【正文】 $)].…………..9,250Adjusted investment to market value.Req. 3BALANCE SHEETCurrent assets: Shortterm investment, at market value (5,000 180。 $)………………….46,250Purchased investment.14Cash (5,000 180。 $.32 = $1,600 +$46,250 – (5,000 180。 50/365)616Req. 2 December 31BALANCE SHEET 20X5 20X4 Current assets: Note receivable…………………………$50,000$60,000 Interest receivable……………………...616500(3040 min.) P 57AReq. 1 Dollar amounts in millions 20X620X5a. Current=Total current assets=$766= $695= ratioTotal current liabilities$540$446Cash + Shortterm investmentsb. Acidtest ratio=+ Net current receivables=$27+$93+$206$26+$101+$154Total current liabilities$540$446=.60= .63c. One day’ssales=Net sales=$2,671= $$2,505= $365365365Days’ sales in average receivables=Average net receivables=($206+$154)/2($154+$127)/2One day’s sales$$=25 days= 20 days(continued) P 57AReq. 2MEMORANDUMDATE: _________________ TO: Top management of Crain’s Stationery CompanyFROM: Student NameRE: Changes in ratio values from 20X5 to 20X6The current ratio deteriorated from to . The acidtest ratio dropped from .63 to .60, and days’ sales in receivables rose to 25 days. All three ratio values deteriorated during the current year. This is an unfavorable trend because it indicates that the pany may find it more difficult to collect its receivables and pay its bills.Student responses may vary.ProblemsGroup B(2030 min.) P 51BReqs. 1 and 2CashShortTerm Investment 400,00046,250*46,250*9,250+ 1,600**37,000Dividend RevenueUnrealized Gain (Loss)on Investment1,600**9,250+_____ *5,000 180。 2/12)…..1,000(continued) P 56AJournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDIT20X5Nov. 11Note Receivable — Consolidated, Inc...50,000 Cash……………………………………...50,000Dec. 31Interest Receivable……………………….616 Interest Revenue ($50,000 180。 1/12)…...500 Interest Revenue……………………………..50020X5Feb.18Note Receivable — Altex Co…………………..5,000 Accounts Receivable — Altex Co…………5,000Feb.20Cash………………………………………………..4,600Financing Expense………………………………400 Note Receivable — Altex Co……………….5,000Feb.28Cash………………………………………………..61,500 Note Receivable — Kelly Moore Paint Co..60,000 Interest Receivable…………………………..500 Interest Revenue ($60,000 180。 .03)……….…$12,000 Uncollectibleaccount expense by the direct writeoff method………… 7,000 (5,000)Net ine, corrected…………………….$48,000Req. 4KPMG’s suggestions make Bzensky look much less successful, decreasing the current ratio, the acidtest ratio, and net ine.(2030 min.) P 56AReq. 1JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDIT20X4Nov.30Note Receivable — Kelly Moore Paint Co…..60,000 Sales Revenue………………………………..60,000Dec.31Interest Receivable ($60,000 180。 .50)……………………..$10,800Credit balance in Allowance for Doubtful Accounts before the December 31 entry — (see the Tacccount in the answer to Req. 2。 .01) + ($34,000 180。 .04)………………………308d.Allowance for Uncollectibles……...269* Accounts Receivable…………….269*(continued) P 53AReq. 5Customers owed AOL $561.AOL expected to collect $464 ($561 – $97).Req. 6INCOME STATEMENT Service revenue……………………….$7,703 Uncollectibleaccount expense…….308(2535 min.) P 54AReq. 1JournalDATEACCOUNT TITLES AND EXPLANATIONDEBITCREDITNov.22Allowance for Doubtful Accounts………4,100 Accounts Receivable — Monet Corp.. 1,300 Accounts Receivable — Blocker, Inc.. 2,100 Accounts Receivable — M Street Plaza 700 Dec.31DoubtfulAccount Expense………………7,800 Allowance for Doubtful Accounts……7,800*_____*Computation:Required credit balance in Allowance for Doubtful Accounts based on aging of Accounts Receivable ($160,000 180。 $)………………..25,500Purchased investment.21Cash (2,000 180。 $ = $25,500 **2,000 180。 .07 180。 .07 180。 .20) – $3,200 = $6,600] 5.$210,200 ($220,000 – $9,800) 6.a ($1,000,000 180。 .02) + ($60,000 180。 = $231,000 ***$440,000 – $200,000 = $240,000 180。s=service revenue=$415=$sales365 365Days’ salesAverage netin average=accounts receivable=($37 + $42) / 2receivablesOne day’s sales$=35 days35 days’ sales in average receivables is okay relative to credit terms of net 30 days.(1015 min.) E 514Req. 1Average collection period:Millions of dollars One day’s sales=$256,329=$365 Days’ sales in average receivables=($1,254 + $1,569) / 2=2 days (average collection period)$Req. 2WalMart’s collection period is short because WalMart sells for cash and on credit cards and bank cards. Receivables are very low.(1520 min.) E 515Actual without Bank CardsExpected with Bank CardsSales revenue ……………………...$400,000$440,000* Cost of goods sold… …………….$210,000$231,000** Uncollectibleaccount expense…6,000 — Bankcard discount expense……4,800*** Other expenses……………………