Exam 7: Cash and Receivables

Which is not a key element of internal control over cash receipts?

Prior to the adjusting entry for bad debt expense, Funnel, Inc.'s balances for Accounts Receivable and Allowances for Doubtful Accounts were $720, 000 (debit)and $3, 500 (credit), respectively.After the bad debt expense entry was posted, the net realizable value of accounts receivable was $650, 000.Bad debt expense for the year

A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that

When a company discounts its notes receivable at a bank, the common practice is to record the discounted notes in a(n)

You are in the process of preparing a bank reconciliation for Carpenter Company as of May 31.Listed below is information necessary to prepare the reconciliation. Required: In the spaces provided, place the appropriate letter to indicate whether each item of information should be a. deducted from the balance per bank statement b. added to the balance per bank statement c. deducted from the balance per company records d. added to the balance per company records e. omitted from the reconciliation _____ $\quad$ 1. $\quad$ Deposit in transit of $\$ 1,500$ as of May 31 . _____ $\quad$ 2. $\quad$ April service charge of $\$ 30$ recorded by the company in May. _____ $\quad$ 3. $\quad$ Checks totaling $\$ 1,100$ written in April that have not cleared the bark by May 31 . _____ $\quad$ 4. $\quad$ Check of Tomi, Inc. for $\$ 780$ deposited in May by Capenter Company and returned by the bank with the NSF $\quad$$\quad$$\quad$$\quad$ notation in May bank statement. _____ $\quad$ 5. $\quad$ Canceled check No. 205 written by Capenter Company for $\$ 200$ to Mays, Inc., had be en recorded on the $\quad$$\quad$$\quad$$\quad$ company's books as $\$ 2,000$ . _____ $\quad$ 6. $\quad$ Note receivable face value plus interest collected by the bank and deposited into Cappenter's account and not previously $\quad$$\quad$$\quad$$\quad$ recorded by Capenter Compary. _____ $\quad$ 7. $\quad$ Bank service charge of $\$ 35$ for May. _____ $\quad$ 8. $\quad$ Check of Carpets, Inc. charged in error against Carpenter's account by the bank during May and not corrected as of May 31

On June 11, Eugene, Inc.accepted a $7, 000, 6%, 60-day note from a customer.On June 26, the company discounted the note at the bank at 8%.The proceeds amounted to

Of the following items, which would be included in cash on hand and classified as a current asset? A. Negotiable checks B. Certificates of deposit C. Bank drafts D. Coins and currency

The method for estimating bad debts that results in current revenues and anticipated current expenses being matched is the

Cash control systems are the methods and procedures used to ensure

Revenue from a credit sale may be deferred because

On May 17, Otay Olive Co.accepted a $6, 500, 8%, 90-day note from a customer.On June 11, the note was discounted at 10%.At maturity date, the note was dishonored and the bank charged a $25 protest fee.The amount that Otay Olive Co.would debit to Notes Receivable Dishonored is

Based on the following information as of December 31: Postclated check \ 700 Employee travel advance 500 Checking account balance 2,500 Savings account balance 1,500 Bank overdraft 400 Certificates of deposit 600 Cash on hand 2,000 Petty cash fund 200 Bank draft 1,000 Required: Compute the total amount that will appear for current assets on the December 31 balance sheet.

Which of the following reconciling items would require an adjusting journal entry on the company's books?

Which of the following would not be considered a cash equivalent?

In order to be classified as a cash equivalent, an investment must have a maturity date of

An advantage of basing bad debt expense on the historical relationship between bad debts and net credit sales is that

When a company decides to sell its goods on credit, it should evaluate the effect on profit of Adchtional Additiona Expenses Revenues I. No No II. Yess No III. No Yes IV. Yes Yes

During 2010, Dawson's first year of operations, the following transactions occurred: Credit sales of $\$ 2,000,000$ . Collections on ac count of $\$ 1,700,000$ . Accounts receivable written off during the year, $\$ 5,000$ . Estimated uncollectible accounts $\$ 8,000$ . Accepted a $\$ 10,000$ one-year. $12 \%$ note receivable on June 30 Required: Prepare as appropriate: a. The receivables portion of Dawson's first year operations balance sheet. b. Notes to the financial statments for receivalites

Marx Company estimates bad debt expense using a percentage of credit sales (4%).The company began its current year with an $8, 500 balance in the allowance account.During the current year, $10, 500 of accounts receivable were written off, and $1, 200 of previously written off accounts were collected.Credit sales for the year were $200, 000.The bad debt expense for the year was