Reference no: EM132424334
Accounting Basics Questions -
Q1. Daley Company prepared the following aging of receivables analysis at December 31.
|
|
Total
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Days Past Due
|
|
0
|
1 to 30
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31 to 60
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61 to 90
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Over 90
|
|
Accounts receivable
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$665,000
|
$415,000
|
$109,000
|
$55,000
|
$37,000
|
$49,000
|
|
Percent uncollectible
|
|
2%
|
3%
|
6%
|
8%
|
11%
|
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance In the Allowance for Doubtful Accounts is a $5,500 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $2,000 debit.
Q2. Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $86,200. The machine's useful life is estimated at 10 years, or 396,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 33,600 units of product.
Determine the machine's second-year depreciation and year end book value under the straight-line method.
Q3. No-Toxic-Toys currently has $350,000 of equity and is planning an $140,000 expansion to meet increasing demand for its product The company currently earns $122,500 in net income, and the expansion will yield $61,250 in additional Income before any Interest expense.
The company has three options: (1) do not expand, (2) expand and issue $140,000 in debt that requires payments of 15% annual interest, or (3) expand and raise $140,000 from equity financing. For each option, compute (a) net income and (b) return on equity (Net Income + Equity). Ignore any income tax effects.