Question 1

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

Accepted Answer

A) It is reported on the balance sheet as a component of current assets. 
B) It is a contra-asset account. 
C) It is reported on the balance sheet as a component of stockholders' equity. 
D) It is created as a result of the adjusting entry to record bad debt expense. 
A) It is reported on the balance sheet as a component of current assets. 
B) It is a contra-asset account. 
C) It is reported on the balance sheet as a component of stockholders' equity. 
D) It is created as a result of the adjusting entry to record bad debt expense.

Question 2

A company purchased goods on credit with credit terms of 3/15,n/45.Although the company does not have cash available to pay within the discount period,the manager of the company is considering borrowing money to take advantage of the discount.In order to make the appropriate decision,the manager computed the annual interest rate associated with the sales discount.Which of the following is the annual interest rate (rounded)? (Use 365 days a year)

Accepted Answer

A) 56%. 
B) 38%. 
C) 25%. 
D) 18%. 
A) 56%. 
B) 38%. 
C) 25%. 
D) 18%.

Question 3

Matrix Corp.reported the following figures from its financial statements for the years 2018 through 2020.
   A.Calculate for 2020:
1.Accounts receivable turnover
2.Average collection period
B.Calculate for 2019:
1.Accounts receivable turnover
2.Average collection period
C.Interpret the receivables turnover and the average collection period,in general.Comment on the change in the ratio results from 2019 to 2020.Then discuss how the trend in sales from 2018 to 2019 and 2020 may have affected the change in the ratios from 2019 to 2020.

Accepted Answer

A.1.2020 Accounts receivable turnover 10

Question 4

When a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces cash.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following demonstrates a poor internal control procedure?

Accepted Answer

A) The bookkeeper makes cash deposits and records journal entries related to cash,while the treasurer prepares the bank reconciliation. 
B) The president,who does no bookkeeping,prepares the bank reconciliation each month. 
C) The treasurer signs all checks after the bookkeeper prepares the supporting documents. 
D) One bookkeeper prepares cash deposits and the other bookkeeper enters the collections in the journal and ledger. 
A) The bookkeeper makes cash deposits and records journal entries related to cash,while the treasurer prepares the bank reconciliation. 
B) The president,who does no bookkeeping,prepares the bank reconciliation each month. 
C) The treasurer signs all checks after the bookkeeper prepares the supporting documents. 
D) One bookkeeper prepares cash deposits and the other bookkeeper enters the collections in the journal and ledger.

Question 6

Which of the following is correct when bad debt expense is recorded at year-end?

Accepted Answer

A) Current assets will increase. 
B) Gross profit will decrease. 
C) Income from operations will decrease. 
D) Current liabilities will decrease. 
A) Current assets will increase. 
B) Gross profit will decrease. 
C) Income from operations will decrease. 
D) Current liabilities will decrease.

Question 7

Dally Company has just finished preparing its bank reconciliation.If everything was done correctly,which of the following items would be reported as a deduction from the company's ending balance per the bank?

Accepted Answer

A) Deposits in transit. 
B) Service Fees. 
C) Outstanding checks. 
D) NSF checks. 
A) Deposits in transit. 
B) Service Fees. 
C) Outstanding checks. 
D) NSF checks.

Question 8

Which of the following correctly describes the following journal entry?

Accepted Answer

A) The gross profit does not change. 
B) Net income decreases. 
C) Current assets increase. 
D) Net sales increases. 
A) The gross profit does not change. 
B) Net income decreases. 
C) Current assets increase. 
D) Net sales increases.

Question 9

Which of the following does not correctly describe the effect of a credit card discount?

Accepted Answer

A) Net sales decrease and gross profit decreases. 
B) Net sales decrease and net income decreases. 
C) Operating expenses remain the same and net income decreases. 
D) Neither operating expenses nor net income is affected 
A) Net sales decrease and gross profit decreases. 
B) Net sales decrease and net income decreases. 
C) Operating expenses remain the same and net income decreases. 
D) Neither operating expenses nor net income is affected

Question 10

Superior Company has provided you with the following information before any year-end adjustments: Net credit sales are $120,000.
Historical percentage of credit losses is 2%.
Allowance for doubtful accounts has a credit balance of $300.
Accounts receivables ending balance is $47,000.
What is the estimated bad debt expense using the percentage of credit sales method?

Accepted Answer

A) $2,100. 
B) $2,400. 
C) $940. 
D) $2,700. 
A) $2,100. 
B) $2,400. 
C) $940. 
D) $2,700.

Question 11

Prior to the year-end adjustment to record bad debt expense for 2019 the general ledger of Stickler Company included the following accounts and balances:
   Cash collections on accounts receivable during 2019 amounted to $450,000.Sales revenue during 2019 amounted to $800,000,of which 75% was on credit,and it was estimated that 2% of these credit sales made in 2019 would ultimately become uncollectible.
A.Calculate the bad debt expense for 2019.
B.Determine the adjusted 2019 year-end balance of the allowance for doubtful accounts.
C.Determine the net realizable value of accounts receivable for the December 31,2019 balance sheet.

Accepted Answer

A.Bad debt expense,$12,000 = [($800,000

Question 12

The Roscoe Company's March 31 bank statement balance was $70,000.As of March 31,outstanding checks total $22,000 and deposits in transit total $15,000.Assuming there are no other reconciling items,what was the March 31 cash balance on Roscoe's books?

Accepted Answer

A) $63,000. 
B) $77,000. 
C) $70,000. 
D) $107,000. 
A) $63,000. 
B) $77,000. 
C) $70,000. 
D) $107,000.

Question 13

The Conner Company's August 31 pre-reconciliation cash balance on its books was $90,000.As of August 31,outstanding checks total $44,000 and deposits in transit total $30,000.Assuming there are no other reconciling items,what was the August 31 cash balance on Conner's bank statement?

Accepted Answer

A) $76,000. 
B) $90,000. 
C) $13,000. 
D) $104,000. 
A) $76,000. 
B) $90,000. 
C) $13,000. 
D) $104,000.

Question 14

The allowance for doubtful accounts is reported as a contra-asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is correct?

Accepted Answer

A) Revenue is recognized at the time of shipment when goods are shipped FOB destination. 
B) Sales returns and allowances are reported as operating expenses on an income statement. 
C) A seller records revenue when title and risks of ownership transfer to the buyer. 
D) Sales discounts are reported as cost of sales on an income statement. 
A) Revenue is recognized at the time of shipment when goods are shipped FOB destination. 
B) Sales returns and allowances are reported as operating expenses on an income statement. 
C) A seller records revenue when title and risks of ownership transfer to the buyer. 
D) Sales discounts are reported as cost of sales on an income statement.

Question 16

The following data were taken from the records of Lilo Corporation for the year ended
December 31,2019 before any adjustment for bad debt expense:
   The following items have not been included in above amounts:
Estimated bad debt expense is 1% of credit sales.
The income tax rate is 35%.
10,000 of shares of common stock are outstanding.
A.Calculate the bad debt expense.
B.Prepare a multiple-step income statement (including gross profit,income before income taxes,and earnings per share).

Accepted Answer

A.Bad debt expense =

Question 17

Illinois Company prepared the following bank reconciliation at May 31:
   Required:
Prepare the necessary journal entries for Illinois Company required by the May 31 bank reconciliation.

Accepted Answer

The answer of Illinois Company prepared the following bank reconciliation...

Question 18

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 are Newark's net sales?

Accepted Answer

A) $1,634,000. 
B) $1,800,000. 
C) $1,667,000. 
D) $1,745,000. 
A) $1,634,000. 
B) $1,800,000. 
C) $1,667,000. 
D) $1,745,000.

Question 19

On June 1,2019,Concorde Company sold merchandise on credit at an invoice price of $1,000;terms 2/10,n/30.
Prepare the journal entries to record the following:
A.To record the sale.
B.Assumption A: To record collection on June 28,2019.
C.Assumption B: To record collection on June 9,2019.

Accepted Answer

The answer of On June 1,2019,Concorde Company sold merchandise on...

Question 20

Deposits in transit are deducted from the bank balance when preparing the bank reconciliation.

Accepted Answer

A) True 
 B)False

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

When a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces cash.

Which of the following demonstrates a poor internal control procedure?

Which of the following is correct when bad debt expense is recorded at year-end?

Dally Company has just finished preparing its bank reconciliation.If everything was done correctly,which of the following items would be reported as a deduction from the company's ending balance per the bank?

Which of the following correctly describes the following journal entry?

Which of the following does not correctly describe the effect of a credit card discount?

The Roscoe Company's March 31 bank statement balance was $70,000.As of March 31,outstanding checks total $22,000 and deposits in transit total $15,000.Assuming there are no other reconciling items,what was the March 31 cash balance on Roscoe's books?

The Conner Company's August 31 pre-reconciliation cash balance on its books was $90,000.As of August 31,outstanding checks total $44,000 and deposits in transit total $30,000.Assuming there are no other reconciling items,what was the August 31 cash balance on Conner's bank statement?

The allowance for doubtful accounts is reported as a contra-asset on the balance sheet.

Which of the following statements is correct?

Illinois Company prepared the following bank reconciliation at May 31: Required: Prepare the necessary journal entries for Illinois Company required by the May 31 bank reconciliation.

On June 1,2019,Concorde Company sold merchandise on credit at an invoice price of $1,000;terms 2/10,n/30. Prepare the journal entries to record the following: A.To record the sale. B.Assumption A: To record collection on June 28,2019. C.Assumption B: To record collection on June 9,2019.

Deposits in transit are deducted from the bank balance when preparing the bank reconciliation.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

When a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces cash.

Which of the following demonstrates a poor internal control procedure?

Which of the following is correct when bad debt expense is recorded at year-end?

Dally Company has just finished preparing its bank reconciliation.If everything was done correctly,which of the following items would be reported as a deduction from the company's ending balance per the bank?

Which of the following correctly describes the following journal entry?

Which of the following does not correctly describe the effect of a credit card discount?

The Roscoe Company's March 31 bank statement balance was $70,000.As of March 31,outstanding checks total $22,000 and deposits in transit total $15,000.Assuming there are no other reconciling items,what was the March 31 cash balance on Roscoe's books?

The Conner Company's August 31 pre-reconciliation cash balance on its books was $90,000.As of August 31,outstanding checks total $44,000 and deposits in transit total $30,000.Assuming there are no other reconciling items,what was the August 31 cash balance on Conner's bank statement?

The allowance for doubtful accounts is reported as a contra-asset on the balance sheet.

Which of the following statements is correct?

Illinois Company prepared the following bank reconciliation at May 31: Required: Prepare the necessary journal entries for Illinois Company required by the May 31 bank reconciliation.

On June 1,2019,Concorde Company sold merchandise on credit at an invoice price of $1,000;terms 2/10,n/30. Prepare the journal entries to record the following: A.To record the sale. B.Assumption A: To record collection on June 28,2019. C.Assumption B: To record collection on June 9,2019.

Deposits in transit are deducted from the bank balance when preparing the bank reconciliation.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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