Wiggins Corporation utilizes an accounting software pack.docx

Wiggins Corporation utilizes an accounting software package that is capable of producing a detailed aging
of outstanding accounts receivable. Following is the aging schedule as of December 31, 20X2.

Spreadsheet

f x

A B C D E

1 Age Amount Outstanding

2 0 to 30 days $1,200,000

3 31 to 60 days 700,000

4 61 to 120 days 200,000

5 Over 120 days 25,000

6

Casper Wiggins has owned and operated Wiggins Corporation for many years and has a very good sense
of the probability of collection of outstanding receivables, based on an aging analysis. The following table
reveals the likelihood of collection:

Allowance method: Aging of accounts B-07.05


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Spreadsheet

f x

A B C D E

1 Age Probability of Collection

2 0 to 30 days 98%

3 31 to 60 days 90%

4 61 to 120 days 75%

5 Over 120 days 50%

6

(a) Prepare an aging analysis and show how accounts receivable and the related allowance for
uncollectibles should appear on the balance sheet at December 31.

(b) Prepare the necessary journal entry to update the allowance for uncollectibles, assuming the
balance prior to preparing the aging was a $15,000 credit.

(c) Prepare the necessary journal entry to update the allowance for uncollectibles, assuming the
balance prior to preparing the aging was a $5,000 debit. How could the allowance account have
contained a debit balance?

Morrison Supply sells pressured air devices that assist patients with breathing disorders during sleep. These
devices are delivered to patients immediately upon completion of a diagnostics exam, and are subsequently
billed to insurance companies. Insurance companies sometime refuse to pay and/or only agree to a reduced
price. Patients are then responsible for any amount denied by the insurance company, but are often unable
or unwilling to pay. Because clinical standards of cleanliness must be maintained, Morrison is unable to ac-
cept returns for resale to others.

Morrison is reluctant to litigate to collect unpaid amounts. As a result, Morrison experiences a high rate of
uncollectible accounts, and prepares a monthly adjusting entry for uncollectibles that is equal to 20% of sales.

Morrison's Monthly sales and write-offs for the first quarter of 20X7 follow:

MONTH SALES ACTUAL WRITEOFFS

January $630,000 $100,000

February $480,000 $ 80,000

March $590,000 $140,000

(a) Prepare monthly journal entries to summarize sales on account, the recording of the provision for
uncollectibles, and the actual write-offs.

(b) The provision for uncollectibles is established at 20% of sales. Why are the monthly write-offs not
also proportional to that month's sales? Does the amount written off in a particular month impact
net income for that month?

B-07.06 Allowance method: Percentage of sales


Mike
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Supreme Vacuum uses television advertising blitzes to generate consumer interest in its highly-touted floor
cleaners. Customers are directed to a website for more information. Once on the webs.

1. Wiggins Corporation utilizes an accounting software package
that is capable of producing a detailed aging
of outstanding accounts receivable. Following is the aging
schedule as of December 31, 20X2.

Spreadsheet

f x

A B C D E

1 Age Amount Outstanding

2 0 to 30 days $1,200,000

3 31 to 60 days 700,000

4 61 to 120 days 200,000

5 Over 120 days 25,000

6

Casper Wiggins has owned and operated Wiggins Corporation
for many years and has a very good sense
of the probability of collection of outstanding receivables,
based on an aging analysis. The following table
reveals the likelihood of collection:

2. Allowance method: Aging of accounts B-07.05


Mike
Highlight



Spreadsheet

f x

A B C D E

1 Age Probability of Collection

2 0 to 30 days 98%

3 31 to 60 days 90%

4 61 to 120 days 75%

5 Over 120 days 50%

6

(a) Prepare an aging analysis and show how accounts receivable
and the related allowance for
uncollectibles should appear on the balance sheet at December
31.

(b) Prepare the necessary journal entry to update the allowance
for uncollectibles, assuming the
balance prior to preparing the aging was a $15,000 credit.

(c) Prepare the necessary journal entry to update the allowance

3. for uncollectibles, assuming the
balance prior to preparing the aging was a $5,000 debit. How
could the allowance account have
contained a debit balance?

