Exam 7: Cash and Receivables

The accounts receivable turnover ratio is computed by dividing

Vasguez Corporation had a 1/1/14 balance in the Allowance for Doubtful Accounts of $30,000. During 2014, it wrote off $21,600 of accounts and collected $6,300 on accounts previously written off. The balance in Accounts Receivable was $600,000 at 1/1 and $720,000 at 12/31. At 12/31/14, Vasguez estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2014?

Use the following information to answer Questions 7 and 8. Johnstone Company has a loan receivable with a carrying value of $125,000 at December 31, 2013. On January 1, 2014, the borrower, Ralph Young Industries, declares bankruptcy, and Johnstone estimates that it will collect only 45% of the loan balance. -Assume that on January 4, 2015, Johnstone learns that Ralph Young Industries has emerged from bankruptcy. As a result, Johnstone now estimates that all but $11,500 will be paid on the loan. Under IFRS, which of the following entries would be made on January 4, 2015?

Which of the following should be recorded in Accounts Receivable?

All of the following may be included under the heading of "cash" except

Finley, Inc.'s checkbook balance on December 31, 2014 was $42,400. In addition, Finley held the following items in its safe on December 31.(1) A check for $900 from Peters, Inc. received December 30, 2014, which was not included in the checkbook balance.(2) An NSF check from Garner Company in the amount of $1,800 that had been deposited at the bank, but was returned for lack of sufficient funds on December 29. The check was to be redeposited on January 3, 2015. The original deposit has been included in the December 31 checkbook balance.(3) Coin and currency on hand amounted to $2,900.The proper amount to be reported on Finley's balance sheet for cash at December 31, 2014 is

Amortization of discount on note. On December 31, 2014, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $600,000, a due date of December 31, 2017, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%. The following interest factors are provided: Instructions (a) Determine the present value of the note. (b) Prepare a Schedule of Note Discount Amortization for Green Company under the effective interest method. (Round to whole dollars.) (c) Explain how the accounting for a zero-interest-bearing note would differ in (a) and (b) above.

71. The accounts receivable turnover ratio measures the

In which account are post-dated checks received classified?

Factoring Accounts Receivable. On May 1, Dexter, Inc. factored $1,200,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Dexter was to handle disputes concerning service, and Quick Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Quick Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts. Instructions (a) Prepare the journal entry required on Dexter's books on May 1. (b) Prepare the journal entry required on Quick Finance's books on May 1. (c) Assume Dexter factors the $1,200,000 of accounts receivable with Quick Finance on a with recourse basis instead. The recourse provision has a fair value of $21,000. Prepare the journal entry required on Dexter's books on May 1. (d) Explain the main advantage and disadvantage of selling receivables (1) without recourse and (2) with recourse.

On the December 31, 2014 balance sheet of Vanoy Co., the current receivables consisted of the following: At December 31, 2014, the correct total of Vanoy's current net receivables was

Antique Company has notes receivable that have a fair value of $920,000 and a carrying amount of $710,000. Antique decides on December 31, 2014, to use the fair value option for these recently-acquired receivables. The adjusting entry to record this change will include a:

The accounts receivable turnover ratio is computed by dividing net sales by the ending net receivables.

Bank overdrafts are always offset against the cash account in the balance sheet.

Smithson Corporation had a 1/1/14 balance in the Allowance for Doubtful Accounts of $20,000. During 2014, it wrote off $14,400 of accounts and collected $4,200 on accounts previously written off. The balance in Accounts Receivable was $400,000 at 1/1 and $480,000 at 12/31. At 12/31/14, Smithson estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2014?

Sun Inc. factors $3,000,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $150,000. What would be recorded as a gain (loss) on the transfer of receivables?

Consider the following: Cash in Bank - checking account of $18,500, Cash on hand of $500, Post-dated checks received totaling $3,500, and Certificates of deposit totaling $124,000. How much should be reported as cash in the balance sheet?

Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account

Ace Co. prepared an aging of its accounts receivable at December 31, 2014 and determined that the net realizable value of the receivables was $600,000. Additional information is available as follows: For the year ended December 31, 2014, Ace's uncollectible accounts expense would be

Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?