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Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2018. year-end balance sheet Current asse

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1.Answer

Revenue

$ 200,000 × 6% × 3/12 = $3000

$60000 × 8% × 10/12 = $4000

Total Interest Revenue = $7000

Bad debt expense:-

Analysis of accounts Receivable

Beginning accounts Receivable $ 242,000 ($218,000 + $24000)

Add:- Credit Sales $1,340,000

Less:- Written off ($22000)

Less:- Cash Collections ($1,280,000)

Ending Accounts Receivable $280,000

Analysis of allowance for uncollectible amounts:-

Beginning allowance $24000

Add:- Bad debt expense $26000 ($24000 + $28000 - $22000)

Less:- Written off ($22000)

Ending Allowance $28000

Calculation of Ending allowance:-

($280,000 × 10 % = $28000)

Loss on sale of notes Receivable :-

$200,000 × 6% × 9/12 = $9000

Face Amount $ 200,000

Interest to maturity $12000 ($200,000 × 6%)

Maturity value $212,000 (A)

Discount $4240 ($212,000 × 8% × 3/12) (B)

Cash proceeds $207,760 (C) = A + B

Carrying Value of notes Receivable $209,000 ($200,000 + $9000 Interest Receivable)

Less:- Cash Proceeds $ 207,760

Loss on sale of notes Receivable $1240

2.Answer:-

Accounts Receivable net of $28,000 in allowance for uncollectible accounts $252,000

3.Answer:-

  Calculation of Receivables Turnover Ratio:

Formula = Credit Sales / [(Opening Notes Receivable + Closing Notes Receivable )/2]

= $1,340,000 / [($218,000 + $252,000)/2]

= $1,340,000/$235000

= 5.7 times

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