Bramble Corp. has the following account balances at December 31, 2021: Notes payable ($47,000 due after 12/31/22) $78,000 Unearned service revenue 55,000 Mortgage Payable ($70,000 due in 2022) 195,000 Salaries payable 25,000 Accounts payable 49,000 In addition, Bramble is involved in a lawsuit. Legal counsel feels it is probable Bramble will pay damages of $20,000 in 2022. Bramble records provisions related to litigations in the account Litigation Liability. Prepare the current liabilities section of Bramble's December 31, 2021, balance sheet. Bramble Corp. (Partial) Balance Sheet

Bramble Corp. has the following account balances at December 31, 2021: Notes payable ($47,000 due after 12/31/22) $78,000 Unearned service revenue 55,000 Mortgage Payable ($70,000 due in 2022) 195,000 Salaries payable 25,000 Accounts payable 49,000 In addition, Bramble is involved in a lawsuit. Legal counsel feels it is probable Bramble will pay damages of $20,000 in 2022. Bramble records provisions related to litigations in the account Litigation Liability. Prepare the current liabilities section of Bramble's December 31, 2021, balance sheet. Bramble Corp. (Partial) Balance Sheet

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 67P

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It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019 (which will be issued in March 2020). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenports accounts receivable is 50,000 (a material amount) owed to it by Travis. You approach Jim Davenport, president, with this information and suggest that a reduction of accounts receivable and recognition of a loss for 2019 might be appropriate. Jim replies, Why should we make an adjustment? Ted Travis, the president of Travis Corporation, is a friend of mine; he will find a way to pay us, one way or another. Furthermore, this occurred in 2020, so lets wait and see what happens; we can always make an adjustment later this year. Our 2019 income and year-end working capital are not that high; our creditors and shareholders wouldnt stand for lower amounts than they already are. Required: From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.
On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
In its December 31, 2022 statement of financial position, Reederei Company reported receivables of P250,000 and related allowance for uncollectibility of P20,000. Such receivables are in litigation and the cost of litigation is 20% of the receivables. At December 31, 2022, it is reasonably possible that Beirut Company will not be able to collect on the receivables after litigation. 27. What is the total amount of risk of accounting loss related to Reederei's receivables? 28. What is the total amount of off balance sheet risk related to Reederei's receivables?
Flounder Corp. has the following account balances at December 31, 2021: Notes payable ($50,000 due after 12/31/22) $84,000 Unearned service revenue 59,000 Mortgage Payable ($76,000 due in 2022) 210,000 Salaries payable 27,000 Accounts payable 53,000 In addition, Flounder is involved in a lawsuit. Legal counsel feels it is probable Flounder will pay damages of $21,000 in 2022. Flounder records provisions related to litigations in the account Litigation Liability.Prepare the current liabilities section of Flounder’s December 31, 2021, balance sheet.
Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the end of 2021, its balance for Accounts Receivable is $35,000. The company estimates that of this amount, $4,000 is not likely to be collected in 2022. In 2022, the actual amount of bad debts is $3,000. Record, if necessary, an adjustment for estimated uncollectible accounts at the end of 2021 and the actual bad debts in 2022.
Orange Corp.’s accounts payable at December 31, 2021, totaled P800,000 before any necessary year-end adjustments relating to the following transactions:· On December 27, 2021, Orange wrote and recorded checks to creditors totaling P350,000 causing an overdraft of P100,000 in Orange’s bank account at December 31, 2021. The checks were mailed out on January 10, 2022.· On December 28, 2021, Orange purchased and received goods for P150,000, terms 2/10, n/30. Orange records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2022.· Goods purchased on December 20, 2021, shipped f.o.b. destination, were received January 2, 2022. The invoice cost was P65,000. Terms 2/10, 2/30 What was the correct balance of accounts payable at December 31, 2021? Choices: P950,000 P1,050,000 P1,297,000 P1,362,000
Orange Corp.’s accounts payable at December 31, 2021, totaled P800,000 before any necessary year-end adjustments relating to the following transactions:· On December 27, 2021, Orange wrote and recorded checks to creditors totaling P350,000 causing an overdraft of P100,000 in Orange’s bank account at December 31, 2021. The checks were mailed out on January 10, 2022.· On December 28, 2021, Orange purchased and received goods for P150,000, terms 2/10, n/30. Orange records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2022.· Goods purchased on December 20, 2021, shipped f.o.b. destination, were received January 2, 2022. The invoice cost was P65,000. Terms 2/10, 2/30 What was the correct balance of accounts payable at December 31, 2021?
At the end of 2021, Worthy Co.’s balance for Accounts Receivable is $20,000, while the company’s total assets equal $1,500,000. In addition, the company expects to collect all of its receivables in 2022. In 2022, however, one customer owing $2,000 becomes a bad debt on March 14. Record the write off of this customer’s account in 2022 using the direct write-off method.
On December 31, 2021, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $45,000 and $2,300, respectively. During 2022, Coolwear wrote off $650 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,400 at December 31, 2022. Bad debt expense for 2022 would be:
On December 31, 2020, Hoosier Inc. establishes an allowance for doubtful accounts of 3% of its accounts receivable balance of $180,000. Hoosier Inc. decides on March 15, 2021, not to pursue collection of Smith’s $1,000 account. The likelihood of collection does not support further collection efforts. What is the net realizable value (NRV) of accounts receivable before and after the write-off of the Smith account?
On December 31, 2021, when its Allowance for Doubtful Accounts had a debit balance of $1,534, Indigo Corporation estimates that 8% of its accounts receivable balance of $74,108 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On May 11, 2022, Indigo Corporation determined that B. Jared's account was uncollectible and wrote off $1,171. On June 12, 2022, Jared paid the amount previously written off. Prepare the journal entries on December 31, 2021, May 11, 2022, and June 12, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To reinstate account previously written off) Debit Credit
Penn Co.'s allowance for uncollectible accounts was $200,000 at the end of 2019 and $180,000 at the end of 2018. For the year ended December 31, 2019, Penn reported bad debt expense of $40,000 in its income statement. What amount did Penn debit to the appropriate account in 2019 to write off actual bad debts?