Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

Which of the following demonstrates a poor internal control procedure?

The Rye Corporation has provided the following information: Total sales were $1,200,000. Beginning net accounts receivable was $45,000. Ending net accounts receivable was $65,000. Sales returns and allowances totaled $100,000. What was Rye's average collection period?

Credit terms of "2/10,n/30" mean that if payment is made in two days,a 10% discount will be given; if not paid within two days,the full invoice price will be due in thirty days.

When a credit sale is made with terms of 2/10,n/30 on May 10 and the customer's check is received on May 19,which of the following is true about the May 19 journal entry?

At year end,Chief Company has a balance of $10,000 in accounts receivable of which $1,000 is more than 30 days overdue.Chief has a credit balance of $100 in the allowance for doubtful accounts before any year-end adjustments.Chief estimates that 1% of current accounts and 10% of accounts over thirty days are uncollectible.How much is bad debt expense?

Cyclone Inc.reported the following figures from their financial statements for the years 2009 through 2011: Net revenues \ 717,422 \ 1,110,178 \ 591,786 Gross profit 560,421 960,434 498,605 Net income (net loss) (92,788) 70,776 47,811 Cash flow from operations 106,850 509,707 204,496 Accounts receivable 68,648 90,561 56,454 Calculate the accounts receivable turnover for 2011 and 2010:

One of Hawk Company's customers returned products that cost Hawk $500,which was sold on account for $800.Which of the following correctly describes the affect of the return on the financial statements?

When preparing the statement of cash flows,the reason that we must adjust net sales revenue for the change in accounts receivables to convert net sales to cash collected from customers is that accounts receivable represents sales revenue not collected from customers at the beginning and end of the accounting year.

Clark Company estimated the net realizable value of their accounts receivable as of December 31,2011,based on an aging schedule of accounts receivable,to be $165,000.Clark has also provided the following information: The accounts receivable balance on December 31,2011 was $175,000. Uncollectible accounts receivable written-off during 2011 totaled $12,000. The allowance for doubtful accounts balance on January 1,2011 was $15,000. How much is Clark's 2011 bad debt expense?

Newark Company has provided the following information: Cash sales,$450,000 Credit sales,$1,350,000 Selling and administrative expenses,$330,000 Sales returns and allowances,$90,000 Depreciation expense,$101,000 Gross profit,$1,360,000 Increase in accounts receivable,$55,000 Bad debt expense,$33,000 Sales discounts,$43,000 How much are Newark's net sales?

A deposit in transit on a bank reconciliation should be

Deposits in transit are deducted from the book balance when preparing the bank reconciliation.

Newark Company has provided the following information: Cash sales,$450,000 Credit sales,$1,350,000 Selling and administrative expenses,$330,000 Sales returns and allowances,$90,000 Depreciation expense,$101,000 Gross profit,$1,360,000 Increase in accounts receivable,$55,000 Bad debt expense,$33,000 Sales discounts,$43,000 How much is Newark's gross profit percentage?

Which of the following correctly describes the effect of a journal entry involving the recording of a sales return?

Burke Company has just received its June 30 bank statement from Urban Bank.The bank statement and the cash account,summarized below,are to be reconciled for the month of June. Bank Statement Cash Account Balance, June 1 \ 5,200 Balance, June 1 \ 5,500 Deposits 9,200 Cash receipts 9,000 Interest paid by bank 240 Checks written (7,700) Checks cashed (7,475) Bank service charge (20) NSF check (Jimmy Dean) (100) Balance, June 30 \ 11,045 Balance, June 30 \ 10,800 Other Data: May June Deposit in transit at month end \ 600 \ 400 Outstanding checks at month end 300 525 Required: A.Prepare the June 30 bank reconciliation. B.Prepare the journal entries that should be made in the accounts of Burke Company as a result of the bank reconciliation.

Flyer Company has provided the following information: Cash sales,$150,000 Credit sales,$450,000 Selling and administrative expenses,$110,000 Sales returns and allowances,$30,000 Gross profit,$490,000 Accounts receivable,$110,000 Sales discounts,$14,000 Allowance for doubtful accounts credit balance,$1,200 Flyer estimates bad debt expense assuming that 5% of accounts receivable is estimated to be uncollectible.What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

Which of the following statements is false?

Cash equivalents on the balance sheet include certificates of deposit with maturities of 60 days or more.

The Conner Company's August 1,2010 cash balance on their books was $90,000.As of August 1,outstanding checks total $44,000 and deposits in transit total $30,000.How much was Conner's August 1,2010 cash balance on their bank statement?

The CHS Company has provided the following information: Accounts receivable written-off as uncollectible during the year amounted to $11,500. The accounts receivable balance at the beginning of the year was $150,000. The accounts receivable balance at the end of the year was $210,000. The allowance for doubtful accounts balance at the beginning of the year was $14,000. The allowance for doubtful accounts balance at the end of the year after the recording of bad debt expense was $12,900. Credit sales during the year totaled $900,000. How much cash was received from collections of accounts receivable?