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Accounting for Potential Sales Returns Ultimate Corporation is a computer products supplier. Ultimate sells products to dealers who then sell the products to the end users. Most of the company’s competitors require dealers to pay for shipments within 45 to 60 days. Ultimate has followed a more relaxed policy; in 2008 the average length of […]

The Ho Man Tin Tennis Club sells lifetime memberships for $20,000 each. A lifetime membership entitles a person to unlimited access to the club’s tennis courts, weight room, exercise equipment, and swimming pool. Once a lifetime membership fee is paid, it is not refundable for any reason. Judy Chan and her partners are the owners […]

The information below is from the 2008 financial statements companying notes of The Scotts Company, a major manufacturer of lawn-care products. THE SCOTTS COMPANY Notes to the Financial Statements Note 19. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. The Company […]

Use Amazon.com’s balance sheet and the Note 1 data on in Appendix A at the end of this book. Requirements 1. Do accounts receivable appear to be an important asset for Amazon.com? 2. Assume that all of ?oAccounts receivable, Net, and Other?? is accounts receivable. Further assume that gross receivables at December 31, 2009, were […]

UPS, Federal Express, and Airborne are three of the major UPS, Federal Express, and Airborne are three of the major players in the highly competitive package delivery industry. Comparability is a key qualitative characteristic of accounting numbers that allows analysts to compare similar companies. A number of years ago, the revenue recognition footnotes of the […]

Transfer of Receivables Use the information for Grant Company as presented in E7-20. Grant is planning to factor some accounts receivable at the end of the year. Accounts totaling $10,000 will be transferred to Credit Factors, Inc. with recourse. Credit Factors will retain 5% of the balances for probable adjustments and assesses a finance charge […]

The following selected transactions were taken from the records of Lights of the West Company for the first year of its operations ending December 31, 2010: Jan. 24. Wrote off account of J. Huntley, $3,000. Feb. 17. Received $1,500 as partial payment on the $4,000 account of Karlene Solomon. Wrote off the remaining balance as […]

The following were selected from among transactions completed by Mair Co. during the current year. Mair Co. sells and installs home and business security systems. Jan. 10. Loaned $12,000 cash to Jas Caudel, receiving a 90-day, 8% note. Feb. 4. Sold merchandise on account to Periman & Co., $28,000. The cost of the merchandise sold […]

transactions were completed by The Corion Gallery Gallery during the current fiscal year ended December 31: Mar. 21. Reinstated the account of Tony Marshal, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,050 cash in full payment of Marshal’s account. Apr. 18. Wrote off the $5,500 balance owed […]

The following selected transactions were taken from the records of Burrito Company for the year ending December 31, 2010: Mar. 13. Wrote off account of B. Hall, $4,200. Apr. 19. Received $3,000 as partial payment on the $7,500 account of M. Rainey. Wrote off the remaining balance as uncollectible. July 9. Received the $4,200 from […]