Last year you decided to start up a new business - Heavenly Books Inc., an off-campus...

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Last year you decided to start up a new business - Heavenly Books Inc., an off-campus bookstore where students can purchase textbooks and supplies at reduced prices. Twenty percent on sales were for cash. The business purchased $525,000 in merchandise during the year and marked to sell at 35% above cost. Collections (on account) from customers were $440,000. A year end inventory count showed $49,000 in ending merchandise inventory. Required: Estimate the ending balance of accounts receivable and if there are any apparent shortages or overages. Also discuss any controls that could be implemented in this situation. Question #2 Huron Tractor is committed to becoming the dealership of first choice by providing top quality equipment and services to our customers. Huron Tractor had accounts receivable of $2,750,000 and an allowance for doubtful accounts of $120,000 at the end of the fiscal year 2020. On January 11, 2021, Huron determined that its $22,000 receivable from farmer Old McDonald will not be collected, and management has authorized its write off. On January 31, 2021, Huron Tractor received notification that the company will be receiving $0.12 for every dollar of accounts receivable relating to Walker's Spring Ridge Farm. The company had previously written off 100% of the $50,000 amount due from Walker's Spring Ridge Farm. Required: a) Prepare all journal entries you consider necessary relating to the above information. b) What is the net realizable value and book value of accounts receivable before and after the entries in part a? Question #3 On January 1, Year 1, Montgomery Manufacturing paid $556,742.69 for 10% bonds with a face value of $600,000. They are dated January 1, Year 1, and mature on January 1, Year 6, with interest receivable annually on December 31. Montgomery uses ASPE and applies the amortized cost approach using the effective interest method and has a December 31 year end. Required: a) Prepare the journal entry to record the bond purchase. b) Prepare a bond amortization schedule, rounding to two decimal places. c) In your own words, why might potential investors find the effective interest method more relevant than straight-line method? d) In your own words, briefly explain what it means to manage an investment on the basis of yield-to-mature. Last year you decided to start up a new business - Heavenly Books Inc., an off-campus bookstore where students can purchase textbooks and supplies at reduced prices. Twenty percent on sales were for cash. The business purchased $525,000 in merchandise during the year and marked to sell at 35% above cost. Collections (on account) from customers were $440,000. A year end inventory count showed $49,000 in ending merchandise inventory. Required: Estimate the ending balance of accounts receivable and if there are any apparent shortages or overages. Also discuss any controls that could be implemented in this situation. Question #2 Huron Tractor is committed to becoming the dealership of first choice by providing top quality equipment and services to our customers. Huron Tractor had accounts receivable of $2,750,000 and an allowance for doubtful accounts of $120,000 at the end of the fiscal year 2020. On January 11, 2021, Huron determined that its $22,000 receivable from farmer Old McDonald will not be collected, and management has authorized its write off. On January 31, 2021, Huron Tractor received notification that the company will be receiving $0.12 for every dollar of accounts receivable relating to Walker's Spring Ridge Farm. The company had previously written off 100% of the $50,000 amount due from Walker's Spring Ridge Farm. Required: a) Prepare all journal entries you consider necessary relating to the above information. b) What is the net realizable value and book value of accounts receivable before and after the entries in part a? Question #3 On January 1, Year 1, Montgomery Manufacturing paid $556,742.69 for 10% bonds with a face value of $600,000. They are dated January 1, Year 1, and mature on January 1, Year 6, with interest receivable annually on December 31. Montgomery uses ASPE and applies the amortized cost approach using the effective interest method and has a December 31 year end. Required: a) Prepare the journal entry to record the bond purchase. b) Prepare a bond amortization schedule, rounding to two decimal places. c) In your own words, why might potential investors find the effective interest method more relevant than straight-line method? d) In your own words, briefly explain what it means to manage an investment on the basis of yield-to-mature.

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Answer Lets tackle each question one by one Question 1 To estimate the ending balance of accounts receivable we first need to calculate the total cred... View the full answer