# E6-2, e6-7, e6-8 and e6-18

E6-2

Determine due date and interest on notes

Obj|1

Feb. 20, \$450

Determine the due date and the amount of interest due at maturity on the following notes:

 Date of Note Face Amount Interest Rate Term of Note a. January 6 \$40,000 9% 45 days b. March 23 9,000 10 60 days c. May 30 12,000 12 90 days d. August 30 18,000 10 120 days e. October 1 10,500 8 60 days

E6-7

Estimating doubtful accounts

Obj|4

Newbury Bikes Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2012, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Age Interval                           Balance                                   Percent Uncollectible

Not Past Due                          \$667,000                                             ½%

1 – 30 Days past due                158,000                                            2

31 -60 Days past due                   54,000                                           5

61 -90 Days past due                         20,000                                     15

91 -180 Days past due                       15,000                                     40

Over 180 Days past due                    10,500                                    75

\$925,000

Estimate what the balance of the allowance for doubtful accounts should be as of December 31, 2012.

E6-8

Entry for uncollectible accounts

Obj|4

Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Newbury Bikes Co. had a negative balance of 2\$3,800 as of December 31, 2012.

Illustrate the effects of the adjustment for uncollectible accounts as of December 31, 2012, on the accounts and financial statements

 E6-18 Lower of cost or market inventory On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9. Unit Unit Inventory Cost Market Commodity Quantity Price Price Buffalo 35 \$115 \$120 Dakota 67 90 75 Frontier 8 300 280 Midwest 83 40 30 Rainbow 100 90 94

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