Morrison Supply sells pressured air devices that assist patients
with breathing disorders during sleep. These
devices are delivered to patients immediately upon completion
of a diagnostics exam, and are subsequently
billed to insurance companies. Insurance companies sometime
refuse to pay and/or only agree to a reduced
price. Patients are then responsible for any amount denied by
the insurance company, but are often unable
or unwilling to pay. Because clinical standards of cleanliness
must be maintained, Morrison is unable to ac-
cept returns for resale to others.

Morrison is reluctant to litigate to collect unpaid amounts. As a
result, Morrison experiences a high rate of
uncollectible accounts, and prepares a monthly adjusting entry
for uncollectibles that is equal to 20% of sales.

Morrison's Monthly sales and write-offs for the first quarter of
20X7 follow:

MONTH SALES ACTUAL WRITEOFFS

January $630,000 $100,000

February $480,000 $ 80,000

March $590,000 $140,000

(a) Prepare monthly journal entries to summarize sales on
account, the recording of the provision for
uncollectibles, and the actual write-offs.

4. (b) The provision for uncollectibles is established at 20% of
sales. Why are the monthly write-offs not
also proportional to that month's sales? Does the amount written
off in a particular month impact
net income for that month?

B-07.06 Allowance method: Percentage of sales


Mike
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Supreme Vacuum uses television advertising blitzes to generate
consumer interest in its highly-touted floor
cleaners. Customers are directed to a website for more
information. Once on the website, customers are con-
stantly confronted with a "video game" where they can use icon-
like vacuums to suck up coupons that float
on and off their browser windows. At check out, customers are
able to clean the contents of their imaginary
vacuums and select one of the coupons to apply against their
purchase.

The best coupon is a no-moneydown, 4-equal-monthly-
payments, coupon. "Magically", every customer will
find at least one of these coupons. Virtually all customers will
use this coupon in making their final purchases.
As a result, Supreme carries a substantial balance in accounts
receivable. It is imperative that Supreme manage
credit risk, and careful attention is paid to the "accounts

5. receivable turnover ratio" and the "days outstanding."

During 20X5, net credit sales were $6,000,000. The sales were
evenly spread throughout the year.

The beginning-of-year net realizable value of accounts
receivable was $2,150,000 and the end-of-year bal-
ance was $2,650,000.

Monitoring receivables: Analysis and ratios B-07.08


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(a) Calculate the "accounts receivable turnover ratio" and the
"days outstanding."

(b) Evaluate the information from part (a) and determine if
Supreme's customer base is in compliance
the 4-equal-monthly payments agreement.

(c) In addition to the facts above, suppose Supreme ran a major
holiday sales campaign in December
of 20X5. This campaign promised no payments until 20X6! This
campaign generated an additional
$3,000,000 in credit sales (and resulted in an end-of-year
receivable balance of $5,650,000). Can
Supreme record these sales under generally accepted accounting
principles, and what is the impact
on the ratios (compared to the values you computed in part (a))?

Vinay Sanja was interviewing for a job at the State Bank of
India. The bank requires all job applicants to take a

6. competency test on basic money mathematics. Vinay has
completed the interest calculations portion of the
exam. Following are his questions and answers. Vinay must
correctly answer in at least 3 cases to be eligible
for the job. Evaluate and correct Vinay's answers. Does he
qualify for the job?

B-07.10 Notes receivable interest calculations


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(a) Assume the bank holds a 400,000 Indian Rupee (INR) note
receivable dated June 1, 20X1. This note
matures on August 31, 20X1. This note is written to assume a
360 day year and 30 day months. The
annual interest rate is stated at 10%. What is the maturity value
of the note, including interest?

Answer: 400,000 X 10% X 60/360 =

6,666.67

400,000 + 6,666.67 = 406,666.67

(b) Assume the bank holds a INR 400,000 note receivable dated
June 1, 20X1. This note matures on
August 31, 20X1. This note is written to assume a 365 day year
and actual days outstanding are used
in all calculations. The annual interest rate is stated at 10%.
What is the maturity value of the note,
including interest?

7. Answer: 400,000 X 10% X 92/365 =

10,082.19

(c) Assume the bank holds a INR 1,000,000 note receivable
dated October 1, 20X5. This note matures
on September 30, 20X6. This note is written to assume a 360
day year and 30 day months. The annual
interest rate is stated at 8%. How much interest income should
the bank record for its accounting
year ending December 31, 20X5?

Answer: Zero, the note is not due until 20X6

(d) Assume the bank holds a INR 1,000,000 note receivable
dated October 1, 20X5. This note matures
on September 30, 20X6. This note is written to assume a 360
day year and 30 day months. The annual
interest rate is stated at 8%. How much interest income should
the bank record for its accounting
year ending December 31, 20X6?

Answer: 1,000,000 X 8% X 270/360 =

600,000




Sid Breman Art Gallery operates a retail store in Florida. All art
displayed in the gallery is available for purchase.
Much of the art is owned by the gallery. However, there are also
works on display that belong to other artists.
When the consigned art is sold, Sid remits 75% of the proceeds
to the creator and retains a 25% commission.
Art belonging to the gallery is marked to sell at 200% of cost.

8. Following is a complete list of art on display in the gallery,
along with the retail selling price.

NAME SELLING PRICE OWNERSHIP

See Shining Sea $ 2,500 Gallery

Mermaids 1,800 Artist

Big Fish 910 Gallery

Shells At Dawn 3,000 Gallery

Sand Forever 1,090 Gallery

Development! 4,200 Artist

Taking a Chance 20,000 Gallery

Tides and Moons 500 Gallery

Mystery Sea 1,200 Gallery

On the Beach 1,650 Artist

Too Much Sun 4,775 Artist

Spring Break 5,000 Artist

Inland 7,880 Gallery

Alligators Return 19,720 Artist

Frost and Farm 14,300 Gallery

9. (a) Identify if Sid Breman Art Gallery is the consignor or the
consignee. Should the consigned inventory
be reported on the balance sheet of the gallery? What special
accounting/control challenges are
presented by the existence of consigned inventory?

(b) Determine the correct inventory valuation to be reported by
the gallery.



B-08.02 Consigned inventory

x


SPREADSHEET
TOOL:

Check boxes


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Patti Devine owns Devine Decorating. One of her most popular
items is the Remind-a-Chime digital clock. This
programmable clock issues "voice-based" reminders of
important events like birthdays, anniversaries, etc.

Following is the Remind-a-Chime inventory activity for

10. January. The clocks on hand at January 1 had a unit
cost of $140.

Date Purchases Sales Units on Hand

1-Jan 40

5-Jan 60 units @ $150 each 100

16-Jan 70 units @ $255 each 30

23-Jan 90 units @ $170 each 120

28-Jan 55 units @ $295 each 65

(a) If Devine uses the first-in, first-out (FIFO) inventory
method (periodic approach), what values
would be assigned to ending inventory and cost of goods sold?
How much is gross profit?

(b) If Devine uses the last-in, first-out (LIFO) inventory method
(periodic approach), what values would
be assigned to ending inventory and cost of goods sold? How
much is gross profit?

(c) If Devine uses the weighted-average inventory method
(periodic approach), what values would be
assigned to ending inventory and cost of goods sold? How much
is gross profit?

Basic "periodic" calculations for inventory, FIFO, LIFO,
average cost B-08.04


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11. Park Place Luxury Autos uses the specific identification method
to value its inventory. Below is a listing of
automobiles that were either in beginning inventory or acquired
during the year:

Automobile Date Acquired Cost

Bentley Beginning inventory $120,000

Rolls Royce Beginning inventory 160,000

Cadillac January 40,000

Lexus March 50,000

Land Rover June 60,000

Jaguar July 42,000

Porsche September 75,000

Mercedes November 85,000

BMW December 64,000

Infiniti December 39,000

Park Place uses the specific identification method. Total sales
during the year were $600,000. Automobiles
in ending inventory were the Rolls Royce, Lexus, Jaguar, and
BMW. Determine the ending inventory, cost of
goods sold, and gross profit for Park Place.

12. Specific identification method B-08.07


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Aurora Wedding Gowns was burglarized in May of 20X5. It is
unclear how many dresses were stolen. Aurora
and its insurance company are currently working to estimate the
dollar value of the stolen goods in order to
reach a financial settlement under the existing property
insurance policy.

