Mgmt210 Week 6

Module Six Assignment Solutions

LO 1 | | BRIEF EXERCISE 7-1 ACCOUNTING FOR BAD DEBTS |

The effect of the adjustment at the end of the year can be identified and analyzed as follows:

| |

Identify | ACTIVITY: Operating |

and | ACCOUNTS: Allowance for Doubtful Accounts Increase |

Analyze | Bad Debts Expense Increase |

| STATEMENT[S]: Balance Sheet and Income Statement |

| | |

Balance Sheet | | Income Statement |

| | | | | | | | | | |

Assets | = | Liabilities | + | Stockholders’

Equity | | Revenues | – | Expenses | = | Net

Income |

Allowance for

Doubtful

Accounts*

(10,000) | | | | (10,000)

| | | | Bad Debts

Expense 10,000**

| | (10,000)

|

*The Allowance for Doubtful Accounts account has increased. It is shown as a decrease in the equation above because it is a contra

account and causes total assets to decrease.**$500,000 2% = $10,000 |

LO 3 | | BRIEF EXERCISE 7-3 ACCOUNTING FOR NOTES RECEIVABLE |

The effect of the adjustment at the end of the year can be identified and analyzed as follows:

| |

Identify | ACTIVITY: Operating |

and | ACCOUNTS: Interest Receivable Increase |

Analyze | Interest Revenue Increase |

| STATEMENT[S]: Balance Sheet and Income Statement |

| |

| | |

Balance Sheet | | Income Statement |

| | | | | | | | | | |

Assets | = | Liabilities | + | Stockholders’

Equity | | Revenues | – | Expenses | = | Net

Income |

Interest

Receiv-

able 500 | | | | 500

| | Interest Rev-

enue 500*

| | | | 500

|

*$50,000 6% 60/360 = $500 | | |

LO 1 | | EXERCISE 9-2 CURRENT LIABILITIES |

1. and 2.

Classification Account Title

a. Current liability Accounts Payable

b. Current liability Notes Payable

c. Long-term liability Notes Payable

d. Current liability Wages Payable

e. Current liability Interest Payable

f....