Accounting for notes receivable and uncollectible accounts
Problem 5-27Â Â Â Â Â Â Accounting for notes receivable and uncollectible accounts using the percent of sales allowance method
The following transactions apply to Bialis Co. for 2012, its first year of operations.
1.     Issued $100,000 of common stock for cash.
2.     Provided $86,000 of services on account.
3.     Collected $75,000 cash from accounts receivable.
4.     Loaned $10,000 to Horne Co. on October 1, 2012. The note had a one-year term to maturity and an 8 percent interest rate.
5.     Paid $32,000 of salaries expense for the year.
6.     Paid a $2,000 dividend to the stockholders.
7.     Recorded the accrued interest on December 31, 2012 (see item 4).
8.     Uncollectible accounts expense is estimated to be 1 percent of service revenue on account.
a.     Show the effects of the above transactions in a horizontal statements model like the one shown below.
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b.     Prepare the income statement, balance sheet, and statement of cash flows for 2012.
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Posted 10 Jun 2017 05:06 AM
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A-----------nsw-----------er -----------a ----------- As-----------set-----------s E-----------qui-----------ty -----------Rev----------- Ex-----------p N-----------et -----------Inc-----------ome----------- Ca-----------sh -----------Flo-----------ws -----------Eve-----------nt -----------Cas-----------h A-----------cco-----------unt----------- re-----------c. -----------Not-----------es -----------Rec----------- In-----------t. -----------Rec-----------. C-----------omm-----------on -----------Stk-----------. R-----------et.----------- Ea-----------rn.----------- Al-----------low----------- fo-----------r d-----------obu-----------t f-----------ull----------- ac-----------c. -----------1 1-----------000-----------00 -----------100-----------000----------- 10-----------000-----------0 2----------- 86-----------000----------- 86-----------000----------- 86-----------000----------- 3 -----------750-----------00 ------------75-----------000----------- 75-----------000----------- 4 ------------10-----------000----------- 10-----------000----------- -1-----------000-----------0 5----------- -3-----------200-----------0 3-----------200-----------0 ------------320-----------00 ------------32-----------000----------- 6 ------------20-----------00 ------------20-----------00 ------------20-----------00 -----------7 2-----------00 -----------200----------- 20-----------0 8----------- -8-----------60 -----------860----------- -8-----------60 ----------- A-----------nsw-----------er -----------b ----------- In-----------com-----------e s-----------tat-----------eme-----------nt -----------Rev-----------enu-----------e 8-----------600-----------0 I-----------nte-----------res-----------t r-----------ece-----------iva-----------ble----------- 20-----------0 T-----------ota-----------l 8-----------620-----------0 S-----------ala-----------rie-----------s 3-----------200-----------0 u-----------nco-----------lle-----------ct -----------acc-----------oun-----------t e-----------xpe-----------nse-----------s
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