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Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Intermediate Accounting: Reporting And Analysis
Cash And Receivables. 12C
Examine the related generally accepted accounting principles and draft a memo to the president.
Question
Chapter 6, Problem 12C
To determine
Examine the related generally accepted accounting principles and draft a memo to the president.
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3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Intermediate Accounting: Reporting And Analysis
Cash And Receivables. 12C
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Chapter 6 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 6 - Prob. 1GICh. 6 - Prob. 2GICh. 6 - Prob. 3GICh. 6 - Prob. 4GICh. 6 - Prob. 5GICh. 6 - Prob. 6GICh. 6 - Prob. 7GICh. 6 - Prob. 8GICh. 6 - Prob. 9GICh. 6 - Prob. 10GI
Ch. 6 - Prob. 11GICh. 6 - Prob. 12GICh. 6 - Prob. 13GICh. 6 - Prob. 14GICh. 6 - Prob. 15GICh. 6 - Prob. 16GICh. 6 - Prob. 17GICh. 6 - Prob. 18GICh. 6 - Prob. 19GICh. 6 - Prob. 20GICh. 6 - Prob. 21GICh. 6 - Prob. 22GICh. 6 - Prob. 23GICh. 6 - Prob. 24GICh. 6 - Prob. 25GICh. 6 - Prob. 26GICh. 6 - Prob. 27GICh. 6 - Prob. 1MCCh. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Prob. 11MCCh. 6 - Prob. 1RECh. 6 - Prob. 2RECh. 6 - Prob. 3RECh. 6 - Prob. 4RECh. 6 - Prob. 5RECh. 6 - Prob. 6RECh. 6 - Prob. 7RECh. 6 - Prob. 8RECh. 6 - Prob. 9RECh. 6 - Prob. 10RECh. 6 - Prob. 11RECh. 6 - Prob. 12RECh. 6 - Prob. 13RECh. 6 - Prob. 14RECh. 6 - Prob. 15RECh. 6 - Prob. 16RECh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3ECh. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Prob. 3CCh. 6 - Prob. 4CCh. 6 - Prob. 5CCh. 6 - Prob. 6CCh. 6 - Prob. 7CCh. 6 - Prob. 8CCh. 6 - Prob. 9CCh. 6 - Prob. 10CCh. 6 - Prob. 12C
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Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency? A. $5,000 B. $5,050 C. $20,000 D. $19,950
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Paradise Retailers, Inc. (PRI) determined that $1,500,000 is needed for cash transactions made during the next year. Each time PRI deposits money in its checking account, a charge of $12.95 is assessed to cover clerical costs. If PRI can hold marketable securities that yield 4.5%, and then convert these securities to cash at a cost of only the $12.95 deposit charge, what is the optimal cash amount C* to transfer from marketable securities to the checking account according to the Baumol Model?
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Suppose that, as a result of increased use of electronic payments, banks no longer need to hold as much vault cash. Banks decide to reduce their vault cash holdings by $250million.
a) Show the effects this would have on the balance sheets of commercial banks and the central bank.
b) If, at the same time, depositors decide to reduce their cash holdings by $50million by depositing that amount with their banks, show the combined effect of these decisions on the balance sheets of commercial banks.
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Beleaguered State Bank (BSB) holds $200,000,000 in deposits and maintains a reserve ratio of 10%, which also is the reserve requirement. On paper, write the T account for BSB and use it to answer the rest of this question. Now suppose that BSB's largest depositor withdraws $10,000,000 from her account one day. On paper, show the effect of this on the T account. How many dollars of cash reserves does BSB need to raise to be allowed to open for business the next morning?
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Assuming loan made by M Enterprises to Banco De Oro amounting to P350,000.00 payable in three years with a monthly interest of 1.05%. M enterprises issued 12 checks for 1 year and upon 3rd month, issued check was bounced. What could be the possible action of the drawee? Elaborate your answer with supporting data.
What could be the possible violation of the above scenario where they would just escape the obligation to the said bank upon the rules of commercial/ personal credit?
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As a result of the COVID-19 crisis, company A has decided to sell its receivables to a bank in exchange for cash. What would be the effect of this financial decision on the company's current ratio, quick ratio and cash ratio?
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Show how each of the following would initially affect a bank’s assets liabilities.
Someone makes $1000 deposit into a checking account.
A bank makes a loan of $1000 by establishing a checking account for $1000
The loan described in part (B) is spent.
A bank must write off a loan because the borrower defaults.
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17.
In preparing its August 31, 2022 bank reconciliation, AA Corp. has available following information:
Balance per bank statement, 8/31/22, P18, 050
Deposit in transit, 8/31/22,P3, 250
Return of customer’s check for insufficient funds, 8/29/22, P600
Outstanding checks, 8/31/22, P2, 750
Bank service charges for August, P100
Check disbursement recorded in August (correct amount is P5,000), P500
AA deposited P15,000 in August but credited by bank at, P1,500
What is the unadjusted balance per book on August 31, 2021?
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Analyzing Cash and Marketable Securities techniques through answering the following:
3.a. What are the Keynes as a reasons/motives for holding cash?
3.b. A company has daily cash receipts of $100,000. The treasurer of the company has investigated a lock box service whereby the bank that offers this service will reduce the company’s collection time by three days at a monthly fee of $1,500. If money market rates average 5% during the year, what is the additional annual income (loss) from using the lock box service?
3.c. What do you think is a collection float compared with deposit float?
3.d. What is the type of float that management should increase due to its positive impact in the cash balance of the company?
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Create a Bank Reconciliation for Tasters Club Corp. In this exercise, you will create a bank reconciliation for Tasters Club Corp. for the month ended December 31, 2016. The reconciliation should be partly based on these figures: Bank Statement Balance (12/31/2016) equals $16,200; Notes Receivable equals $395; NSF Check equals $4,000; Bank Charges equals $550. During the month, the bank erroneously deposited a $505 check written to Pepper Products into the bank account of Tasters Club Corp.
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7. The money creation processSuppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 25%. Brian, a client of First Main Street Bank, deposits $1,800,000 into his checking account at First Main Street Bank.Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans).AssetsLiabilities
Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 25%.Hint: If the change is negative, be sure to enter the value as negative number.Amount DepositedChange in Excess ReservesChange in Required Reserves(Dollars)(Dollars)(Dollars)1,800,000
Now, suppose First Main Street Bank loans out all of its new excess reserves to Alyssa, who immediately uses the funds to write a check to Tim. Tim deposits the funds immediately into his checking account at Second Republic Bank. Then Second…
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Hussein Al Lawati SAOG has recognized that the organization is facing a liquidity crisis. Accordingly, the accountant of the organization has studied the payment records from the customer and has noticed that the company at present offers its customers 25 days credit. Half the customers by value, pay on time. The other half takes an average of 50 days to pay. In this background you are planning to offer a cash discount of 2.5 per cent to your customers for the payment made within 25 days.
The credit controller anticipates that half of the customers who now take an average of 50 days to pay will pay in 25 days. The other half will still take an average of 50 days to pay. It is anticipated that the proposed scheme will reduce bad debts amount by RO. 450,000 a year.
Annual sales revenue of RO 45,000,000 is made evenly throughout the year. At present the business has a large overdraft RO. 5,000,000 with its bank at an interest of 7 percent a year.
Required:
a. Calculate receivables…
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