Case 5-1 Stern Corp

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Case 5-1 Stern Corporation On December 31, 2006, before the yearly financial statements were prepared, the controller of the Stern Corporation re affected accounts receivable and the allowance for doubtful accounts. The controller first examined the December 31, subsequent review of the year's transactions applicable to accounts receivable revealed the items listed below: 1. Sales on account during 2006 amounted to $9,965,575. 2. Payment received on accounts receivable during 2006 totaled $9,685,420. 3. During the year, accounts receivable totaling $26,854 were deemed uncollectible and were written of. 4. Two accounts that had been written off as uncollectible in 2005 were collected in 2006. One account for $2,108 was $1,566 was made by the Hollowell Company on another account that originally had amounted to $2,486. The controller would be paid in full because reliable reports were circulating that the trustee in bankruptcy for the Hollowell Company the dollar. 5. The Allowance for Bad Debts was adjusted to equal 3% of the balance in Accounts Receivable at the end of the yea Questions: 1. Analyze the effect of each of these transactions in terms of its effect on Account Receivable, Allowance for Doubtful may be involved, and prepare necessary journal entries. 2. Give the correct totals for Accounts Receivable and the Allowance for Doubtful Accounts as of December 31, 2006, had been recorded. 3. Calculate the current ratio, acid-test ratio, and days receivables figures as of December 31, 2006. Assume that amo described in the case are the same as on December 31, 2005. controller of the Stern Corporation reviewed certain transactions that er first examined the December 31, 2005, balance sheet (Exhibit 1 ). A ealed the items listed below: e and were written of. 2006. One account for $2,108 was paid in full. A partial payment of amounted to

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