EASY

1. Solution
Inventory- January 1 4,800,000
Purchases 8,000,000
Goods available for sale 12,800,000
Inventory- December 31 (4,400,000)
Cost of goods sold 8,400,000
Gross margin on sales 4,200,000
Gross sales 12,600,000
Cash sales (2,000,000)
Credit sales 10,600,000
Accounts Receivable- January 1 4,000,000
Total 14,600,000
Accounts Receivable collected (8,400,000)
Accounts Receivable - December 31 6,200,000

2. Solution
Allowance for doubtful accounts- December 31,2015 900,000
Doubtful accounts expense 160,000
Total 1,060,000
Accounts written off (SQUEEZE) (60,000)
Allowance for doubtful accounts- December 31,2016 1,000,000

3. Solution
Uncollectible accounts expense ( 2%x9,000,000) 180,000

MODERATE
1. Solution
Only the bad debts expense decreases working capital.
The write off does not affect anymore the working capital because the effect is offsetting on current assets.

2. Solution 12,000
0-60 ( 1,200,000x 1%) 18,000
61-120 (900,000x 2%) 60,000
Over 120 90,000
Allowance for uncollectible accounts- December 31

3. Solution
Net realizable value of accounts receivable 5,000,000
Allowance for doubtful accounts (800,000-200,000) 600,000
Gross accounts receivable 5,600,000

DIIFICULT
1.Solution
Principal 1,000,000
Add: Interest (1,000,000x8%x6/12) 40,000
Maturity value 1,040,000
Less: Discount (1,040,000x10%x6/12) -52,000
Net Proceeds 988,000

2. Solution
Principal- maturity value 2,000,000
Less: Discount (2,000,000x10%x6/12) (100,000)
Net Proceeds 1,900,000

3. Solution
Principal 500,000
Add: Interest (500,000x10%) 50,000
Maturity value 550,000
Less: Discount (550,000x12%x6/12) (33,000)
Net Proceeds 517,000
n current assets.