ACC 291 Week 2 Textbook Exercise BE 8-8, E8-4, E8-14, E9-4
Chapter 8: BE8-8
Determine maturity dates and compute interest and rates on notes.
E8-4 The ledger of Macarty Company at the end of the current year shows Accounts Receivable $78,000, Credit Sales $810,000, and Sales Returns and Allowances $40,000.
(a) If Macarty uses the direct write‐off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Macarty determines that Matisse's $900 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $1,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.
Determine bad debt expense, and prepare the adjusting entry.
Chapter 8: E8-14
Compute ratios to evaluate a company's receivables balance.
(LO 4), AN
E8-14 Suppose the following information was taken from the 2017 financial statements of FedEx Corporation, a major global transportation/delivery company.
(in millions) 017 2016
Accounts receivable (gross) $ 3,587 $ 4,517
Accounts receivable (net) 3,391 4,359
Allowance for doubtful accounts 196 158
Sales revenue 35,497 37,953
Total current assets 7,116 7,244
Answer each of the following questions.
(a) Calculate the accounts receivable turnover and the average collection period for 2017 for FedEx.
(b) Is accounts receivable a material component of the company's total current assets?
(c) Evaluate the balance in FedEx's allowance for doubtful accounts.
Chapter 9: E9-4
Understand depreciation concepts.
(LO 2), C
E9-4 Alysha Monet has prepared the following list of statements about depreciation.
Depreciation is a process of asset valuation, not cost allocation.
Depreciation provides for the proper matching of expenses with revenues.
The book value of a plant asset should approximate its fair value.
Depreciation applies to three classes of plant assets: land, buildings, and equipment.
Depreciation does not apply to a building because its usefulness and revenue‐producing ability generally remain intact over time.
The revenue‐producing ability of a depreciable asset will decline due to wear and tear and to obsolescence.
Recognizing depreciation on an asset results in an accumulation of cash for replacement of the asset.
The balance in accumulated depreciation represents the total cost that has been charged to expense since placing the asset in service.
Depreciation expense and accumulated depreciation are reported on the income statement.
Three factors affect the computation of depreciation: cost, useful life, and salvage value.
Identify each statement as true or false. If false, indicate how to correct the statement.