Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

problem: The controller for Grant Corporation is concerned about certain business transactions that firm experienced during 2008. The controller, after discussing these matters with various individuals, has come to you for advice. The transactions at issue are presented below.

[A] The firm has decided to switch from the direct prepare-off method in accounting for bad debt expense to the percentage-of-sales approach. Suppose that Grant Corporation has recognized bad debt expense as the receivables have actually become uncollectible in the following way;

 

2007

2008

From 2007 sales

31,800

12,000

From 2008 sales

 

45,000

The controller estimates that an additional $65,400 will be charged off in 2009: $11,400 applicable to 2007 sales & $54,000 to 2008 sales.
[B] Inventory has been shipped on consignment. These transactions have been recorded as ordinary sales and billed as such on account. At December 31, 2008, inventory billed and in the hands of consignees amounted to $400,000. The percentage markup on selling price is 20%. Suppose that consigned inventory is sold the following year. The firm uses the perpetual inventory system. 
[C] During the current year, the firm sold $600,000 of goods on the installment basis. The cost of sales associated with these goods sold is $420,000. The firm inadvertently handled these sales and related costs as part of the regular sales transactions. Cash of $172,000, including a down payment of $60,000, was collected on these installment sales during the current year. Due to problemable, the installment method was considered appropriate.

Instructions;
[1] Suppose that Grant Corporation reported net income of $1,000,000 for 2008. Make a schedule showing the corrected net income after reviewing the above transactions.
[2] Make the journal entries necessary at December 31, 2008, suppose that the books have been closed.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M922427

Have any Question? 


Related Questions in Accounting Basics

Assignment reorganizationtarget corporation holds assets

Assignment: Reorganization Target Corporation holds assets with a fair market value of $4 million (adjusted basis of $2.2 million) and liabilities of $1.5 million. It transfers assets worth $3.7 million to Acquiring Corp ...

Accounting discussion questionbulldiscuss the advantages of

Accounting Discussion Question • Discuss the advantages of understanding accounting as it relates to your current or future position. (Consider careers in management, sales, business operations, finance, and business own ...

Preston auto paint company had the temporary free use of an

Preston Auto Paint Company had the temporary free use of an old building and completed the following transactions in September 2010: Sept. 1 The company was organized and received USD 100,000 cash from the issuance of ca ...

Harmon helmets purchased equipment for 62000 cash sold

Harmon Helmets purchased equipment for $62,000 cash, sold equipment costing $36,000 with a book value of $22,000 at a loss, and declared dividends during 2013. No new notes payable were issued during the year. Financial ...

Westerville company reported the following results from

Westerville Company reported the following results from last year % 2013 operations: Sales $ 1,000,000 Variable expenses 300,000 -------------------------------------- Contribution margin 700,000 Fixed expenses 500,000 - ...

Assignmentsec 10k link Assignment SEC 10K Link:

Assignment SEC 10K Link: https://www.sec.gov/Archives/edgar/data/908255/000090825516000077/a10k12312015.htm Position: 358 Income Statement: 53 Balance Sheet: 52 Statement of Stockholders Equity: 56 Statement of Cash Flow ...

Project assignmentdo investors react to stock

Project Assignment Do Investors React to Stock Dividends? Financial accounting theory predicts that there should be no market reaction to a company's stock dividend. This is because the market value of the shares should ...

The trial balance before adjustment for sheffield company

The trial balance before adjustment for Sheffield Company shows the following balances.   Dr. Cr. Accounts Receivable $84,800 Allowance for Doubtful Accounts 2,420 Sales Revenue   $434,200 Using the data above, give the ...

Question 1 buttercup corporation issued 300

Question 1 Buttercup Corporation issued 300 shares of $10 par value common stock for $4,500. Prepare Buttercup's journal entry. (Credit account titles are automatically indented when amount is entered. Do not indent manu ...

Aountingfalcons incorporatedassetsnbsp20132012cash and

Accounting FALCONS INCORPORATED Assets   2013 2012 Cash and Marketable Securities 10 80 Mc.. Receivable 375 315 Inventories 615 415 Total Current Ass. 1,000 810 Net plant and equipment 1,000 870 TOTAL ASSETS 2,000 1,680 ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro