Financial Accounting Questions and Answers

Old Town Co. wholesales bathroom fixtures. During the current fiscal year, Old Town Co. received the following notes:                     Date                Face Amount      Term              Interest Rate  1.              Apr. 10                 $45,000          60 days                     4%  2.              June 24                  18,000           30 days                    6  3.              July 1                     36,000     ...

Tel-Com Company, a telephone service and supply company, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the company is considering changing to the allowance method. Information is requested as to the effect that an annual provision of ¾% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts: Year of Origin of Accounts Receivable Written Off  as Uncollectible Year Sales Uncollectible Accounts Written off 1st 2nd 3rd 4th 1st $   700,000 $2,000 $2,000 2nd    900,000 3,400 1,800 $1,600 3rd 1,200,000 6,450 1,000 3,700 $1,750 4th 2,000,000 9,200 1,260 3,...

Angler’s Dream Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Angler’s Dream prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2011: The following accounts were unintentionally omitted from the aging schedule: Customer                                            Due Date                        Balance  Antelope Sports & Flies                June 21, 2011                      $ 3,000  Big Hole Flies                               Aug. 30, 2011         ...

The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31: Feb.  17. Received 25% of the $30,000 balance owed by Gillespie Co., a bankrupt business, and wrote off the remainder as uncollectible. Apr.  11. Reinstated the account of Colleen Bertram, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,250 cash in full payment of Colleen’s account. July  6. Wrote off the $9,000 balance owed by Covered Wagon Co., which has no assets. Nov. 20. Reinstated the account of Dugan Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $5,900 cash in full payment of the account. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Kipp Co., $3,000; Moore Co., $4,000; Butte Distributors, $8,000; Parker Towers, $6,700.          31. Based on an analysis of the $1,200,000 of accounts receivabl...

Use the data in Exercises 9-27 and 9-28 to analyze the accounts receivable turnover ratios of H.J. Heinz Company and The Limited Brands Inc. a. Compute the average accounts receivable turnover ratio for The Limited Brands Inc. and H.J. Heinz Company for the years shown in Exercises 9-27 and 9-28. b. Does The Limited Brands or H.J. Heinz Company have the higher average accounts receivable turnover ratio? c. Explain the logic underlying your answer in (b). Answer: a. The average accounts receivable turnover ratios are as follows: The Limited Brands Inc.: 28.9 [(30.7 + 27.1)/2]   H.J. Heinz Company: 9.0 [(8.7 + 9.3)/2]  Note: For computations of the individual ratios, see Ex. 9–27 and Ex. 9–28. b. The Limited Brands has the higher average accounts receivable turnover  ratio. c. The Limited Brands operates a specialty retail chain of stores that sell directly to individual consumers. Many of these consumers (retail customers) pay with MasterCards or VISAs that are recorded as...

The Limited Brands Inc. sells women’s clothing and personal health care products through specialty retail stores including Victoria’s Secret and Bath & Body Works stores. The Limited Brands reported the following (in millions):                                                                 For the Period Ending                                                          Jan. 31, 2010    Jan. 31, 2009 Net sales                                               $8,632                $9,043 Accounts receivable      ...

H.J. Heinz Company was founded in 1869 at Sharpsburg, Pennsylvania, by Henry J. Heinz. The company manufactures and markets food products throughout the world, including ketchup, condiments and sauces, frozen food, pet food, soups, and tuna. For the fiscal years 2009 and 2008, H.J. Heinz reported the following (in thousands):                                                                             Year Ending                                                             April 29, 2009     April 30, 2008  Net sales                                   ...