ACCOUNTING

1 Major Co. reported 2016 income of $300,000 from continuing operations before income taxes and a before-tax loss on discontinued operations of $80,000. All income is subject to a 30% tax rate. In the 2016 income statement, Major Co. would show the following line-item amounts for income tax expense and net income:

 

2 On June 30, 2016, Blondie Fixtures transfered $400,000 in accounts receivable to Dogwood Finance Company without recourse for a 5% fee. Dogwood will immediately remit 90% of the factored receivables to Blondie, and retain 10%. When Dogwood collects the remaining receivables, it remits the amount, less the fee, to Blondie. Blondie estimates that the fair value of the final 10% of the receivables is $25,000 (ignoring the factoring fee). Required: 1. Prepare any necessary journal entry or entries.

 

.
 
 
 
3. On December 31, 2015, Central Freight reported an allowance for uncollectible accounts of $15,300. During 2016, Central wrote off $17,000 in accounts receivable. Included in the write-off was Roskoff Corp.’s account in the amount of $750. Roskoff subsequently paid this balance. At December 31, 2016, an analysis of the accounts receivable aging schedule indicated the need for an allowance for uncollectible accounts of $14,900. Required: Prepare all implied journal entries relative to bad debt expense and the allowance for uncollectible accounts.

 

 

ABC Consulting entered into a contract to provide marketing consulting services for a fixed fee of $35,000 and a bonus of $12,000 if the client reaches a specified sales growth. ABC estimates a 40% chance achieving the sales growth Using the expected value approach ,what transaction price would ABC estimate

Bikes Unlimited sell racing bikes for $400 which includes a “free” extended warranty. It also offers a separate one year warranty for $50 and a stand alone price for the bike of $450.

Required

Record the entry for the sale of one bike with the free warranty.

Assume a construction contract for $400,000 to begin in 2016 and complete in 2017

2016

Actual Costs to date $ 90,000

Estimated costs to complete 210,000

Compute the amount of revenue and gross profit for 2016

1

Major Co. reported 2016 income of $300,000 from continuing operations before income

taxes and a before

tax loss on discontinued operations of $80,000. All income is subject to

a 30% tax rate. In the 2016 income statement, Major Co. would show the

following line

item amounts for income tax expense and net income:

2

On June 30, 2016, Blondie Fixtur

es transfered

$400,000 in accounts receivable to Dogwood

Finance Company

without

recourse

for a 5% fee.

Dogwood will

immediately remit 90% of the

factored receivables to Blondie, and retain 10%. When Dogwood collects the remaining

receivables, it remits the amount, less the fee, to Blondie. Blondie estimates that the fair value of

the final 10% of the receivables is $25,

000 (ignoring the factoring fee).

Required:

1. Prepare any necessary journal entry or entries.

.

3.

On December 31, 2015, Central Freight reported an allowance for uncollectible accounts of

$15,300. During 2016, Central wrote off $17,000 in accounts receivable. Included in the write

off

was Roskoff Corp.’s account in the amount of $750. Roskoff subsequen

tly paid this balance. At

December 31, 2016, an analysis of the accounts receivable aging schedule indicated the need for

an allowance for uncollectible accounts of $14,900.

Required:

Prepare all implied journal entries relative to bad debt expense and t

he allowance for

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