Reference no: EM132853468

Questions -

Q1. The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of Bic Company are $500,000 and $50,000 respectively. Net credit sales has a total of $4,500,000 during the year while collections amounted to $4,400,000. Bad debts expense for the year is $30,000. Included in the collections was a $10,000 account which was written off in the prior year and was recovered during the current year. At year end, how much is the net realizable value of the Accounts Receivable?

Q2. Jam Corporation owned 50,000 shares of another Fame Corporation. These 50,000 shares have an original price of $100 per share. The investee distributed 50,000 rights to Jam Corporation. Jam Corporation was entitled to buy one new share for $140 and five of these rights. Each share had a market value of $150 and each right had market value of $10 on the date of issuance. Jam Corporation exercised all rights. The share rights are accounted for separately and measured initially at fair value. How much should be recorded for the new shares that are acquired by exercising the rights?