ACCT 201 University of Houston Bad Debts Estimated as Receivables Questions

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Financial accounting
Q1. Discuss with your own examples the two methods of accounting for account receivables with
cash discounts and the two methods for estimating bad debts.
(Note: Numerical Examples must include Journal entry)
Answer
Q2. X Company has the following receivables classified into individually significant and all
other receivables.
Individually significant
P Company
Q Company
R Company
S Company
All other receivables
Total receivables.
$ 65,000
95,000
75,000
35,000
270,000
425,000
695,000
X company determines that P’s receivable is impaired by $20,000, and S’s receivable is totally
impaired. Both Q’s and R’s receivables are not considered impaired. X company also determines
that a composite rate of 2% is appropriate to measure impairment on all other receivables.
Required: Calculate the total impairment on accounts Receivable
Answer:
Q3. Rex Company’s record of transactions for the month of September was as follows.
Purchase
Quantity
Unit Price
Date
(Balance on
$5.00
Sep 5
hand) 100
Sep 4
400
5.10
Sep 12
Sep 11
300
5.30
Sep 27
Sep 18
200
5.35
Sep 28
Sep 26
600
5.60
Sep 30
200
5.80
Total
1,800
Total units (ending inventory) 350
Instructions:
Date
Sep 1
Sales
Units
300
200
800
150
1,450
Compute the ending inventory at September 30 on each of the following on periodic bases.
1. FIFO
2. LIFO
3. WA
Answer:
Q4. Explain the concept of LCNRV and its applicability to Agricultural Inventory and
Commodity Broker-Traders
Answer:
Q5. Give numerical examples for Gross profit and retail Methods of Estimating ending Inventory.
Answer:
Q6. ABC Corporation borrowed SAR 150,000 at 10% interest from NCB Bank on Jan. 1, 2020,
for specific purposes of constructing special-purpose equipment to be used in its operations.
Construction on the equipment began on Jan. 1, 2020, and other general debt existing on Jan. 1,
2020 was:
SAR 200,000, 12%, 10-year bonds payable
SAR 100,000, 11%, 5-year note payable
The weighted-average accumulated expenditures was SAR 250,000.
Compute the Actual and Avoidable Interest and Pass journal entry for the appropriate interest to
be capitalized. (2 Marks)
Answer:

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Explanation & Answer:
1300 words

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financial accounting

accounts receivables

Gross Sales

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