Exam 7: Financial Assets: Cash and Receivables

B owes C $3,000 per year,due over the next six years.However,C feels he needs the cash now and wants to make an offer to B for settlement at this time.If you were B,to the nearest dollar what is the maximum you would be willing to pay (assuming you have the cash to pay) in settlement today if the current interest rate is 15 percent? (Assume the first payment is due one year from today.) $_______________________.

Cash management involves the planning and control of cash to efficiently accomplish all of the following except:

When accounts receivable are factored with recourse and are accounted for as a loan,what account does the transferor credit?

The estimation of bad debt expense by using a percentage of credit sales produces the same results,as an aging of accounts receivable.

The "adjusted or correct cash balance" in a bank reconciliation is always equal to the bank balance plus all deposits in transit.

When receivables are factored without recourse,the transferor generally:

The cash account and bank statement for ABC Company for the month of October were as follows: CASH ACCOUNT* Bal. Sept. 30 11,000 Cheques Deposits 30,000 Other data for September: Sept.30 cash on hand,$500 Sept.30 outstanding checks,$900 Sept.30 deposits in transit,$1,400 October 31 cash on hand,$480. BANK STATEMENT SUMMARIZED** \begin{array} { l } \text {Balance, Sept 30 . }&\$10,000 \\\text {Deposits. }& 21,400\\\text {Cheques. }&(20,900) \\\text {Note collected for \mathrm{ABC} including \( 10 \% \) interest). }&1,100 \\\end{array} Returned cheque-previously deposited cheque from customer $10 \%$ interest). }&1,100 \\ \end{array} Returned cheque-previously deposited cheque from customer Required: (a) Complete a bank reconciliation in all respects (note-you must compute the outstanding cheques and unrecorded deposits on October 31): (b) Give all journal entries that should be made based upon your bank reconciliation. " class="answers-bank-image d-inline" loading="lazy" > Required: (a) Complete a bank reconciliation in all respects (note-you must compute the outstanding cheques and unrecorded deposits on October 31): (b) Give all journal entries that should be made based upon your bank reconciliation.

What would be the present value on January 1,year 1,of a $6,000 note (this amount includes both principal and interest) which is payable in full on December 31,year 4,at a 12 percent interest rate,assuming: (a) Annual discounting? $_______________________. (b) Semi-annual discounting? $_______________________. (c) Quarterly discounting? $_______________________.

Which of the following procedures is not consistent with good control of cash receipts?

An advantage of relating a company's bad debt experience to its accounts receivable is that this approach:

A company uses the allowance method of accounting for bad debt.During 2001,an important customer became bankrupt and a related receivable of $6,400 was deemed uncollectible.The 2001 entry to record this event would be: 1 Bad debt expense.. 6,400 Allowance for doubtful accounts... 6,400 2 Loss on receivable. 6,400 Accounts receivable. 6,400 3 Bad debt expense. 6,400 Accounts receivable. 6,400 4 Loss on receivable. 6,400 Allowance for doubtful accounts... 6,400 5 Allowance for doubtful accounts.. 6,400 Accounts receivable 6,400

Which of the following procedures is the least essential attribute of a cash disbursement control system?

Company M assigned a receivable from AB to the XY Finance Company on a "non-notification" basis.On this basis:

Demand loans must be classified as long-term liabilities.

X borrows money from the bank by signing a non-interest-bearing $1,000 note payable due at the end of one year.The going rate of interest for notes of this type is 9 percent. How much cash did X receive? $_______________________.

With compounding,the interest earned each period on an amount invested at a fixed rate of interest increases over time.

Cash held by a foreign subsidiary that is not readily available to the parent must not be included with cash and cash equivalents on the consolidated Statement of Financial Position.

Choosing to account for a transfer of accounts receivable as a sale rather than a borrowing would result in:

At the end of 2008 but before adjusting entries were recorded,the records of a corporation showed the following: Required: Provide amounts for the following tabulation (show computations): Income Statement: (a) Bad debt expense Balance sheet: (b) Accounts receivable (c) Allowance for doubtful accounts

Total sales for the period amounted to $100,000,of which 60 percent was on credit.The unadjusted trial balance showed Accounts receivable of $20,000 and the Allowance for doubtful accounts reflected a $500 credit balance (before the write off of a bad account of $100).The bad debt experience ratio based on the ending balance in accounts receivable is 3 percent.Bad debt expense for the period should be reported as $_____________________.