Exam 7: Cash and Receivables

The entry to replenish the petty cash fund for $100 of various minor expenditures would include a

Exhibit 7-1 Martin & Cox, Inc.accepted a $50, 000, 8%, 90-day note receivable for services rendered to a client.Thirty days later, Martin & Cox discounted the note at a bank at 10%.Assume interest has not been recognized for the first month. - Refer to Exhibit 7-1.The entry to record the proceeds from the sale of the note would include a

When a company writes off an account receivable using the direct write-off method, the effect of this write-off on the financial statements is to

Compensating balance agreements that do not legally restrict the amount of funds shown on the balance sheet should be reported in the

Transit Corporation estimates uncollectible accounts using a percentage of outstanding accounts receivable.After the year-end adjustment for bad debt expense was made, the company's records reflected the following information (in 000's): Accounts written off \ 1,600 Collection on accounts previously written off 300 Allowance for uncollectible accounts at Januady 1 1,700 Accountsreceivable at December 31 100,000 Bad debt percentage 1.5\% The bad debt expense for the year was

Based on the following information: Sales returns and allowances(credit sales) \ 20,000 Cash sales 1,200,000 Unadjusted balance in Allowance for Doubtful Accounts 1,000 credit Creclit sales 2,550,000 If bad debts are estimated to be 2% of net credit sales, the adjusting entry to recognize uncollectible accounts will include a debit to expense for

Bad debt expense is normally reported on the income statement as a(n)

Which of the following would be included in cash and cash equivalents on the balance sheet?

On April 3, First State Bank loaned a customer $30, 000 on a 60-day, 10% note, remitting the face value less the interest to the customer.Which of the following journal entries would First State Bank use to record the receipt of the note?

Theoretically, the amount of estimated future returns and allowances on credit sales should be recorded during the period of the sale so as not to overstate sales and ending accounts receivable.In practice, these estimates are rarely recorded because

On September 1, 2010, Elite Company received an $80, 000, 12%, 120-day note from a credit customer wishing to extend its repayment period.On October 1, 2010, thirty days after the note was received, Elite discounted the note at the bank at 14%.How much cash did Elite Company receive from the bank?

Although IFRS contain the same basic guidelines for accounting for cash and receivables as U.S.GAAP, some differences exist.Which of the following accounting treatments differs under IFRS versus GAAP?

On April 7, Willow, Inc.sold goods for $20, 000 and accepted a 9%, 60-day note.On April 22, the company discounted the note at 12%. Required: Compute the amount of interest revenue and the loss on sale of the note.

Which of the following is not a disadvantage of using the direct write-off method for recording uncollectible accounts?

Pollock Supply Co.makes American Express credit card sales of $66, 000.There is a 3% collection fee. Required: Journalize these sales.

Cash planning is important because a company wants to

Which statement is not true?

The estimate of bad debt expense may be based on the historical relationships between actual bad debts incurred and Accounts Receivable Sales I. Yes No II. No No III. No Yes IV. Yes Yes

All of the following are nontrade receivables except

Huntress, Inc.reported a balance of $141 in its cash account at the end of the month.There were $120 of deposits in transit and $115 of checks outstanding.The bank statement showed a balance of $151, service charges of $7, and the collection of a note plus interest.The note had a face value of $17.How much interest did the bank collect for the company?