Pre-Lecture, Question 4 | |

| | Correct! The sale of receivables by a business can be a quick way to generate cash for operating needs. | | |
The sale of receivables by a business

| is generally the major revenue item on its income statement. |

| is an indication that the business is owned by a factor. |

| can be a quick way to generate cash for operating needs. |

| indicates that the business is in financial difficulty. | Click if you would like to Show Work for this question: | |

Pre-Lecture, Question 5 | |

| | Correct! April 30 –13 = 17 days remaining in April + 31 days in May + 12 days in June = a maturity date of June 12. | | |
A 60-day note receivable dated April 13 has a maturity date of

| June 12. |

| June 10. |

| June 13. |

| June 11. | Click if you would like to Show Work for this question: |

DO IT! 8-1 | |

| | Your answer is partially correct. Try again. | | |
Etienne Company has been in business several years. At the end of the current year, the ledger shows: Accounts Receivable | $ 310,000 | Dr. | Sales | 2,200,000 | Cr. | Allowance for Doubtful Accounts | 6,100 | Cr. |
Bad debts are estimated to be 7% of receivables.

Prepare the entry to adjust the Allowance for Doubtful Accounts. Account/Description | Debit | Credit | | | | | | |

| E8-1 | | | | Correct. | | |
Presented below are selected transactions of Pale Force Company. Pale Force sells in large quantities to other companies and also sells its product in a small retail outlet. March 1 | Sold merchandise on account to CC Company for $3,000, terms 2/10, n/30. | March 3 | CC Company returned merchandise worth $500 to Pale Force. | March 9 | Pale Force collected the amount due from CC Company from the March 1 sale. | March 15 | Pale Force sold merchandise for $400 in its retail outlet. The customer used his Pale Force credit card. | March 31 | Pale Force added 1.5% monthly interest to the customer's credit card balance. |
Prepare journal entries for the transactions above. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date | Account/Description | Debit | Credit | March 1 | | | | | | | | March 3 | | | | | | | | March 9 | | | | | | | | | | | | March 15 | | | | | | | | March 31 | | | | | | | | Click if you would like to Show Work for this question: | | | | |

| | E8-2 | |
Presented below are two independent situations. | | | | | | | | | Correct. | | |
On January 6, Arneson Co. sells merchandise on account to Cortez Inc. for $9,000, terms 2/10, n/30. On January 16, Cortez Inc. pays the amount due. Prepare the entries on Arneson's books to record the sale and related collection. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date | Account/Description | Debit | Credit | Jan. 6 | | | | | | | | Jan. 16 | | | | | | | | | | | | |

SHOW SOLUTIONSHOW ANSWER | | | | | | | | | Correct. | | |
On January 10, Mary Dawes uses her Pierson Co. credit card to purchase merchandise from Pierson Co. for $9,000. On February 10, Dawes is billed for the amount due of $9,000. On February 12, Dawes pays $5,000 on the balance due. On March 10, Dawes is billed for the amount due, including interest at 2% per month on the unpaid balance as of February 12. Prepare the entries on Pierson Co.'s books related to the transactions that occurred on January 10, February 12, and March 10. Date | Account/Description | Debit | Credit | Jan. 10 | | | | | | | | Feb. 12 | | | | | | | | Mar. 10 | | | | | | | | | | | |