    Net income 30 $450 45 D (50)
    Dividends declared and paid 10 120 C 35 E
    Retained earnings, Dec. 31, A 670 60 105 75
    Year 2

    5. Compute the missing amounts affecting the net income for Year 1 in each of the five independent cases that follow. Amounts shown are in thousands.

    Sales revenue CASE A
    $650 CASE B
    B CASE C
    $400 CASE D
    $800 CASE E
    $390
    Cost of goods sold 300 $110 C 400 200
    Selling and 150 150 120 65 E
    administrative expenses
    Income tax expense 56 30 55 D 0
    Net income A 10 75 235 (15)

    6. Compute the missing balance sheet amounts in each of the three independent cases that follow:

    Noncurrent assets CASE A
    $460,000 CASE B
    $ 90,000 CASE C
    $280,000
    Shareholders' equity A 870,000 340,000
    Total assets B E 500,000
    Current liabilities 270,000 20,000 I
    Current assets 250,000 F J
    Noncurrent liabilities 100,000 G K
    Total liabilities and shareholders' equity C 990,000 L
    Current assets minus current liabilities D H 200,000

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    https://brainmass.com/business/business-math/current-assets-minus-current-liabilities-458312

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    1. Sullivan Co.'s accounts receivable show the following balances by age:
    Age of Receivable Balance
    0-30 days $600,000
    31-60 days 175,000
    61-120 days 70,000
    more than 120 days 10,000

    The credit balance in the allowance for uncollectible accounts is $2,500. Sullivan Co. uses the following percentages to compute the estimated amounts of receivables that will eventually prove uncollectible: 0-30 days, 0.7%; 31-60 days, 1.2%; 61-120 days, 11%; and more than 120 days, 65%.

    Required:

    Prepare the adjusting journal entry.


    2. The following cash-basis income statement has been prepared for the first year of business.
    Statement of Cash Receipts and Expenditures
    For the Year Ending December 31, Year 1
    Cash Receipts from Sales of Merchandise $25,000
    Less: Cash Expenditures for Merchandise and Services
    Merchandise $10,000
    Salaries 5,000
    Rent ...

    Solution Summary

    The expert examines current assets minus current liabilities.

    $2.19