Problem 5-12 (AICPA Adapted) Delta Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but 50% of the customera took advantage of the discount. The entity used the gross method of recording sales and accounts receivable. An analysis of the trade accounts receivable at year-end revealed the following: Collectible Age Amount 0- 15 days 16 - 30 days 31 - 60 days Over 60 days 2,000,000 1,400,000 400,000 200,000 100% 95% 90% 50% 4,000,000 1. What amount should be reported as allowance for sales discount at year-end? a. 20,000 b. 32,400 c. 33,500 d. 40,000 2. What amount should be reported as allowance for doubtful accounts at year-end? a. 230,000 b. 210,000 c. 190,000 d. 200,000 3. What is the net realizable value of accounts receivable at year-end? a. 4,000,000 b. 3,750,000 c. 3,770,000 d. 3,790,000

Problem 5-12 (AICPA Adapted) Delta Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but 50% of the customera took advantage of the discount. The entity used the gross method of recording sales and accounts receivable. An analysis of the trade accounts receivable at year-end revealed the following: Collectible Age Amount 0- 15 days 16 - 30 days 31 - 60 days Over 60 days 2,000,000 1,400,000 400,000 200,000 100% 95% 90% 50% 4,000,000 1. What amount should be reported as allowance for sales discount at year-end? a. 20,000 b. 32,400 c. 33,500 d. 40,000 2. What amount should be reported as allowance for doubtful accounts at year-end? a. 230,000 b. 210,000 c. 190,000 d. 200,000 3. What is the net realizable value of accounts receivable at year-end? a. 4,000,000 b. 3,750,000 c. 3,770,000 d. 3,790,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 7MCQ

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