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

Which of the following is not a component of the gross profit calculation?

On December 31, 2014, Colonial Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries: Accounts receivable \ 25,000 Allowance for doubtful accounts 200 credit balance Sales revenue (all credit sales) 400,000 Required: Prepare the necessary year-end adjusting entry related to uncollectible accounts for each of the following independent assumptions: A. An aging of accounts receivable is completed. It is estimated that $2,150 of the receivables outstanding at year-end will be uncollectible. A. except that prior to adjustment, the allowance for doubtful accounts had a debit balance of $200 rather than a credit balance of $200. B. Assume the same information presented in part C. It is estimated that a provision for bad debts is required for 1% of credit sales for the year.

Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount?

The Roscoe Company's March 31, 2014 bank statement balance was $70,000. As of March 31, 2014, outstanding checks total $22,000 and deposits in transit total $15,000. How much was Roscoe's March 31, 2014 cash balance on Roscoe's books?

The accounts receivable aging schedule determines the dollar amount of uncollectible accounts receivable at year-end; this dollar amount of uncollectible accounts receivable is the bad debt expense that is recorded for the year regardless of the allowance for doubtful accounts balance.

Dillon Company uses the allowance method to account for bad debts. The entry to write-off a bad account (one that will never be collected) should be:

Asia Company sold $10,000 of goods to Euro Company on credit on May 1. At the time of the sale, Asia recorded a debit to Accounts Receivable and a credit to Sales Revenue for $10,000. Terms were 2/10, n/30. Required: Prepare the journal entries Asia Company would record for each of the following independent situations: A. Euro paid the balance due, less the discount, on May 10. B. Euro returned half of the goods for credit on May 4. Euro paid the balance due, less the discount, on May 10. C. Euro paid its bill on May 30 (there were no sales returns).

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

A recent annual report for Kirova Company contained the following data: (in millions) Accounts receivable \ 2,023 \ 1,866 Less: Allowance for doubtful accounts 50 52 Net accounts receivable 1,976 1,814 Net sales (all are on credit) 18,158 Required: A. Calculate the accounts receivable turnover ratio. B. Calculate the average days' sales in receivables for 2014 (rounded to the nearest day). C. Explain the meaning of each number.

The journal entry to record bad debt expense is made during the year that it is determined that a particular receivable is uncollectible, regardless of the year of sale.

One of Trent Company's customers returned products that had been sold on account for $800. Which of the following correctly describes the effect on the financial statements of the return?

Which of the following is not a reason for the Jones Hardware Store to accept credit cards from customers?

Which of the following statements is correct?

When a depositor receives a bank statement indicating that there was a "NSF check," the depositor should do which of the following?

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 prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

On July 10, 2014, Rex Company sold merchandise at an invoice price of $5,000 with terms of 2/10, n/30. Required: Prepare the journal entries required below by indicating the account code of the appropriate account for each debit and credit and enter the dollar amounts for each item.

The following data were taken from the records of Lilo Corporation for the year ended December 31, 2014 before any adjustment for bad debt expense: Sales of merchandise for cash \ 150,000 Sales of merchandise on credit 800,000 Sales returns and allowances 10,000 Sales salaries expense 80,000 Cost of sales 610,000 Administrative expenses 90,000 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. Required: A. Calculate the bad debt expense. B. Prepare a multiple-step income statement (including gross profit, income before income taxes, and earnings per share).

When preparing a bank reconciliation, which of the following would be deducted from the company's cash balance?

Which of the following does not correctly describe the effect of recording a credit sale of inventory for a profit?

Merchandise was sold on credit for $10,000, terms 2/10, n/30. Which of the following journal entry descriptions correctly describes the cash collection?