Reference no: EM133124451
Question 1 - An aging analysis of Sheridan Company's accounts receivable at December 31, 2020 and 2021, showed the following:
|
Number of Days
Outstanding
|
Estimated %
Uncollectible
|
2021
|
2020
|
|
0-30 days
|
3%
|
$106,000
|
$130,000
|
|
31-60 days
|
6%
|
26,500
|
65,000
|
|
61-90 days
|
13%
|
53,000
|
39,000
|
|
Over 90 days
|
35%
|
79,500
|
26,000
|
|
Total
|
|
$265,000
|
$260,000
|
Additional information:
1. At December 31, 2020, the unadjusted balance in Allowance for Doubtful Accounts was a credit of $5,900.
2. In 2021, $27,300 of accounts was written off as uncollectible and $3,200 of accounts previously written off was collected.
Required -
(a) Prepare an aging schedule to calculate the estimated uncollectible accounts at December 31, 2020, and at December 31, 2021.
(b) Calculate the carrying amount of Sheridan's accounts receivable at December 31, 2020, and December 31, 2021.
(c) Record the following:
1. The adjusting entry on December 31, 2020.
2. The write off of uncollectible accounts in 2021.
3. The collection in 2021 of accounts previously written off.
4. The adjusting entry on December 31, 2021.
Question 2 - Presented here is selected financial information (in millions of dollars) from the 2017 financial statements of Canadian National Railway Company and Canadian Pacific Railway Limited:
|
CN Railway
|
CP Railway
|
|
Sales
|
$13,041
|
$6,554
|
|
Allowance for doubtful accounts, beginning of year
|
28
|
32
|
|
Allowance for doubtful accounts, end of year
|
16
|
25
|
|
Accounts receivable balance (net), beginning of year
|
875
|
591
|
|
Accounts receivable balance (net), end of year
|
984
|
687
|
Required -
(a) Calculate the receivables turnover and average collection period for both companies.
(b) Comment on the difference in their collection experiences.
Question 3 - Cullumber Financial Services loaned Sharp Inc. $120,000 cash in exchange for a one-year, 6% note on July 1, 2021. Interest is payable quarterly beginning on October 1, 2021. Cullumber has a December 31 year end and records adjusting entries annually.
Required -
(a) Record Cullumber's entries related to the note on July 1 and October 1, 2021.
(b) Prepare the adjusting journal entry for accrued interest on December 31, 2021.
(c) Indicate what amounts will be reported on Cullumber's December 31, 2021, balance sheet related to the note receivable.
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