1. Savory Sweet Ltd. had a September 30 year-end. Savory Sweet Ltd.'s June 30, 2018 balance sheet recorded the following:

Accounts Receivable	$ 400,000
Allowance for Doubtful Accounts	(20,000)

Throughout Savory Sweet Ltd.'s last quarter of 2018, Savory Sweet Ltd. finalized the following selected transactions:

• Sept. 29: Wrote off the following accounts receivables as uncollectible:
  • Connie Downs                        $ 3,000
  • Dennis Jade                    3,200
  • Evan Sanders                 2,100
• Sept. 30: Recorded bad debts expense based on the aging of accounts receivable, as follows:

	Age of Accounts
Accounts Receivable	1-30 Days	31-60 Days	61-90 Days	Over 90 Days
Total = $ 420,000	$ 250,000	$ 100,000	$ 40,000	$ 30,000
Estimated % Uncollectible	0.1%	0.4%	0.5%	30%

 Required:

1. Record the above transactions in the general journal.
2. Open the Allowance for Doubtful Accounts general ledger, and post those journal entries affecting that account. Maintain a running balance in the general ledger account.
3. At September 30, 2017, if Savory Sweet Ltd.'s Accounts Receivable balance was $440,000 and the Allowance for Doubtful Accounts balance was $30,000, demonstrate how Savory Sweet Ltd. would report its Accounts Receivable in a comparative balance sheet for 2018 and 2017.
4. On September 30, 2018, if the bad debts expense was based on an estimate of 3% of the accounts receivable balance, instead of the aging of accounts receivable, record in the general journal the September 30, 2018 journal entry for bad debts expense.

2 . Perfect Painting commenced business on March 01, 2018. The business produced monthly financial statements and had total sales of $600,000, of which $450,000 was on account, during the first 4 months.

As of June 30, 2018, no accounts have been written off to date. The accounts receivable had a $233,000 balance, which was comprised of the following accounts, aged according to the date of the sale:

	Month of Sale
Customer	March	April	May	June
Mega Contracts	$   4,000	$   2,000	$   3,000	$   2,000
Quadra Prints	2,000	3,000	4,000	1,000
Work Wear	6,000	17,000	10,000	3,000
Natural Paint	4,000	8,000	7,000	30,000
Other Accounts Receivable	22,000	15,000	50,000	40,000
	$ 38,000	$ 45,000	$ 74,000	$ 76,000

The following accounts receivable transactions occurred in July 2018:

• July 07: Determined the Quadra Prints account was uncollectible and wrote it off.
• July 13: Collected $9,000 from Mega Contracts for sales made in the first 3 months.
• July 17: Determined the Work Wear account was uncollectible and wrote it off.
• July 22: Collected $4,000 from Natural Paint for sales made in the month of March.
• July 28: Received a cheque from Work Wear for $12,000 plus three cheques of $8,000 each, post-dated for August 28, September 28, and October 28.
• July 31: Total sales in the month of July were $400,000; 80% of these sales were on account, and 70% of the sales on account were collected in the month.

Required:

1. Perfect Painting read on the internet that similar companies used the allowance method of accounting for uncollectibles, with many of these companies estimating the uncollectibles through an aging of accounts receivable.
   1. Journalize the adjustments that would have to be made on June 30 for the months of March through June, assuming the following estimates of uncollectibles:
2. Age of Accounts Receivable     Percent Estimated Uncollectible
3. From current month                                                       1%
4. From prior month                                                           3%
5. From 2 months prior                                                       4%
6. From 3 months prior                                                       10%
7. From 4 months prior                                                       30%
8. Prepare journal entries for the July 2018 transactions.
9. Prepare journal entry for the month-end adjustment, using the information from the table above.
10. Use the allowance method, which was used above, to record the following:
11. The balance sheet presentation of the accounts receivable for June and July 2018
12. The effect of the uncollectibles on the income statement for June and July 2018

3. Assume the following transactions were completed by Dandy Distributors:

2017

• December 01: Sold goods to Savanna Select, and received a $50,000, 6-month, 2% note. Ignore cost of goods sold.
• December 31: Made an adjusting journal entry to accrue interest on the Savanna Select note.
• December 31: Made an adjusting journal entry to record bad debt expense, which was based on the aging of accounts receivable. The aging analysis revealed that $60,000 of accounts receivable would not be collected. Prior to this adjustment, the credit balance in the allowance for doubtful accounts was $49,000.

2018

• June 01: Collected the maturity value of the Savanna Select note.
• June 30: Sold goods for $20,000 on MasterCard. MasterCard charged 2%.
• August 01: Sold goods to Norfolk, and received a 45-day, 4% note for $30,000. Ignore cost of goods sold.
• September 15: Norfolk defaulted (i.e., failed to pay) his note at maturity; converted the maturing value of the note to an accounts receivable.
• November 20: Sold goods to Money Management for $50,000, and received a 120-day, 3% note. Ignore cost of goods sold.
• December 10: Collected in full from Norfolk.
• December 31: Accrued the interest on the Money Management note.

Required:

Record the above transactions in the general journal. Explanations are not required. Round interest amounts to the nearest dollar.

  4. Micro-Vision Computers' comparative financial statements for Last Year and This Year included the following selected data:

	This Year	Last Year
	(Dollar amounts in thousands)
Balance Sheet
Current Assets:
Cash	$       20	$       18
Short-Term Investments	70	65
Receivables, Net	75	70
Inventory	150	140
Prepaid Expenses	25	22
Total Current Assets	$   340	$   315
Total Current Liabilities	$   220	$   220
Income Statement
Sales Revenue	$ 935	$ 760

Required:

1. Calculate the following ratios for Last Year and This Year:
2. Current ratio
3. Acid-test ratio
4. One day's sales

Write short memo describing to Micro-Vision Computers' owner, Susan Bright, which ratio values showed improvement from Last Year to This Year and which ratio values deteriorated. Indicate whether this trend was favourable or unfavourable for Micro-Vision Computers.

Answer rating: 100% (QA)

Lets address each part of your question Savory Sweet Ltd a Recording Transactions On September 29 write off accounts receivables for Connie Downs Dennis Jade and Evan Sanders as uncollectible On Septe... View the full answer