Exam 5: Cash and Receivables

Sabrina Inc.reported credit sales of $700,000 and cash sales of $100,000.The ending balance in accounts receivable was $1,500,000.Bad debt expense is estimated at 1% of credit sales.The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year.What was the bad debt expense for the year?

McGraw Motors both sells and leases vehicles.With sales temporarily slowing due to the economy,the company factored a significant portion of its lease receivables.The company factored with recourse receivables with a carrying amount of $22 million in exchange for $21.45 million less a holdback of $550,000 for potential uncollectable accounts.Due to poor economic conditions,the actual uncollectable accounts amounted to $900,000. Record the entries on McGraw's books relating to the $22 million factoring of lease receivables.

The accounting records of 10Com Ltd.show the following for 2018: *The credit side of the journal entry (or entries)related to this amount went to allowance for doubtful accounts. ** Account write-offs were debited to the allowance for doubtful accounts. More Info For 2018,cash sales were $970,000,while credit sales were $720,000.Recently,10Com's management has become concerned about various estimates used in its accounting system,including those relating to receivables and uncollectable accounts.The company is considering two alternatives. For the purpose of comparing these two alternatives,the company has made the following estimates for each alternative. • Alternative 1: Bad debts approximating 0.7% of credit sales. • Alternative 2: Aging of the accounts receivable at the end of the period,where 80% would incur a 2% loss,while the remaining 20% would incur a 9% loss. Required: For each of the two alternatives listed above,calculate the bad debts expense for 2018 and the allowance for doubtful accounts balance at the end of 2018.

K-Jones Ltd.reported opening balances of $1,712,000 in accounts receivable and $147,000 in the allowance for doubtful accounts at the beginning of last year.During the year,sales on account totaled $2,500,000,collections of accounts receivable were $1,300,000,bad debt write-offs were $65,000 and bad debt expense was $89,000.What was the ending balance in the allowance for doubtful account?

Micelle Inc.reported credit sales of $600,000 and cash collections of $450,000 for last year.The ending balance in accounts receivable was $800,000.Bad debt expense is estimated at 1% of credit sales.The allowance for doubtful accounts had a balance of $80,000 at the beginning of the year.Assuming there are no write-offs made during the year,what was the balance in the allowance for doubtful accounts at the end of the year?

Pauline Company estimates the allowance for doubtful accounts by aging its accounts receivable.At the end of 2018,the balance in the allowance account was $50,000.During 2019,the company wrote off $5,000 in bad debts and collected a $3,000 receivable that had been previously written off as uncollectable.At the end of 2019,the aging schedule indicated that the balance of the allowance for doubtful accounts should be $64,000.What is the bad debts expense for 2019?

What amount will be included in "cash and cash equivalents"?

On January 1,2019,Color Company agreed to sell a diamond to a customer at a special price of $4,000.In return,the customer signed a non-interest bearing note payable to Color Company.Payment terms were $800 on January 1,2019,and $800 each January 1 from 2020 to 2023.Color normally charges 8% interest to its customers. What amount of revenue and accounts receivable should Color recognize on January 1,2019?

What dollar amount will be included in "cash and cash equivalents"?

Explain what is meant by "channel stuffing" and how this can be used to manipulate earnings.

Small Company (SC)is in its fourth year of retail operations.The owner/manager previously employed a part-time bookkeeper to sign cheques,as well as to prepare journal entries,bank reconciliations,and monthly financial statements.SC has just hired you as the first full-time accountant to replace the bookkeeper,and you are preparing the December 31,2018 financial statements. Required: a.Briefly explain the concept of "segregation of duties." b.Identify an internal control issue relating to SC's cash-handling procedures,and provide your recommendation(s)to improve SC's internal controls over cash.

Beebo Ltd.provides for doubtful accounts based on 6% of credit sales.The following data are available for 2018. How much should the balance in the allowance for doubtful accounts be at December 31,2018?

Micelle Inc.reported credit sales of $700,000 and cash sales of $100,000 for last year.The ending balance in accounts receivable was $1,500,000.Bad debt expense is estimated at 1% of credit sales.The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year.Assuming there are no write-offs made during the year,what was the balance in the allowance for doubtful accounts at the end of the year?

Khanna Inc.had the following transactions,information and balances in its accounting records for fiscal 2018: (CAD = Canadian dollars;USD = U.S.dollars) Required: a)Determine the amount of "cash" that will be reported on the balance sheet. b)Determine the amount of "cash equivalents" that will be reported on the balance sheet. c)Determine the amount of "trade accounts receivable" that will be reported on the balance sheet. d)Determine the amount of "other receivables" that will be reported on the balance sheet. e)Explain how the allowance for doubtful accounts will be presented on the balance sheet.

Explain why it is important to segregate duties of employees dealing with cash in an organization.Provide at least three examples of ways which this segregation could be made on the receivables side.

Thineesha Corp.reported credit sales of $1,000,000 and cash sales of $100,000 for last year.The ending balance in accounts receivable was $1,500,000.Bad debt expense is estimated at 1% of ending accounts receivable.The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year.What was the bad debt expense for the year?

Which statement is correct?

Pessimist Inc.reported credit sales of $5,400,000 and $4,800,000 for the years ended December 31,2017 and 2018,respectively.Information on trade accounts receivable for the company is presented below. The balance of the allowance for doubtful accounts as of January 1,2017 was $15,000.In addition,you learn that the company wrote off specific accounts of $18,500 in 2017,and the bad debts expense was $13,000 in 2018. Required: a.Determine the bad debts expense for 2017. b.Determine the amount of receivables written off during 2018. c.Prepare the journal entry to record the bad debts expense for 2017.

Which statement is correct about estimating the allowance for doubtful accounts?

Which statement is correct about recording an allowance for doubtful accounts?