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1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
3. The completed exercise/problem may be printed or e-mailed per direction from your instructor.
P7-2A
Aging Schedule:
Estimated Estimated
1. Prepare a schedule to estimate the amount of uncollectible accounts at December 31, 2016.
2. Rough Stuff knows that $40,000 of the $45,000 amount that is more than two months overdue is due from one
customer that is in severe financial trouble. It is rumored that the customer will be filing for bankruptcy in the
near future. As controller for Rough Stuff, how would you handle this situation?
Rough Stuff is a distributor of large rocks. It sells on credit to commercial landscaping companies and extends terms that
require customers to pay in 60 days. For accounts that are not overdue, Rough Stuff has found that there is a 90%
probability of collection. For accounts up to one month past due, the likelihood of collection decreases to 75%. If accounts
3. Show how accounts receivable would be presented on the December 31, 2016, balance sheet.
Partial Balance Sheet at December 31, 2016:
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, percentages in % cells,
and dollars or numbers in the $ cells.
P7-2
Aging Schedule:
Estimated Estimated
1. Prepare a schedule to estimate the amount of uncollectible accounts at December 31, 2016.
Sparkle Jewels distributes fine stones. It sells on credit to retail jewelry stores and extends terms that require the stores
to pay in 60 days. For accounts that are not overdue, Sparkle has found that there is a 95% probability of collection.
For accounts up to one month past due, the likelihood of collection decreases to 80%. If accounts are between one and
Journal Entry:
2016
3. Show how accounts receivable would be presented on the December 31, 2016, balance sheet.
Partial balance sheet at December 31, 2016:
2. On the basis of the schedule in part (1), prepare the journal entry on December 31, 2016, to estimate bad debts.
1. The following worksheet may be used to complete the exercise/problem.
3. The completed exercise/problem may be printed or e-mailed per direction from your instructor.
P7-5
July 1:
To record purchase of 6%, Gallatin bonds.
Assets = Liabilities + Stockholders' Equity Revenues −= Net Income
Investment in
Cash (12,000)
Nov. 21 Investment in Montana Stock 6,000
Cash 6,000
To record purchase of 200 shares of preferred stock at $30 per share.
Cash 1,300 1,300 Dividend 1,300
Expenses
BALANCE SHEET
INCOME STATEMENT
BALANCE SHEET
INCOME STATEMENT
Swartz Inc. enters into the following transactions during 2016:
Paid $10,000 to acquire on the open market $10,000 face value of Gallatin bonds. The bonds have a stated
annual interest rate of 6% with interest paid semiannually on June 30 and December 31. The bonds mature
Income 1,300
Dec. 28 Cash 10,000
Investment in Eagle Rock Stock 8,000
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, and
dollars or numbers in the $ cells.
P7-7A
TO:
FROM:
Owner of St. Charles Antique Market
Student’s name
2. Draft a brief memo to the owner to explain why cash increased during such an unprofitable year.
1. Prepare St. Charles Antique Market’s 2016 statement of cash flows.
ST. CHARLES ANTIQUE MARKET
STATEMENT OF CASH FLOWS
St. Charles Antique Market reported a net loss of $6,000 for the year ended December 31, 2016. The following items were
included on St. Charles Antique Market’s balance sheets at December 31, 2016 and 2015:
