Question

300 Chapter 5 De APPLY YOUR KNOWLEDGE C5- v in the restaurant und Lyo Serial Case are unc LO 4 C5-74. (Learning Obiective 4: Analyze accounts receivable for a company in there din every chapter in this industry) bakeries in the United Note: This case is part of The Cheesecake Factory serial case contained in every chan textbook The Cheesecake Factory Incorporated (NASDAQ: CAKE) operates two bakeries in the States where it makes over 70 desserts for its own restaurants. In addition, the Cheesecake Factory bakeries sell selected desserts to a variety of foodservice operators and retailers. including Sam's Club, Walmart, Target, BJ's Wholesale Club, and Barnes & Noble The Cheesecake Factory has accounts receivable on its financial statements. The primary som of its accounts receivable is its sales to bakery customers. Requirements 1. Identify the financial statement where The Cheesecake Factory accounts receivable would be found. What is the balance of The Cheesecake Factory's accounts receivable as of January 3, 2017? Did its accounts receivable balance increase or decrease since its 2015 fiscal year? 2. Assume that BJ's Wholesale Club places an order with The Cheesecake Factory bakery for 1,000 Cheesecake Factory Original Cheesecakes on account (FOB shipping point) for a total cost of $7.500. No discount was offered for early payment. Write the journal entry, if any, which would be made on each of the following dates by The Cheesecake Factory (ignore the cost of sales journal entry here): a. Order date b. Shipment date c. Payment date 3. How will The Cheesecake Factory's assets, liabilities, and equity be impacted on each of the previous dates related to BJ's Wholesale Club order?

I need your help with this please!

Answer 1

Answers

Ans 1. I need more information regarding credit sales and payments received from debtors from the end of the fiscal year 2015 to find out whether account receivable balance increase or decrease.

I can give you some instruction which will help u how to find whether account receivable increase or decrease .

Instructions:

1. If credit sales is made and payment from customer towards  credit sales previously made less compared to sales amount previously made, then the Account receivable balance will be increased.

2. If credit sales is made and payment from customers is more than the amount of credit sales previously made (which means they are paying some amount to settle their previous outstanding balance) ,then the account receivable balance will be less compared to previous years.

Hope above instruction will able to find the solution , if u need further clarification don't hesitate to have a chat or post a comment i will clarify your doubts.

Ans.2

Event	General Journal	Debit	credit
On Order date	No journal entry requires -according to revenue recognition principle	-	-
On the date of Shipment	Account Receivable (See working note 1 & 2)	$ 8.,175
	Revenue -Sales		$8,175
Alternative Journal	Account Receivable -	$ 7,500
	Revenue -sales		$ 7,500
On the payment date	Cash *	$ 8,175
	Account Receivable *		$ 8,175

Note : Cash payment will be $7,500 if journal entry made on the basis of alternative journal

Working Note:

1. Calculation of gross profit on sales

* Assume Gross profit here means income from operation ie, $ 200,993. and also assume same GP is maintained on all customers

Gross profit ratio = Gross profit/Revenue

= ($ 200,993/$ 2,227,719)*100

= 9% (approx)

2. Computation of sales value :

Sale value = Total cost * (1+Gross profit)

= $ 7,500 * 1.09

= $8,175.

Alternative Journal entry

On the basis of assumption that total cost of $ 7,500 is a sale value    

Answer 3

• Asset, liabilities and Equity will be increased in proportion sales.
• Profit on sales will increase asset and equity
• Purchase and credit sales will have an effect on Account payable and Account receivable