Exam 6: Cash and Receivables

Trade receivables are amounts due from customers and non-trade receivables are amounts due from all other parties.

During 2015, Davidson's first year of operations, the following transactions occurred: ∙ Credit sales of $2,000,000. ∙ Collections on account 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 the receivables portion of Davidson's first year operation's balance sheet as of December 31, 2015.

Pineapple's Fruit Smoothies began the year with a $4,200 credit balance in its Allowances for Doubtful Accounts. During the year, it accrued $21,500 of bad debt expense and wrote off accounts totaling $28,000. At year-end, a percentage of the outstanding accounts receivable indicated that a $4,800 allowance should be provided for on that date. The year-end adjustment for bad debt expense should be

When a company sells a customer's note to a bank, the discount rate is

After the company completes the bank reconciliation, it makes journal entries for adjustments

Zeus Inc. recorded credit sales of $1,750,000 during 2015. At December 31, 2015, the company had a $250,000 debit balance in Accounts Receivable and a $3,000 credit balance in Allowance for Doubtful Accounts. Required: a. Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 1% of credit sales. b. Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 8% of outstanding accounts receivable. c. Assume that a customer whose $3,300 account had been written off earlier in the year now pays the balance owed in full. Prepare the journal entry, or entries, to record the collection of this customer's account.

The accounting records and bank statement for Walkers, Inc. revealed the following information for April 30, 2013: Required: a. Prepare a bank reconciliation using good format. b. Prepare any necessary adjusting journal entries for April 30, 2013.

Which statement concerning notes receivable is false?

What two attributes do notes receivables have that account receivables do not?

Based on the following information: If bad debts are estimated to be 3% of net credit sales, the adjusting entry to recognize uncollectible accounts will include a debit to expense for

A sinking fund established for the purpose of paying off long term bonds would be recorded on the balance sheet as a cash equivalent.

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

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 not recorded by most companies because

Caymen Supplies frequently assigns its accounts receivable in order to obtain immediate cash. Required: Prepare journal entries for the following: a. The company assigned $1,340,000 of accounts receivable, receiving a 93% advance less service charges of $25,800. b. The company collected $830,000 of these receivables and remitted the collection to the finance company along with one month's interest at 15%.

Exhibit 6-1 O’Martin & Lowry, Inc. accepted a $150,000, 8%, 90-day note receivable for services rendered to a client. Thirty days later, O’Martin & Lowry discounted the note at a bank at 10%. Assume interest has not been recognized for the first month. -Refer to Exhibit 6-1. The entry to record the proceeds from the sale of the note would include a

Sarbanes-Oxley Act requires all U.S. companies to maintain adequate internal control systems.

Trainor Company estimates bad debt expense using a percentage of credit sales 5%). 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 $255,000. The bad debt expense for the year was

Cash equivalents include coin and currency, negotiable instruments, and certificates of deposit

Gordon Fish Co. prepares bank reconciliations that adjust to the correct balance of cash. You are given the following information:

Joan Bell, Inc. uses the bank reconciliation form that arrives at a corrected cash balance. Bank service charges will be