Pearson eText for Financial Accounting -- Instant Access (Pearson+)
5th Edition
ISBN: 9780137525423
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON+
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Question
Chapter 11, Problem 20AE
1.
To determine
Compute the amount of cash collections.
2.
To determine
Compute the amount of cash payment for inventory.
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rect method.
Carlson Software Corp. has assembled the following data for the years ending December 31,
P12-60A (Learning Objectives 2, 3: Prepare the statement of cash flows-indirect method)
2016 and 2015
3. Prepal
cash flows from opl
4
5
6
7
8
$
10
11
12
13
Current Accounts:
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Current liabilities:
Accounts payable
Income tax payable
Accrued liabilities
Transaction Data for 2016:
Acquisition of land by issuing
long-term note payable.....
Stock dividends
Collection of loan.
Depreciation expense.
Purchase of building
with cash.
Retirement of honds payable
by issuing common stock....
Purchase of long-term
investment with cash........
$202,000
34,900
12,400
19,000
159,000
80,000
45,300
31, 2016 Format
December 31,
2016
$ 105,800
18,000
8,600
2,900
equipment
Amortization expense
$ 9,300
28,600
15,000
Purchase of treasury stock.
Loss on sale of equipment......
Payment of cash dividends
Issuance of…
(Learning Objective 1: Show how to speed up cash from receivables) Patterson ShirtCompany sells on credit and manages its own receivables. Average experience for the past threeyears has been the following:Sales..................................................Cost of goods sold.............................Uncollectible-account expense...........Other expenses..................................Cash$250,000125,000—82,500Credit$250,000125,00018,00082,500Total$500,000250,00018,000165,000The owner of Patterson is considering whether to accept credit cards (VISA and MasterCard)instead of granting credit to customers. If Patterson were to accept credit cards, the ownerexpects total sales to increase by 10% but cash sales to remain unchanged. Further, if Pattersonwere to accept credit cards, the business can save $9,000 on other expenses, but the credit cardprocessors charge 3% on credit card sales.Requirement1. Should Patterson Shirt Company start accepting credit cards? Show the computations…
(Learning Objectives 4, 5: Account for accounts receivable and uncollectible receivables) On November 30, Palmer Party Planners had a $41,000 balance in Accounts Receivableand a $3,584 credit balance in Allowance for Uncollectible Accounts. During December, Palmermade credit sales of $200,000. December collections on account were $168,000, and write-offsof uncollectible receivables totaled $2,910. Uncollectible-account expense is estimated as 1% ofcredit sales. No sales returns are expected. Ignore cost of goods sold.Requirements1. Journalize sales, collections, write-offs of uncollectibles, and uncollectible-accountexpense by the allowance method during December. Explanations are not required.2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts,and Net Accounts Receivable at December 31. How much does Palmer expect to collect?3. Show how Palmer Party Planners will report Accounts Receivable and net sales on itsDecember 31 balance sheet and income…
Chapter 11 Solutions
Pearson eText for Financial Accounting -- Instant Access (Pearson+)
Ch. 11 - Prob. 1DQCh. 11 - Prob. 2DQCh. 11 - Prob. 3DQCh. 11 - A company issued bonds during the year. Would this...Ch. 11 - Prob. 5DQCh. 11 - When using the indirect method, why are gains on...Ch. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Prob. 10DQ
Ch. 11 - Prob. 1SCCh. 11 - Operating activities are most closely related to:...Ch. 11 - Prob. 3SCCh. 11 - Prob. 4SCCh. 11 - Finlay, Inc., earned net income of 63,000 after...Ch. 11 - Prob. 6SCCh. 11 - Prob. 7SCCh. 11 - Prob. 8SCCh. 11 - Prob. 9SCCh. 11 - Elliot Enterprises had operating expenses of...Ch. 11 - Prob. 11SCCh. 11 - Prob. 12SCCh. 11 - Prob. 1SECh. 11 - Prob. 2SECh. 11 - Prob. 3SECh. 11 - Prob. 4SECh. 11 - Prob. 5SECh. 11 - Prob. 6SECh. 11 - Operating activitiesindirect method (Learning...Ch. 11 - Prob. 8SECh. 11 - Operating activitiesdirect method (Learning...Ch. 11 - Prob. 10SECh. 11 - Prob. 11SECh. 11 - Prob. 12SECh. 11 - Prob. 13AECh. 11 - Prob. 14AECh. 11 - Prob. 15AECh. 11 - Preparing a statement of cash flowsindirect method...Ch. 11 - Prob. 17AECh. 11 - Prob. 18AECh. 11 - Prob. 19AECh. 11 - Prob. 20AECh. 11 - Prob. 21AECh. 11 - Prob. 22BECh. 11 - Prob. 23BECh. 11 - Preparing a statement of cash flowsindirect method...Ch. 11 - Prob. 25BECh. 11 - Prob. 26BECh. 11 - Prob. 27BECh. 11 - Prob. 28BECh. 11 - Prob. 29BECh. 11 - Calculating certain information using the direct...Ch. 11 - Prob. 31APCh. 11 - Prob. 32APCh. 11 - Prob. 33APCh. 11 - Prob. 34APCh. 11 - Prob. 35APCh. 11 - Prob. 36APCh. 11 - Prob. 37BPCh. 11 - Prob. 38BPCh. 11 - Prob. 39BPCh. 11 - Prob. 40BPCh. 11 - Prob. 41BPCh. 11 - Prob. 42BPCh. 11 - Prob. 1CECh. 11 - Prob. 1CPCh. 11 - Apply Your Knowledge Ethics In Action Case 1....Ch. 11 - Case 2. Kevin Sailors, the CEO of Candle...Ch. 11 - Financial Analysis Purpose: To help to familiarize...Ch. 11 - Prob. 1IACh. 11 - Small Business Analysis Purpose: To help you...Ch. 11 - Written Communication Prepare a paper outlining...Ch. 11 - Comprehensive Problem The Accounting Cycle and...
