Exam 7: The Revenuereceivablescash Cycle

The following information was abstracted from the records of the Hooper Corporation: Prepare the adjusting entry for doubtful accounts expense under each of the following assumptions:

The following information is available for Thomas Company: As a result of a review and aging of accounts receivable, it has been determined that the Allowance for Doubtful Accounts should show a balance of $2,100 at December 31, 2011. What amount should Thomas record as bad debt expense for the year ended December 31, 2011?

First Company sold merchandise on credit to Second Company for $1,000 on July 1, with terms of 2/10, net /30. On July 6, Second returned $200 worth of merchandise claiming the materials were defective. On July 8, First received a payment from Second and credited Accounts Receivable for $450. On July 24, Second Company paid the remaining balance on its account. See First Company information above. What was the total cash received from Second during July?

An analysis and aging of the accounts receivable of Shriner Company at December 31 revealed the following data: The net realizable value of the accounts receivable at December 31 should be

Ramos Company had the following bank reconciliation at March 31: All reconciling items at March 31 cleared through the bank in April. Outstanding checks at April 30 totaled $15,000. What is the amount of cash disbursements per books in April?

An analysis and aging of accounts receivable of the Lucille Company at December 31, 2011, showed the following: Compute the net realizable value of the accounts receivable of Lucille Company at December 31, 2011.

If the cash balance shown in a company's accounting records is less than the correct cash balance, and neither the company nor the bank has made any errors, there must be

Selected information from the accounting records of Ellison Manufacturing Company follows: What is the number of days' sales in average inventories for the year?

On December 1, 2011, Barnes Company received a $10,000, 60-day, 6% note from a customer. On December 31, 2011, the company discounted the note at the bank. The bank's discount rate is 9%. What were the proceeds that Barnes received from the discounting of the note?

A debit balance in the Allowance for Doubtful Accounts

The FASB specified in Statement No. 140 three conditions that must be met if a transfer of receivables is to accounted for as a sale. Which of the following is not one of the three conditions specified?

For tax purposes, an entry should be made to Bad Debt Expense

Charles Company has two checking accounts. A special account is used for the weekly payroll only, and the general account is used for all other disbursements. Every week, a check in the amount of the net payroll is drawn on the general account and deposited in the payroll account. The company maintains a $5,000 minimum balance in the payroll account. On a monthly bank reconciliation, the payroll account should

Richards Company uses the allowance method of accounting for bad debts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year. The following additional information is available for the current year: See Richards Company information above. If Richards bases its estimate of bad debts on the aging of accounts receivable, doubtful accounts expense for the current year ending December 31 is

Securitization is a widely-used arrangement for selling receivables. Many companies use credit card securitization and other forms of securitizations as part of their overall financing strategies. Required: Explain the nature of securitization, how it can be implemented, and the appropriate accounting procedures related to a securitization. Include in your discussion the effects of recourse provisions on the securitization.

National Appliance Center sells washing machines that carry a three-year warranty against manufacturer's defects. Based on company experience, warranty costs are estimated at $60 per machine. During the year, National sold 48,000 washing machines and paid warranty costs of $340,000. In its income statement for the year ended December 31, National should report warranty expense of

In preparing its bank reconciliation for the month of February, James Company has available the following information: What is the corrected cash balance at February 28?

For the month of December, the records of Balin Corporation show the following information: The corporation uses the direct write-off method in accounting for uncollectible accounts receivable. What are the gross sales for the month of December?

Which of the following items would be added to the book balance on a bank reconciliation?

Which of the following is not acceptable in estimating uncollectible accounts receivable under GAAP?