Problem 7c: Accounts Receivable and Uncollectible Accounts Expense
1. The Doyle Merchandising Company currently sells products only through its store in Lowell,
MA. The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
In addition to continuing its store sales, the Doyle Merchandising Company is considering
expanding sales in September by selling through catalogs. The company expects to make catalog
sales of $20,000 in September. The company expects its cost of goods sold to continue to average
60% of sales. Catalog operating expenses, other than uncollectible accounts expense, are expected to
be 19% of catalog sales. The company’s income taxes rate is expected to continue to average 35%
of income before taxes. Although the company collects all its accounts receivable resulting from
store sales, it expects to collect only 96% of catalog sales. Determine the expected cost of goods
sold for the company’s September $20,000 catalog sales.
A)
B)
C)
D)
E)
$8,000
$180,000
$20,000
$176,000
$12,000
2
2. The Doyle Merchandising Company currently sells products only through its store in Lowell, MA.
The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
The company expects to make catalog sales of $20,000 in September. The company expects its cost
of goods sold to continue to average 60% of sales. Catalog operating expenses, other than
uncollectible accounts expense, are expected to be 19% of catalog sales. The company’s income
taxes rate is expected to continue to average 35% of income before taxes. Although the company
collects all its accounts receivable resulting from store sales, it expects to collect only 96% of
catalog sales. Determine the expected gross profit for the company’s September $20,000 catalog
sales.
A)
B)
C)
D)
E)
$120,000
$20,000
$124,000
$8,000
$12,000
3
3. The Doyle Merchandising Company currently sells products only through its store in Lowell,
MA. The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
The company expects to make catalog sales of $20,000 in September. The company expects its cost
of goods sold to continue to average 60% of sales. Catalog operating expenses, other than
uncollectible accounts expense, are expected to be 19% of catalog sales. The company’s income
taxes rate is expected to continue to average 35% of income before taxes. Although the company
collects all its accounts receivable resulting from store sales, it expects to collect only 96% of
catalog sales. Determine the expected uncollectible accounts expense for the company’s September
$20,000 catalog sales.
A)
B)
C)
D)
E)
$0
$12,000
$800
$80
$320
4
4. The Doyle Merchandising Company currently sells products only through its store in Lowell,
MA. The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
The company expects to make catalog sales of $20,000 in September. The company expects its cost
of goods sold to continue to average 60% of sales. Catalog operating expenses, other than
uncollectible accounts expense, are expected to be 19% of catalog sales. The company’s income
taxes rate is expected to continue to average 35% of income before taxes. Although the company
collects all its accounts receivable resulting from store sales, it expects to collect only 96% of
catalog sales. Determine the expected total operating expenses for the company’s September
$20,000 catalog sales.
A)
B)
C)
D)
E)
$1,840
$4,600
$3,800
$16,600
$83,000
5
5. The Doyle Merchandising Company currently sells products only through its store in Lowell,
MA. The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
The company expects to make catalog sales of $20,000 in September. The company expects its cost
of goods sold to continue to average 60% of sales. Catalog operating expenses, other than
uncollectible accounts expense, are expected to be 19% of catalog sales. The company’s income
taxes rate is expected to continue to average 35% of income before taxes. Although the company
collects all its accounts receivable resulting from store sales, it expects to collect only 96% of
catalog sales. Determine the expected income before taxes for the company’s September $20,000
catalog sales.
A)
B)
C)
D)
E)
$3,400
$7,400
$4,200
$37,000
$12,600
6
6. The Doyle Merchandising Company currently sells products only through its store in Lowell,
MA. The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
The company expects to make catalog sales of $20,000 in September. The company expects its cost
of goods sold to continue to average 60% of sales. Catalog operating expenses, other than
uncollectible accounts expense, are expected to be 19% of catalog sales. The company’s income
taxes rate is expected to continue to average 35% of income before taxes. Although the company
collects all its accounts receivable resulting from store sales, it expects to collect only 96% of
catalog sales. Determine the expected income taxes expense for the company’s September $20,000
catalog sales.
A)
B)
C)
D)
E)
$12,950
$7,000
$1,190
$2,590
$4,410
7
7. The Doyle Merchandising Company currently sells products only through its store in Lowell,
MA. The company’s expected income statement for store operations in August is presented below.
Doyle Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended August 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Income Before Taxes
Income Taxes Expense
Net Income
$280,000
168,000
$112,000
78,400
$33,600
$11,760
$21,840
The company expects to make catalog sales of $20,000 in September. The company expects its cost
of goods sold to continue to average 60% of sales. Catalog operating expenses, other than
uncollectible accounts expense, are expected to be 19% of catalog sales. The company’s income
taxes rate is expected to continue to average 35% of income before taxes. Although the company
collects all its accounts receivable resulting from store sales, it expects to collect only 96% of
catalog sales. Determine the expected net income for the company’s September $20,000 catalog
sales.
A)
B)
C)
D)
E)
$4,810
$2,730
$24,050
$8,000
$2,210
8
8. The Doyle Merchandising Company’s December 31 balance sheet contained the following
information. If the Doyle Merchandising Company were to send invoices to its December 31
customers, what is the total dollar amount of invoices the company would send?
Assets
Current Assets
Cash
Accounts Receivable
Allowance for Uncollectible Accounts
Merchandise Inventory
Supplies
Prepaid Insurance
A)
B)
C)
D)
E)
$9,000
$14,000
$1,200
$12,800
$26,000
$1,300
$1,900
$0
$14,000
$1,200
$12,800
$9,000
9. The Doyle Merchandising Company’s December 31 balance sheet contained the following
information. If the Doyle Merchandising Company were to predict the dollar amount of cash it
would receive from collecting its December 31 accounts receivable, what is the total dollar amount
of cash the company would predict it would receive?
Assets
Current Assets
Cash
Accounts Receivable
Allowance for Uncollectible Accounts
Merchandise Inventory
Supplies
Prepaid Insurance
A)
B)
C)
D)
E)
$0
$14,000
$1,200
$12,800
$9,000
$9,000
$14,000
$1,200
$12,800
$26,000
$1,300
$1,900