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- (Learning Objectives 1, 7: Show how to speed up cash flow from receivables;evaluate liquidity through ratios) Norfolk Co., Inc., an electronics and appliance chain,reported these figures in millions of dollars:Net sales .........................................Receivables at end of year...............2019$398,5003,8602018$418,5004,110Requirements1. Compute Norfolk’s days’ sales in receivables or days’ sales outstanding (DSO) during 2019.(For this exercise, use “net sales” for “net credit sales” when calculating ratios.)2. Is Norfolk’s DSO long or short? Nico Networks takes 39 days to collect its average levelof receivables. Divencenzo, the overnight shipper, takes 33 days. What causes Norfolk’scollection period to be so different?arrow_forwardComputing cash flow items—direct method Consider the following facts: Beginning and ending Accounts Receivable are $24,000 and $20,000, respectively. Credit sales for the period total of $68,000. The cost of goods sold is $77,000. Beginning Merchandise Inventory balance is $29,000, and ending Merchandise Inventory balance is $26,000. Beginning and ending Accounts Payable are $12,000 and $16,000, respectively Requirements Compute cash collections from customers. Compute cash payments for merchandise inventory.arrow_forwardPrepare the Statement of Cash Flows for Smart Touch Learning for the month ended December 31, 2016 from the provided information. Within each section of the statement, use the drop-down menus to enter the accounts. Then enter the account balances and calculate ending balances. Enter decreases in cash with a minus sign or parentheses.arrow_forward
- Computing cash flow items—direct method Consider the following facts: a. Beginning and ending Accounts Receivable are $24,000 and $20,000, respectively. Credit sales for the period total $68,000. b. Cost of goods sold is $77,000. c. Beginning Merchandise Inventory balance is $29,000, and ending Merchandise Inventory balance is $26,000. d. Beginning and ending Accounts Payable are $12,000 and $16,000, respectively Requirements Compute cash collections from customers. Compute cash payments for merchandise inventory.arrow_forwardP4-53A (Learning Objective 3: Design and use a bank reconciliation) The November 30 bank statement of Donald Engineering Associates has just arrived from Kansas First Bank. To prepare the Donald bank reconciliation, you gather the following data: a. Donald's Cash account shows a balance of $7,684.83 on November 30. b. The November 30 bank balance is $8,457.95. c. The bank statement shows that Donald earned $16.38 of interest on its bank balance during November. This amount was added to Donald's bank balance. d. Donald pays utilities ($750) and insurance ($240) by EFT. e. The following Donald checks did not clear the bank by November 30: Check No. Amount 237 $404.80 288 74.82 291 34.89 293 173.25 294 238.00 295 47.75 296 105.78 f. The bank statement includes a deposit of $903.10, collected on account by the bank on behalf of Donald. g. The bank statement lists a $7.50 bank service charge. h. On November 30, the Donald treasurer deposited $381.75, which will appear on the December bank…arrow_forward(Learning Objectives 1, 7: Show how to speed up cash flow from receivables;evaluate liquidity through ratios) Geneva Co., Inc., an electronics and appliance chain,reported these figures in millions of dollars:Net sales .........................................Receivables at end of year...............2019$523,1253,8602018$543,1254,510Requirements1. Compute Geneva’s days’ sales in receivables or days’ sales outstanding (DSO) during2019. (For this exercise, use “net sales” for “net credit sales” when calculating ratios.)2. Is Geneva’s DSO long or short? Kurzwel Networks takes 39 days to collect its averagelevel of receivables. Domarko Freight, the overnight shipper, takes 33 days. What causesGeneva’s collection period to be so different?arrow_forward
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