Exam 5: Cash and Receivables

A $100,000 sale transaction is made with terms of 5/10,net 30.What entry is made to the accounts receivable account when the sale is made under the net method of recording a discount?

Maximum Inc.reported credit sales of $880,000,bad debt write-offs of $297,000 and bad debt expense of $257,000 for last year.Accounts receivable had a balance of $1,367,000 at the beginning of the year and $1,381,000 at the end of the year.How much cash was collected from customers during the year?

Explain why a bank reconciliation is necessary.

Royal Inc.offers terms of 4/10,net 60 for its accounts receivable.The company issues an invoice for $73,000.How should Royal record the invoice if it uses (a)the gross method and (b)the net method?

Family Fun reported credit sales of $800,000,cash collections of $550,000 and bad debt expense of $15,000 for last year.Accounts receivable had a balance of $1,000,000 at the beginning of the year.Assuming there are no write-offs made during the year,what was the ending balance in the accounts receivable account?

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

EasyCredit Inc.reported cash sales of $45,000,credit sales of $280,000 and write-offs of bad debts of $7,000 for last year.Accounts receivable had a balance of $327,000 at the beginning of the year and $381,000 at the end of the year.How much cash was collected from customers during the year?

Medical Machines reported credit sales of $800,000,cash collections of $550,000 and bad debt write-offs of $15,000 for last year.Accounts receivable had a balance of $1,000,000 at the beginning of the year.What was the ending balance in the accounts receivable account?

What is included in "cash and cash equivalents"?

Eastwick Company is preparing its financial statement for the year ended December 31,2017.A summary of Eastwick's accounts receivable sub-ledger shows the following information: Required: a.Calculate the amount of bad debts expense required for 2017. b.Present the journal entry to record bad debts expense for 2017. c.Present the journal entry that was used to record write-offs for 2017. d.Independent of the information above,suppose Eastwick factored $1,500,000 of receivables without recourse.In exchange,it received $1,380,000.Present the journal entry to record this transfer of receivables. e.Independent of part (d),Eastwick instead factored the $1,500,000 of receivables with recourse and received $1,430,000 cash.Both Eastwick and the factor anticipate that 2% of these receivables will prove to be uncollectable,so the factor has held this amount to cover any uncollectable accounts.Should the amount of uncollectable accounts prove to be more or less than 2%,the difference will be paid by/refunded to Eastwick.Present the journal entry to record this transfer of receivables.

Which statement about "cash and cash equivalents" is correct?

Which statement about internal controls over cash is correct?

What is not included in "cash and cash equivalents"?

The December 31,2018 financial statements of Pure Air Works (PAW)show $125,000 for "Note receivable." You learn that the company provided cash of $125,000 to a customer (a new chain of hotdog stands)in exchange for a promissory note. The note was issued on January 1,2017,bearing interest at 7% per year (which approximates the market interest rate),with principal and interest (total $133,750)due on January 1,2018. However,the hotdog chain has had numerous delays obtaining the required licenses to operate on street corners. Consequently,on January 1,2018,the chain and PAW renegotiated the promissory note so that the $133,750 in principal and interest would come due on January 1,2020.Aside from the initial recording of the note receivable on January 1,2017,PAW has not recorded any other journal entries relating to this note. Present the necessary journal entries to correct PAW's accounts in 2017 and 2018.Round all values to the nearest dollar.

Fitness Machines reported cash sales of $50,000,credit sales of $800,000 and bad debt expense of $150,000 for last year.Accounts receivable had a balance of $1,000,000 at the beginning of the year and $1,250,000 at the end of the year.Assuming there are no write-offs during the year,how much cash was collected from customers during the year?

The following accounts were abstracted from Almond Co.'s unadjusted trial balance at December 31,2019: The company estimates that 5 percent of the gross accounts receivable will become uncollectable.After adjustment at December 31,2019,the allowance for doubtful accounts should have a credit balance of

Explain how a company's revenue recognition policy can be used to manipulate earnings.

Jackie Co.'s allowance for doubtful accounts was $15,000 at the end of 2019 and $205,000 at the end of 2018.For the year ended December 31,2019,Jackie reported bad debt expense of $48,000 in its income statement.What amount did Jackie debit to the appropriate account in 2019 to write off actual bad debts?

Spiders Geophysics issues an invoice to Huslia Goldmines for $150,000 on August 5,2018.The invoice states the payment terms are 5/10,net 30.Huslia pays the invoice on August 14,2018.How should Spiders record the invoice and its subsequent collection if it uses (a)the gross method or (b)the net method?

Which statement is correct?