Reference no: EM133196790
Forever Steel Company follows US GAAP, and prepares their financial statements on a quarterly basis. On September 30, 2020, the balance in their Accounts Receivable was $ 1,200,000, and their Allowance for Doubtful Accounts was $ 30,000. During the fourth quarter of 2020, Forever Steel recorded Sales in the amount of $ 1,800,000, all of which were made on account. Cash Collections during the quarter were $ 2,100,000, and a total of $ 40,000 of accounts were "written off". No accounts that had previously been written off were collected during the fourth quarter.
According to company policy, an Account Receivable is "written off" whenever it is more than three months old. Also, at the end of every quarter, Forever Steel Company records an Allowance for Doubtful Accounts equal to 2.5% of their outstanding Accounts Receivable as of the end of the quarter. No provisions for Uncollectible Accounts are made during the quarter, and the Allowance account is updated with an adjusting entry made at the end of the quarter.
Based on the information provided above, what is the amount of "Bad Debt Expense" that Forever Steel Company recorded during the quarter ending December 31, 2020? You should assume that all of the information related to this problem is "material".
Multiple Choice
- $ 11,500
- $ 30,000
- $ 31,500
- $ 40,000
- None of the above.
High Flying Company issued stock with a market value of $ 250 Million in exchange for 100% of the outstanding common stock of Sell Now, Inc. At the time of the acquistion, Sell Now's Balance Sheet, which was prepared in accordance with US GAAP, indicated Total Assets in the amount of $ 400 Million, and Total Liabilities in the amount of $ 260 Million. An appraisal conducted at the time of the acqusition indicated that the fair value of the assets was $ 475 Million, with the difference between the Book Value and the Fair Value being entirely attributable to an internally developed Patent that had a fair value of $ 75 Million. For all other assets, and all liabilities, the book value and the fair value were the same.
Immediately after the Business Combination, how much Goodwill should High Flying Company record related to their acquisition of Sell Now, Inc.?
Multiple Choice
- $ 0
- $ 35,000,000
- $ 65,000,000
- $ 110,000,000
- None of the above