amount should be classified as cash on Smith's balance sheet at
December 31, year 1?
Question 11
At the end of the current year (calendar-fiscal year), a creditor
firm's 6% note receivable balance is $10,000. Two years
remain in the note term. Interest is due each December 31. The
debtor's financial position has deteriorated causing the
creditor to reevaluate the note. After careful consideration, the
creditor believes that only 60% of the principal ($10,000) will
be collected at the end of the term. The only interest expected
to be received is 2% of the original principal for one year, also
to be collected at the end of the term. At the end of the current
year, what amount of expense or loss is recognized by the
creditor for this loan impairment? The present value of $1 two
years hence at 6% is .89, and at 2% is .961.
Question 12
Hutch, Inc. uses the conventional retail inventory method to
account for inventory. The following information relates to
2004 operations: What amount should be reported as cost of
sales for 2004?
Question 13
Trans Co. uses a periodic inventory system. The following are
inventory transactions for the month of January: Trans uses
the average pricing method to determine the value of its
inventory. What amount should Trans report as cost of goods
sold on its income statement for the month of January?