Intro to Financial & Managerial Accounting Set 3 - Edubirdie

University:
Massachusetts Institute of Technology
Course:
15.501/516 | Accounting
Academic year:

2023
Views:

430

Pages:

1
Author:

Harold Hamilton

Financial and Managerial Accounting Solutions 1. a. Bad debt expense would be: .04 * $870,000 = $34,800. Gross A/R is calculated using the analyst’s report: 400,000+90.000+40,000+20,000 = 550,000 The ending book value of accounts receivable would be $550,000 - (25,200 -30,000 + 34,800) = $520,000. b. The aging approach first determines the desired ending balance of the allowance as (.005 * 400,000) + (.01 * 90,000) + (.1 * 40,000) + (.7 * 20,000) = $20,900 The Bad debt expense has to be: 25,200 - 30,000 + x = 20,900 ==> x = $20,900 - 25,200 + 30,000 = $25,700. Ending BV of A/R = $550,000 - 20,900 = $529,100 c. If the aging analysis gives a fair estimate of the outstanding accounts that won't be collected, then it appears that Dove Company has been overestimating bad debt expense via the percent of sales method. We can infer this because the ending allowance balance in part a. above (30,000) is much greater than the desired balance derived in part (b). The lower amount of bad debt expense computed in part (b) is compensating for overly aggressive estimates in the past. 2. a. Cash (A) increases by $240, and Deferred Membership Revenue (L) increases by $240. b. Since the $240 is membership revenue for a year, and 2 months pass between 12/1/99 and 1/29/2000, the company may now recognize 1/6 of the deferred revenue or $40. In terms of the BSE, Deferred Membership Revenue (L) decreases by $40, and Retained Earnings (SE) increases by $40, through the recognition of sales revenue.

Related Documents

Intro to Financial & Managerial Accounting Set 3

Intro to Financial & Managerial Accounting Set 3 - Page 1

of 1

Recommended Documents

The Balance Sheet and the Recording of Transactions

The Balance Sheet and the Recording of Transactions

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

The Accounting Process

The Accounting Process

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Intro to Financial & Managerial Accounting Set 2

Intro to Financial & Managerial Accounting Set 2

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Financial Statements - the Annual Report

Financial Statements - the Annual Report

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

The Classified Balance Sheet

The Classified Balance Sheet

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Tabular analysis of the effects of various

Tabular analysis of the effects of various

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Mapping the Telecom Value Chain - A Roadmap for Communications Networks

Mapping the Telecom Value Chain - A Roadmap for Communications Networks

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Constructive Conflict, Uncertainty and Real Options

Constructive Conflict, Uncertainty and Real Options

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Strategic Management and Consulting Proseminar Strategic Questions Lufthansa

Strategic Management and Consulting Proseminar Strategic Questions Lufthansa

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Advanced Corporate Risk Management: MW Petroleum (B)

Advanced Corporate Risk Management: MW Petroleum (B)

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Communication for Managers Active Listening Exercise

Communication for Managers Active Listening Exercise

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Communication for Managers: Craigstone Worksheet

Communication for Managers: Craigstone Worksheet

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

New Documents from this Course

Introduction to Financial and Managerial Accountin Problem Set 1

Introduction to Financial and Managerial Accountin Problem Set 1

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Midterm 2 Review Notes

Midterm 2 Review Notes

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Marketable Securities (Deferred Taxes)

Marketable Securities (Deferred Taxes)

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Long-term Assets, Depreciation (Deferred Taxes)

Long-term Assets, Depreciation (Deferred Taxes)

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note