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Lone Star Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June, $2014,$ the company had accounts receivable of $$780,000$

and an Allowance for Doubtful Accounts of $$31,000($cr$).$ During the period from July $1-$ Sept. $30,$ Lone Star had sales on account of $$1,000,000,$ collected $$800,000$ on

unassigned accounts and wrote off $$5,000$ of unassigned accounts receivable. Lone Star also collected $$450$ from a customer whose account had previously been

written off $($not included in the $$800,000$ above$).($HINT: Use your t$-$accounts on page $7-13$ handout to help you reconcile the A$/$R and ADA t$-$accounts using this

information.$)$

On August $1,$ Lone Star assigned $$250,000$ of the accounts receivable to XYZ Finance and received $80\%$ of the value of the

accounts assigned less a finance fee of $$5,000.$ XYZ charges $1\%$ per month $(12\%$ APR$)$ on the outstanding loan balance. Cash

collections from assigned accounts are to be remitted monthly to XYZ and cover principal and accrued interest for the month.

During August, Lone Star collected $$130,000$ in cash of the accounts receivable assigned and, in addition, accepted sales returns

of $$3,000$ on assigned accounts. During September, Lone Star collected $$70,000$ in cash and, in addition, wrote off $$2,000$ of

assigned accounts as uncollectible.

On September $30,$ Lone Star estimated $4\%$ of the total accounts receivable and accounts receivable assigned to be uncollectible.

Required: Use the above information to determine each of the following:

a$.$ Determine how much Interest Expense Lone Start would report on their quarterly income statement for the period July $1$ thru Sept $30$ from the

accounts receivable assigned. $($Remember$,$ the fee charged initially to receive the loan is considered part of the "cost to borrow" so it needs to be

included in the interest expense.$)$

b$.$ What is Bad Debt Expense for the July $1-$ Sept $30$ quarterly period?

c$.$ Prepare the receivables section of the Balance Sheet dated September $30,2014.$

$(1)$ Determine how much Interest Expense Lone Start would report on their quarterly income statement for the period July $1$ thru Sept $30$ from

the accounts receivable assigned. $($Remember$,$ the fee charged initially to receive the loan is considered part of the "cost to borrow" so it

needs to be included in interest expense.$)$

$$[$Blank$\_1]$

$(2)$ What is Bad Debt Expense for the July $1-$ Sept $30$ quarterly period?

$(3)$ Determine the Ending Balance of Accounts Receivable $-$ General as of September $30,2014$:

$(4)$ Determine the ending balance of Accounts Receivable $-$ Assigned as of September $30,2014$:

$(5)$ Determine the ending balance of the Note Payable as of September $30,2014,$ and be sure to put your answer in $($parentheses$)$:

$(6)$ Determine the ending balance of Allowance for Doubtful Accounts $($after adjustment$)$ as of September $30,2014$:

$(7)$ Determine the Net Realizable Value of the Receivables as of September $30,2014$

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