Aurora's tax return prepared at the end of 20X4 revealed that
the company ended 20X4 with a total inven-
tory of $189,000. Aurora uses the same inventory accounting
methods for tax and accounting purposes.

The insurance company has contacted Aurora's suppliers and
confirmed Aurora's claim that purchases for
20X5, prior to the date of the burglary, were $376,000. All
inventory was purchased, FOB destination.

20X5 Sales taxes collected by Aurora and remitted to the state,
prior to the date of the theft, were $48,000.
The sales tax rate is 6% of sales.

An inventory was taken immediately after the burglary and the
cost of dresses in stock was $123,000.

13. Aurora consistently sells dresses at a gross profit margin of
45%.

Use the gross profit method to estimate the dollar value of
stolen dresses.



1

2

5


B-08.09 Gross profit estimation technique


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Beckwith Boots invested $100,000 in 5-year bonds issued by
Ace Brick Company. The bonds were purchased
at par on January 1, 20X1, and bear interest at a rate of 8% per
annum, payable semiannually.

(a) Prepare the journal entry to record the initial investment on
January, 20X1.

B-09.05 Bond investment purchased at par

14. Mike
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(b) Prepare the journal entry that Beckwith would record on
each interest date.

(c) Prepare the journal entry that Beckwith would record at
maturity of the bonds.

(d) How much cash flowed "in" and "out" on this investment,
and how does the difference compare to
total interest income that was recognized?

Devol Computing invested in $100,000 of face amount of 6-year
bonds issued by Horton Micro Chip Company
on January 1, 20X1. The bonds were purchased at 103, and bear
interest at a stated rate of 8% per annum,
payable semiannually.

(a) Prepare the journal entry to record the initial investment on
January, 20X1.

(b) Prepare the journal entry that Devol would record on each
interest date.

(c) Prepare the journal entry that Devol would record at
maturity of the bonds.

(d) How much cash flowed "in" and "out" on this investment,
and how does the difference compare
to total interest income that was recognized?

15. Petersen Stores invested in $100,000 of face amount of 4-year
bonds issued by Erik Food Supply Company
on January 1, 20X1. The bonds were purchased at 98, and bear
interest at a stated rate of 8% per annum,
payable semiannually.

(a) Prepare the journal entry to record the initial investment on
January, 20X1.

(b) Prepare the journal entry that Petersen would record on each
interest date.

(c) Prepare the journal entry that Petersen would record at
maturity of the bonds.

(d) How much cash flowed "in" and "out" on this investment,
and how does the difference compare
to total interest income that was recognized?


Bond investment purchased at a premium B-09.06

Bond investment purchased at a discount B-09.07


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SC250: Science for Everyday LifeUnit 4 Lab Assignment

16. Data Collection & Unit Conversions
To complete this lab you must first collect data by interviewing
friends, family, coworkers, neighbors, etc. You can conduct
these interviews via personal visit, phone call, social media,
however you choose.
Ask your subjects the following questions:

1. What is your height?

2. Approximately how much do you weigh? If you prefer not to
give your weight, how much does your bag (purse, back pack,
lunch bag, etc.) weigh?

3. What is the furthest you have ever traveled from your home
(in distance)? (This can be approximated using an online
mapping service e.g. Google Maps™, MapQuest™)
IMPORTANT NOTE! Be sure to ask and then record the units
of measurement your subject reports for each answer.

Next you must convert this data into different forms of
measurement:

· Height in inches and centimeters
· Weight in kilograms and pounds

· Distance in miles, yards, and meters
Be sure to show your work and the equations used in making
these conversions. Note that not only will partial credit be given
for answers given without formulas used, but partial credit will
be given for any incorrect answers where the correct formula
was applied.

Report your collected data and conversions in the table on the
following page.

After completing the computation work, answer the following

17. examination question:

Why is it important to follow a standard system of
measurement? Provide an explanation of a scenario where
standardized measurement is necessary for a successful
exchange or activity.
Data
Height in inches
Height in centimeters
Weight in kilograms
Weight in pounds
Distance in miles
Distance in yards
Distance in meters
Subject 1







Subject 2









Subject 3

18. Subject 4









Show your work here: