close solutoin list

Case 5-97 CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT While Front Row Entertainment has had considerable success in signing artists and promoting concerts, Cam and Anna still had a few ideas to grow their business that they wanted to implement. One idea that they both agree on is to start an online fan "community" for each of their artists. By providing a more direct connection between the artists and their fans, each artist community would serve as an online fan club that should generate increased interest and attendance at the artists' concerts. In addition to marketing and promoting the artist, Front Row Entertainment could sell advertising space on these fan communities to companies interested in reaching the particular demographic that the artist attracts. Because the summer concert season is one of the busiest and most lucrative times of the year, Cam and Anna felt it was extremely important to get the fan communities in place prior to the beginning of the summer. Therefore, they engaged in the following selected transactions for the months of May and June: May 1 Paid Web Design Inc. S8,500 to develop the fan websites. The fan websites were operational on May 10. Front Row charged this expenditure to other expense. 10 Front Row Entertainment sold S550 worth of advertising to Little John’s Restaurant with terms 2/10, n/30. The advertising will randomly appear on the artists' websites throughout the month of May. Front Row expects Little John’s to pay within the discount period. 15 Front Row Entertainment sold S450 worth of advertising to Sherwood Media with terms 2/10, n/30. The advertising related to an in-store DVD promotion that Sherwood was holding later in the month. Front Row expects Sherwood Media to pay within the discount period. 19 Front Row Entertainment received payment from Little John for the May 10 bill. 20 Sherwood Media informed Front Row that an error had been made on its advertisement. Sherwood’s promotion was supposed to run from May 20 to May 25; however, the advertisement stated that the promotion would run from May 15 to May 25. Because the error was Front Row’s fault, Front Row agreed to reduce the amount owed by $150. June 1 Front Row Entertainment sold S750 worth of advertising to Big House Entertainment Company with terms 2/10, n/30. The advertising will randomly appear on the artists' websites throughout the month of June. Front Row expect Big House to pay within the discount period. 10 Sherwood paid Front Row the amount owed for the May 15 bill minus the allowance granted on May 20. 20 Front Row learns that Big House Entertainment has filed for bankruptcy, and it writes off the receivable from June 1st. Over the next few months, the fan communities continue to grow in popularity, with more and more companies purchasing advertising space. By the end of 2019, Front Row reports the following balances: Required: Prepare the adjusting entry required at December 31, 2019, with regard to bad debt under each of the following independent assumptions. a. Assume that Front Row performed an aging of its accounts receivable. Front Row estimates that $895 of its accounts receivable will be uncollectible. b. Assume that Front Row uses the percentage of credit sales method and estimates that 2% of credit sales will be uncollectible.

BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 5, Problem 97.2C
Textbook Problem

Case 5-97 CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT

While Front Row Entertainment has had considerable success in signing artists and promoting concerts, Cam and Anna still had a few ideas to grow their business that they wanted to implement. One idea that they both agree on is to start an online fan "community" for each of their artists. By providing a more direct connection between the artists and their fans, each artist community would serve as an online fan club that should generate increased interest and attendance at the artists' concerts. In addition to marketing and promoting the artist, Front Row Entertainment could sell advertising space on these fan communities to companies interested in reaching the particular demographic that the artist attracts. Because the summer concert season is one of the busiest and most lucrative times of the year, Cam and Anna felt it was extremely important to get the fan communities in place prior to the beginning of the summer. Therefore, they engaged in the following selected transactions for the months of May and June:

May 1 Paid Web Design Inc. S8,500 to develop the fan websites. The fan websites were operational on May 10. Front Row charged this expenditure to other expense.

10 Front Row Entertainment sold S550 worth of advertising to Little John’s Restaurant with terms 2/10, n/30. The advertising will randomly appear on the artists' websites throughout the month of May. Front Row expects Little John’s to pay within the discount period.

15 Front Row Entertainment sold S450 worth of advertising to Sherwood Media with terms 2/10, n/30. The advertising related to an in-store DVD promotion that Sherwood was holding later in the month. Front Row expects Sherwood Media to pay within the discount period.

19 Front Row Entertainment received payment from Little John for the May 10 bill.

20 Sherwood Media informed Front Row that an error had been made on its advertisement. Sherwood’s promotion was supposed to run from May 20 to May 25; however, the advertisement stated that the promotion would run from May 15 to May 25. Because the error was Front Row’s fault, Front Row agreed to reduce the amount owed by $150.

June 1 Front Row Entertainment sold S750 worth of advertising to Big House Entertainment Company with terms 2/10, n/30. The advertising will randomly appear on the artists' websites throughout the month of June. Front Row expect Big House to pay within the discount period.

10 Sherwood paid Front Row the amount owed for the May 15 bill minus the allowance granted on May 20.

20 Front Row learns that Big House Entertainment has filed for bankruptcy, and it writes off the receivable from June 1st.

Over the next few months, the fan communities continue to grow in popularity, with more and more companies purchasing advertising space. By the end of 2019, Front Row reports the following balances:

Chapter 5, Problem 97.2C, Case 5-97 CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT While Front Row Entertainment has had

Required:

Prepare the adjusting entry required at December 31, 2019, with regard to bad debt under each of the following independent assumptions.

a. Assume that Front Row performed an aging of its accounts receivable. Front Row estimates that $895 of its accounts receivable will be uncollectible.

b. Assume that Front Row uses the percentage of credit sales method and estimates that 2% of credit sales will be uncollectible.

Expert Solution

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Chapter 5 Solutions

Cornerstones of Financial Accounting
Show all chapter solutions
Ch. 5 - What is the conceptual difference between the (1)...Ch. 5 - What kind of account is allowance for doubtful...Ch. 5 - Why do companies issue credit when their past...Ch. 5 - How much interest will be due at maturity for each...Ch. 5 - A business borrows $1,000, signing a note that...Ch. 5 - A business borrows $1,000, signing a note that...Ch. 5 - Describe what happens when receivables are...Ch. 5 - Accepting major credit cards requires the seller...Ch. 5 - Why is interest typically charged on notes...Ch. 5 - What documents must be present to trigger the...Ch. 5 - Describe the documents that underlie the typical...Ch. 5 - How may analyzing sales and receivables provide...Ch. 5 - How may analyzing sales and receivables provide...Ch. 5 - Food To Go is a local catering service....Ch. 5 - When is revenue from the sale of merchandise...Ch. 5 - What does the phrase, Revenue is recognized at the...Ch. 5 - On August 31, 2019, Montana Corporation signed a...Ch. 5 - When should the net method be used to record sales...Ch. 5 - On April 20, McLean Company provides lawn care...Ch. 5 - Which of the following statements concerning...Ch. 5 - All of the following are ways in which receivables...Ch. 5 - Which one of the following best describes the...Ch. 5 - If a company uses the direct write-off method of...Ch. 5 - Which of the following best describes the...Ch. 5 - Which of the following best describes the concept...Ch. 5 - The aging method is closely related to the a....Ch. 5 - The percentage of credit sales approach is closely...Ch. 5 - The process by which firms package factored...Ch. 5 - Which one of the following statements is true if a...Ch. 5 - Zenephia Corp. accepted a 9-month note receivable...Ch. 5 - The principal of a note receivable refers to a....Ch. 5 - Net profit margin percentage is calculated by a....Ch. 5 - ( Appendix 5A) Under the gross method, the seller...Ch. 5 - Service Revenue Kibitz Fitness received S30000...Ch. 5 - Service Revenue Softball Magazine Company received...Ch. 5 - Sales Discounts Taken Refer to the information for...Ch. 5 - Sales Discounts Not Taken Refer to the information...Ch. 5 - Percentage of Credit Sales Clarissa Company has...Ch. 5 - Write-Off of Uncollectible Accounts The Rock has...Ch. 5 - Aging Method On January 1, 2019, Hungryman Inc....Ch. 5 - Aging Method On January 1, 2019, Smith Inc. has...Ch. 5 - Percentage of Credit Sales Method At December 31,...Ch. 5 - Accounts Receivable Balance Beginning accounts...Ch. 5 - Accounts Receivable Balance Beginning accounts...Ch. 5 - Accounts Receivable Balance Beginning accounts...Ch. 5 - Accounting for Credit Card Sales Franks Tattoos...Ch. 5 - Notes Receivable Metzler Communications designs...Ch. 5 - Notes Receivable Link Communications programs...Ch. 5 - Ratio Analysis The following information pertains...Ch. 5 - Ratio Analysis Diviney Corporations net sales and...Ch. 5 - Ratio Analysis Bo Sports' net sales, average net...Ch. 5 - Service Revenue H**R Wholesalers is a retailer...Ch. 5 - Service Revenue Melrose Milk Delivery provides...Ch. 5 - Sales Discounts Taken Gordons Grocers purchases...Ch. 5 - Sales Discounts Not Taken Assume the same...Ch. 5 - Percentage of Credit Sales Roeker Company provides...Ch. 5 - Write-Off of Uncollectible Accounts King...Ch. 5 - Aging Method Spotted Singer sells karaoke machines...Ch. 5 - Aging Method Ingrid Inc. has strict credit...Ch. 5 - Percentage of Credit Sales Method Ruby Red...Ch. 5 - Collection of Amounts Previously Written Off...Ch. 5 - Accounts Receivable Balance Hart Inc. began the...Ch. 5 - Accounts Receivable Balance XYZ Corp sells widgets...Ch. 5 - Accounts Receivable Balance Rays beginning and...Ch. 5 - Accounting for Credit Card Sales Jarrods Meat Shop...Ch. 5 - Notes Receivable Harrigan Enterprises utilizes...Ch. 5 - Notes Receivable Kelseys Kleening provides...Ch. 5 - Ratio Analysis Dobbys income statement lists net...Ch. 5 - Ratio Analysis Rose Corporation sells upscale...Ch. 5 - Ratio Analysis Watts Inc. specializes in imported...Ch. 5 - ( Appendix 5A) Sales Discounts Harry Gardner...Ch. 5 - ( Appendix 5A) Sales Discounts Ramsden Inc....Ch. 5 - Calculation of Revenue Wallace Motors buys and...Ch. 5 - Revenue Recognition Volume Electronics sold a...Ch. 5 - Calculation of Revenue from Cash Collection...Ch. 5 - Effects of Sales Discounts Citron Mechanical...Ch. 5 - Sales and Sales Returns and Allowances Rubin...Ch. 5 - Average Uncollectible Account Losses and Bad Debt...Ch. 5 - Bad Debt Expense: Percentage of Credit Sales...Ch. 5 - Bad Debt Expense: Percentage of Credit Sales...Ch. 5 - Bad Debt Expense: Aging Method Glencoe Supply had...Ch. 5 - Aging Receivables and Bad Debt Expense Perkinson...Ch. 5 - Allowance for Doubtful Accounts At the beginning...Ch. 5 - Collection of Amounts Previously Written Off...Ch. 5 - Correcting an Erroneous Write-Off The new...Ch. 5 - Accounting for Notes Receivable On November 30,...Ch. 5 - Recording Notes Receivable: Issuance, Payment, and...Ch. 5 - Internal Control for Sales Arrow Products is a...Ch. 5 - Ratio Analysis The following information was taken...Ch. 5 - Ratio Analysis The following information was taken...Ch. 5 - ( Appendix 5A) Sales Discount Recorded at Gross...Ch. 5 - Revenue Recognition Katie Vote owns a small...Ch. 5 - Discount Policy and Gross Profit Compton Audio...Ch. 5 - Effects of Discounts on Sales and Purchases...Ch. 5 - Internal Control for Sales Yancys Hardware has...Ch. 5 - Bad Debt Expense: Percentage of Credit Sales...Ch. 5 - Aging Method Bad Debt Expense Cindy Bagnal, the...Ch. 5 - Determining Bad Debt Expense Using the Aging...Ch. 5 - Accounting for Notes Receivable Yarnell...Ch. 5 - Ratio Analysis Selected information from Bigg...Ch. 5 - ( Appendix 5A) Sales Discounts Sims Company...Ch. 5 - Revenue Recognition Mary Wade owns a small...Ch. 5 - Discount Policy and Gross Profit Parker...Ch. 5 - Effects of Discounts on Sales and Purchases...Ch. 5 - Internal Control for Sales Johnson Tires has three...Ch. 5 - Bad Debt Expense: Percentage of Credit Sales...Ch. 5 - Aging Method Bad Debt Expense Carol Simon, the...Ch. 5 - Determining Bad Debt Expense Using the Aging...Ch. 5 - Accounting for Notes Receivable Sloan Systems...Ch. 5 - Ratio Analysis Selected information from Small...Ch. 5 - ( Appendix 5A) Sales Discounts Spartan Inc....Ch. 5 - Ethics and Revenue Recognition Alan Spalding is...Ch. 5 - Ethics and Revenue Recognition Alan Spalding is...Ch. 5 - Ethics and Revenue Recognition Alan Spalding is...Ch. 5 - Recognition of Service Contract Revenues Jackson...Ch. 5 - Recognition of Service Contract Revenues Jackson...Ch. 5 - Recognition of Service Contract Revenues Jackson...Ch. 5 - Revenue Recognition Beth Rader purchased North...Ch. 5 - Sales Discount Policies Consider three businesses,...Ch. 5 - Sales Discount Policies Consider three businesses,...Ch. 5 - Financial Analysis of Receivables A chain of...Ch. 5 - Financial Analysis of Receivables A chain of...Ch. 5 - Income Effects of Uncollectible Accounts The...Ch. 5 - Income Effects of Uncollectible Accounts The...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Research and Analysis Using the Annual Report...Ch. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Case 5-97 CONTINUING PROBLEM: FRONT ROW...Ch. 5 - Case 5-97 CONTINUING PROBLEM: FRONT ROW...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Which one is best?

Foundations of Business (MindTap Course List)

Explain whether the following statement is true or false: Only weak companies issue debentures.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

What is middleware?

Principles of Information Systems (MindTap Course List)

What is a relational diagram? Give an example.

Database Systems: Design, Implementation, & Management

Which law amended the Computer Fraud and Abuse Act of 1986, and what did it change?

Principles of Information Security (MindTap Course List)

List three safety precautions to observe when operating a horizontal band saw.

Precision Machining Technology (MindTap Course List)

For Problem 19.33, calculate the probability distribution and plot the probability distribution curve.

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

Identify and briefly describe five common fact-finding methods.

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

Describe residual risk.

Management Of Information Security

Describe the purpose of a CAPTCHA.

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)

What is the index of leading indicators? Why is it useful to macro policy-makers?

Economics: Private and Public Choice (MindTap Course List)

It is frequently stated that the one purpose of the preemptive right is to allow individuals to maintain their ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)