Exam 6: Reporting and Interpreting Sales Revenue,receivables,and Cash

When using the allowance method for accounting for bad debts,accounts receivable is reported on the balance sheet at the expected net realizable value.When a particular receivable from a customer ultimately is determined to be uncollectible and is written off,the recording of this event will:

On January 1,American Company's allowance for doubtful accounts had a credit balance of $3,000.The balance in the Accounts Receivable account on that date was $75,000.On January 2,prior to any credit sales,a $500 account from National Company was deemed to be uncollectible and written off. A.Compute the net realizable value of American's receivables on January 1. B.Prepare the journal entry American would record on January 2 related to the write-off of National's account. C.Compute the net realizable value of American's receivables on January 2,immediately following the write-off of National's account.

Chicago Company has hired you to reconcile its bank statement and cash account.At June 30,2019,the Cash account on the books showed the following: Cash account The June bank statement,just received,showed the following: There were neither outstanding checks nor deposits in transit at May 31,2019. A.Prepare the bank reconciliation at June 30,2019. B.Prepare the adjusting journal entries needed as a result of preparing the bank reconciliation.

A comparison of the balance in Cottonwood Company's cash account per its books as of April 30,2019 and the bank statement dated April 30,2019 revealed the following information: Prepare a complete bank reconciliation using the format below.In each section of the bank reconciliation indicate the proper handling of each of the items shown above by listing the appropriate item code letter and the respective amount.

Which of the following correctly describes the effect of a sales discount?

Lumberjack,Inc.manufactures and sells skis and snowboards and uses the allowance method to account for its receivables.Lumberjack sold $16,000 of skis to North Slope Co.in January.In March,North Slope encountered financial difficulties due to a much lower than average snowfall and decreased tourism at its ski resort.North Slope declared bankruptcy in June at which time Lumberjack,Inc.wrote off the $16,000 account receivable.November and December brought record snowfall and North Slope was able to pay the $16,000 owed to Lumberjack on December 15.Prepare the entries on Lumberjacks' books to account for the sale,write-off,and recovery of North Slope's account receivable.

The Rye Corporation has provided the following information: • Total sales were $1,200,000. • Beginning net accounts receivable was $45,000. • Ending net accounts receivable was $65,000. • Sales returns and allowances totaled $100,000. - What was Rye's receivables turnover ratio?

Sales returns and allowances is a contra-revenue account.

Gross profit is calculated as gross sales less cost of sales.

A portion of the income statement for Lone Star Company is shown below.Provide the missing account titles and amounts.

Credit terms of "2/10,n/30" mean that if payment is made in two days,a 10% discount will be given;if not paid within two days,the full invoice price will be due in thirty days.

Newark Company has provided the following information: • Cash sales,$450,000 • Credit sales,$1,350,000 • Selling and administrative expenses,$330,000 • Sales returns and allowances,$90,000 • Gross profit,$1,360,000 • Increase in accounts receivable,$55,000 • Bad debt expense,$33,000 • Sales discounts,$43,000 • Net income,$1,030,000 - How much is Newark's cost of sales?

One of Hawk Company's customers returned a product that cost Hawk $300,which was sold on account for $450.Which of the following does not correctly describe the effect of the return on the financial statements?

Flyer Company has provided the following information prior to any year-end bad debt adjustment: • Cash sales,$150,000 • Credit sales,$450,000 • Selling and administrative expenses,$110,000 • Sales returns and allowances,$30,000 • Gross profit,$490,000 • Accounts receivable,$110,000 • Sales discounts,$14,000 • Allowance for doubtful accounts credit balance,$1,200 - Flyer estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible.What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

A company had the following partial list of account balances at year-end: How much is net sales revenue?

CHS Company has just finished preparing its bank reconciliation.If CHS did everything correctly,which items would have been included as an addition to the company's cash account?

The Ward Company has provided the following information: • Net sales totaled $750,000. • Beginning net accounts receivable was $65,000. • Ending net accounts receivable was $85,000. - What was Ward's receivables turnover ratio?

Determine the effect of the following transactions on the financial statement components identified.Code your answers as follows: A: If the transaction results in an increase in the financial statement component. B: If the transaction results in a decrease in the financial statement component. C.If the transaction does not affect the financial statement component. Transaction 1: The adjusting entry to record bad debt expense was made. Gross profit _____ Current assets _____ Stockholders' equity _____ Transaction 2: An account receivable was collected for which the customer took advantage of a 2% discount and remitted the payment less the discount. Net sales _____ Gross Profit _____ Current assets _____

Which of the following statements pertaining to bank reconciliations is false?

If the accounts receivable turnover ratio increases,the number of days it takes to collect the receivables also increases.