close solutoin list

Accounts Payable and Cash Discounts Byrd Company had the following transactions during 2019 and 2020: On December 24, 2019, a computer was purchased on account from Computers International for $60,000. Terms of the sale were 2/10, n/30. Byrd calculated that to forgo the discount for the computer would be the equivalent of paying 36% interest annually for the extra 20 days. Therefore, Byrd went to First Local Bank and signed a $60,000, 30-day note at 12% in order to take advantage of the discount terms. This transaction took place on December 29, 2019. (The account payable was paid on January 2, 2020, and the note was paid at maturity. Assume a 360-day year.) On December 30, 2019, Byrd declared a $2.00 cash dividend to the common shareholders. Ten thousand shares were outstanding on this date. The dividend is to be paid on January 5, 2020. Required: Prepare the journal entries for Byrd for both 2019 and 2020. Assume that the net price method is used to account for the credit terms. Show how the preceding items would be reported in the current liabilities section of Byrd’s December 31, 2019, balance sheet. Next Level Assuming Byrd’s current assets were $1,200,000 and its current ratio was 2.4 at the end of 2018, compute the current ratio at the end of 2019 (based solely on the effects of the preceding transactions).

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 9, Problem 1P
Textbook Problem

Accounts Payable and Cash Discounts Byrd Company had the following transactions during 2019 and 2020:

On December 24, 2019, a computer was purchased on account from Computers International for $60,000. Terms of the sale were 2/10, n/30.

Byrd calculated that to forgo the discount for the computer would be the equivalent of paying 36% interest annually for the extra 20 days. Therefore, Byrd went to First Local Bank and signed a $60,000, 30-day note at 12% in order to take advantage of the discount terms. This transaction took place on December 29, 2019. (The account payable was paid on January 2, 2020, and the note was paid at maturity. Assume a 360-day year.)

On December 30, 2019, Byrd declared a $2.00 cash dividend to the common shareholders. Ten thousand shares were outstanding on this date. The dividend is to be paid on January 5, 2020.

Required:

Prepare the journal entries for Byrd for both 2019 and 2020. Assume that the net price method is used to account for the credit terms.

Show how the preceding items would be reported in the current liabilities section of Byrd’s December 31, 2019, balance sheet.

Next Level Assuming Byrd’s current assets were $1,200,000 and its current ratio was 2.4 at the end of 2018, compute the current ratio at the end of 2019 (based solely on the effects of the preceding transactions).

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 9 Solutions

Intermediate Accounting: Reporting And Analysis
Show all chapter solutions
Ch. 9 - If a company has 300,000 of 20-year bonds payable...Ch. 9 - How should long-term debt that is callable by a...Ch. 9 - What two criteria must be met before a company can...Ch. 9 - How does a company demonstrate the ability to...Ch. 9 - Distinguish between the balance sheet...Ch. 9 - Donald Company operates a business in Orange...Ch. 9 - How does unearned revenue arise, and how is it...Ch. 9 - Explain the types of liabilities that an employer...Ch. 9 - What are compensated absences? How does a company...Ch. 9 - Define gain contingency. Describe the accounting...Ch. 9 - Define contingency. What exactly is the company...Ch. 9 - How do the matching principle and conservatism...Ch. 9 - What two criteria must be met before a loss...Ch. 9 - With regard to a loss contingency, by what date...Ch. 9 - What conditions would have to be met for a company...Ch. 9 - If a company determines that a provision has a 51...Ch. 9 - If a company that uses IFRS determines that a...Ch. 9 - Identify how to account for warranty costs if the...Ch. 9 - The balance in Ashwood Companys accounts payable...Ch. 9 - On September 1, 2019, a company borrowed cash and...Ch. 9 - When a company receives a deposit from a customer...Ch. 9 - Bronson Apparel Inc. operates a retail store and...Ch. 9 - Morgan Company determined that (1) it has a...Ch. 9 - All of Rolf Co.s employees are entitled to two...Ch. 9 - Which of the following is classified as an accrued...Ch. 9 - Gain contingencies are usually recognized in the...Ch. 9 - How should a loss contingency that is reasonably...Ch. 9 - During 2019, Lawton Company introduced a new line...Ch. 9 - Rescue Sequences LLC purchased inventory by...Ch. 9 - Use the same information in RE9-1 except that the...Ch. 9 - Cee Co.s fiscal year begins April 1. At the...Ch. 9 - McFriend Inc. records its liabilities for...Ch. 9 - Assume that for the August 31 payroll, McFriend...Ch. 9 - Smith Company is required to charge customers an...Ch. 9 - Wallace Corporation summarizes the following...Ch. 9 - Borat Company gives annual bonuses after the end...Ch. 9 - Dynamo Corporation manufactures toasters. Each...Ch. 9 - Landcaster Inc. sells its products with a 2-year...Ch. 9 - After years of experience, Dilcort Company...Ch. 9 - Accounts Payable and Cash Discounts On January 4,...Ch. 9 - Notes Payable On December 1, 2019, Insto Photo...Ch. 9 - Non-Interest-Bearing Notes Payable On November 16,...Ch. 9 - Discounting of Notes Payable On October 30, 2019,...Ch. 9 - Disclosure of Debt On May 1, 2019, Ramden Company...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Refundable Deposits Party Warehouse Inc. rents a...Ch. 9 - Unearned Revenue: Gift Certificates On December 5,...Ch. 9 - Property Taxes Family Practice Associates has an...Ch. 9 - Property Taxes Ames Company is located in a city...Ch. 9 - Compensated Absences Bettinghaus Corporation began...Ch. 9 - Sales Taxes During August, Hill Sales Company had...Ch. 9 - Payroll and Payroll Taxes Rand Companys payroll on...Ch. 9 - Bonus Obligation Raymond Moss, vice president of...Ch. 9 - Loss Contingency On December 4, 2019, Dan Johnson,...Ch. 9 - Assurance-Type Warranties On September 1, 2019,...Ch. 9 - Service-Type Warranties On August 1, 2019, Pereira...Ch. 9 - Premium Obligation Sweet Dates Company offers a...Ch. 9 - Premium Obligation On the back of its cereal...Ch. 9 - Cash Rebates On January 1, 2020, Fro-Yo Inc. began...Ch. 9 - Gain Contingency On December 31, 2019, Braino Tech...Ch. 9 - Accounts Payable and Cash Discounts Byrd Company...Ch. 9 - Notes Payable and Effective Interest On November...Ch. 9 - Trade Note Transactions Adjusto Corporation (which...Ch. 9 - Short-Term Debt Expected to Be Refinanced Several...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Non-Interest-Bearing Note Payable: Present Value...Ch. 9 - Property Taxes Rosen Corporation was formed on...Ch. 9 - Compensated Absences Rexallo Company begins...Ch. 9 - Payroll and Payroll Taxes Bailey Dry Cleaners has...Ch. 9 - Bonus Obligation and Income Tax Expense James...Ch. 9 - Sales Taxes Mauldin Company makes sales on which a...Ch. 9 - Contingencies Fallon Company, a toy manufacturer...Ch. 9 - Contingencies Greenlaw Inc., a publishing company,...Ch. 9 - Assurance-Type Warranty Clean-All Inc. sells...Ch. 9 - Service-Type Warranty Wright Machinery Corporation...Ch. 9 - Premium Obligation Yummy Cereal Company is...Ch. 9 - Comprehensive Selected transactions of Lizard Lick...Ch. 9 - Comprehensive Selected transactions of Shadrach...Ch. 9 - Short-Term Debt Expected to Be Refinanced While...Ch. 9 - Loss Contingencies Part a. The two basic...Ch. 9 - Contingency Conditions and Disclosure Loss...Ch. 9 - Pending Damage Suit Disclosure On December 15,...Ch. 9 - Various Contingency Issues Skinner Company has the...Ch. 9 - Various Contingency Issues At December 31, 2019,...Ch. 9 - Product and Lawsuit Contingencies Reese Company...Ch. 9 - Ethics and Environmental Damage Hart Corporation...Ch. 9 - Analyzing Moet Hennessy Louis Vuittons (LVMH)...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
What is a VPN?

Accounting Information Systems

Under what conditions does product modification work best?

Foundations of Business (MindTap Course List)

PAYING OFF CREDIT CARDS Simon recently received a credit card with an 18% nominal interest rate. With the card,...

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