Exam 7: Financial Assets: Cash and Receivables

You have been provided with the following information for XYZ Corporation and its bank,ABC Trust Company. From the Bank Statement at the end of May 2002: Ending balance \ 30,399.00 Bank charges 26.10 NSF cheque 5.400.00 Interest collected on a note for the company by the bank 635.10 From the cash records of the company at the end of May 2002: Outstanding cheques: Additional information: Error on cheque No.12.The cheque was correctly drawn for $882.00,but was shown as $828.00 on the bank statement. (a) Based on the information above,prepare a bank reconciliation. (b) Show any adjusting entries that would have to be shown on the books of XYZ Corporation.

At the end of the accounting year,December 31,2004,a company had a petty cash fund balance of $600,a chequing account balance of $34,000 in Bank A,an overdraft of $800 with Bank B,and $4,000 in customer payments in the form of money orders.Assuming no other differences between the company books and the bank balances,what cash amount should the company report on its 2004 balance sheet?

Asset-backed commercial paper may or may not be considered a cash equivalent,depending on the term and risk profile of these investments.

In reconciling the bank balance with the book cash balance,which of the following would not cause the bank balance shown on the bank statement to be lower than the unadjusted book balance?

When the allowance method of recognizing bad debt expense is used,the typical write off of a specific customer's account:

A company reported the following items for the year 2007: The December 31,2007 (end of the reporting period) adjusting entry for Bad Debt and Doubtful Accounts should be for the amount of,assuming: CASE A: The average experience loss rate on credit sales is 1/2 of 1 percent.$___________________. CASE B: The average experience loss rate on the year-end balance in accounts receivable is 2 percent.$________________.

When accounts receivable are factored without recourse,what account does the transferor credit?

The cash accounts and bank statement for a company for the month of September reflected the following amounts: Bal 125 BANK STATEMENT SUMMARIZED** Other related data: Outstanding cheques at end of August totalled $70. Unrecorded deposits at end of August totalled $600. Required: (a) Prepare a bank reconciliation for the month of September.Show all computations.Cash reported on the balance sheet should be $____________________.

Entel Inc.factored $100,000 of its accounts receivable without recourse with a factor and received $80,000.Of the $20,000 difference,$8,000 was the financing fee and the remainder was held back for sales adjustments.The firm and the factor agree to share equally the cost of any sales adjustments exceeding $12,000.Actual sales adjustments amounted to $14,000; the remaining amount of receivables was collected. What amount of sales adjustments will be recorded by Entel?

Long-term debt investments held for their contractual cash flows would be accounted for using Fair Value through Profit or Loss (FVTPL).

The bookkeeper for a small book store prepared an unadjusted trial balance as shown below: Prepare the appropriate entries indicated below.Each item is independent. (a) Record bad debt expense,assuming company experience indicates that 40 percent of sales are on account and 2 percent of net credit sales prove uncollectible. (b) Record bad debt expense if an aging schedule indicates that $10 of the receivable at the end of this year will not be collected. (c) Record bad debt expense if company policy requires the allowance for doubtful accounts be maintained at 5 percent of total trade receivables. (d) In April,four accounts totalling $5 were in excess of 90 days old and were determined by the collection department to be uncollectible. (e) In May of the year,one of the accounts written off in (d) was paid in full in the amount of $2.

A note receivable is said to be impaired if there is some uncertainty with regards to the collection of all or part of the note.

A company received two one-year notes in payment for merchandise sold.One note had a face amount of $6,000 and was interest-bearing at an annual rate of 18 percent.The other note had a face amount of $7,080 and was non-interest-bearing (its implied interest rate was 18 percent).

The 12/31/13 unadjusted trial balance of a company disclosed the following balances: Additionally,the firm has given up trying to collect on $5,000 of its accounts receivable but has not yet recorded the write-off entry.The firm does not use the direct write off method to estimate bad debt expense. (a) Provide the entry for the write-off of the receivable. (b) If the firm uses the percentage of sales allowance method for recording bad debt expense,and has experienced an average 6% rate of non collection based on sales,provide the entry to record bad debt expense for 2013. (c) Assume that after the firm recorded the $5,000 of write-offs,it determined that 18% of its remaining accounts receivable will be uncollectible under the aging method.Provide the entry to record bad debt expense.

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

The members of which of the following pairs of methods of accounts receivable financing are most similar?

Entel Inc.factored $100,000 of its accounts receivable without recourse with a factor and received $80,000.Of the $20,000 difference,$8,000 was the financing fee and the remainder was held back for sales adjustments.The firm and the factor agree to share equally the cost of any sales adjustments exceeding $12,000.Actual sales adjustments amounted to $14,000; the remaining amount of receivables was collected. What is the factor's net income from this factoring arrangement?

If a customer's cheque that has been deposited is returned with the bank statement marked "insufficient funds (NSF)," it would appear on the bank reconciliation as a deduction from the ending bank balance of the company.

In preparing its bank reconciliation for the month of March 2001,a company has available the following information: What should be the correct balance of cash at March 31,2001?

The Direct Write-off method of accounting is conceptually inferior to other methods since it does not match bad debt expense to revenues.