Balance Sheet and Points

The company's management estimates that 2.5% of net credit sales will be uncollectible. Net credit sales are $115,000. What will be the amount of uncollectible accounts expense reported on the income statement?

A line of credit is an informal agreement that permits a company to borrow up to a prearranged limit

1. Indicate which statement you would examine the fine each of the following items: income statement, balance sheet, retained earnings statement, or statement of cash flows

The beginning cash balance for April, is the cash from March 31 in the Asset section of the balance sheet. In the merchandise purchases budget, in April, we need 50% of March purchases (that amount is also given to us 3/31 Accounts payable of $100,000 on page 415). Therefore, Total cash disbursements for April is (50% x $316,000 April purchases) + ($100,000 remaining March purchases to be paid) = $258,000.

a. Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period.

It is working efficiently within its resources and does not require any additional funds from outside resources for its operations. Its plan to pay off its debt by applying the company’s profits to repay long term debt is a good plan for the company to lessen incidental expenses that relates to it. The company should regularly review its performance and match it against the industry mark in order to ensure that it is functioning at an optimum and effective level which is beneficial to its

The number of days receivables equals 47 which represents the number of days in receivables. The older an account receivable remains the more difficult it will be to collect.

1. As of December 31, 2011, what amount, if any, of sales due should be recognized in eVade’s financial statements?

The balance sheet is considered a point in time statement because it elaborates on the current position of the organization. Based on the balance sheet, the organization is able to make an educated decision to know if it’s the best time to pursue additional business. The balance sheet is usually reviewed by a creditor when searching for new opportunities. Basically, the creditor determines the company’s position by subtracting the company 's liabilities from the assets. Liabilities are the debts and obligations a facility, regardless of the magnitude of the business. Once the liabilities have been subtracted from the assets, a stakeholder 's equity is determined.

Objective: Prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods.

By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature

Accounts receivable, net of allowance for doubtful accounts of $208 and $102 as of December 31, 2011 and 2010, respectively

Compute the amount of gross profit to be recognized from the installment sale in 2006, 2007, 2008, 2009, and 2010 using point of delivery revenue recognition. Ignore interest charges.

Support: The Company’s revenues increased considerably (19%). However, the Accounts receivables also increased significantly (38%). Increase in revenues are generally associated with a proportional increase in the allowance for doubtful debts. By not reporting a significant ‘allowable for bad debt accounts’, the company is able to overstate its profits and could be a cause for concern in the long run, if the receivables turn out to be bad.

The three sections of cash budget are (receipts, disbursements, and financing) and the beginning and ending cash balances.