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132 Part Finan Accouering Case 5-1 Stern Corporation (A) On December 31, 2010. before the yearly financial were circulating that the trustee in bankruptcy for statements were prepared, the controller of the Stern the Company would pay all obligations Corporation reviewed certain transact ions that affected 00 cents on the ts receivable and the allowance for ac- doubtful counts. The controller first examined the December 2009. balance sheet (Exhibit on page 133). A subse- quent review of the year's transactions applicable to accounts receivable revealed the items listed below. 5. The Allowance for Bad Debts was adjusted to equal 3 percent of the balance in Accounts Receivable at the end of the year. I. Sales on account 2010 amounted to Questions during $9,965,575 2. Payment received on accounts receivable during I. Analyze the effect of each of these transactions in 2010 totaled S9.685.420. terms of its effect on Accounts Receivable. 3. During the year. accounts receivable totaling Allowance for Doubtful Accounts, and any other $26.854 were deemed uncollectible and were written account that may be involved, and prepare neces- sary journal entries. 4. Two accounts that had been written off as uncol. 2. Give the correct totals for Accounts Receivable and the Allowance for Doubtful Accounts as of lectible in 2009 were collected in 2010. One ace De ember 31, 2010, after the transactions affecting count for S2.108 was paid in full. A partial payment them had been recorded. of SI 566 was made by the Hollowell Company on another account thai originally had amounted to 3. Calculate the current ratio, acid-test ratio, and day receivables figures as of December 3 2010. As $2.486. The controller was reasonably sure this ac count would be paid in full because reliable reports sume that amounts for items other than those de- scribed in the case are the same as on Dxcember 31. Copyright o James S. Reece. 5-2 Case