Exam 5: Cash and Receivables

Which of the following would be an example of segregation of duties?

Identify the two criteria for classifying an investment as a cash equivalent.

Which statement is correct?

The following accounts were abstracted from Almond Co.'s unadjusted trial balance at December 31,2019: The company estimates that 1.5 percent of the net credit sales will become uncollectable.After adjustment at December 31,2019,the allowance for doubtful accounts should have a credit balance of

Explain some controls that can be used in an organization to safeguard cash and other assets.

Family Fun reported cash sales of $250,000,credit sales of $750,000,cash collections from receivables of $500,000,bad debt write-offs of $25,000 and bad debt expense of $35,000 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?

Which statement best describes the net method of accounting for cash discounts?

Based on the following information for calendar 2018: If bad debts expense is estimated at 1.5% of credit sales,what is the balance in the allowance for doubtful accounts at year end?

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

Speed Motorcycles sold $550,000 of receivables to a factor to increase the company's liquidity.The company chose to factor these receivables without recourse.In exchange for these receivables,the factor paid Speed $485,000 on the date of transfer.Ultimately,the factor collected $525,000 from these receivables. Record the entry on Speed's books relating to the $550,000 factoring of accounts receivable.

Which statement about using the aging of accounts receivable to estimate bad debt expense is correct?

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

Marvelos Inc.reported credit sales of $1,000,000,cash sales of $100,000 and bad debt write-offs of $10,000 for last year.The ending balance in accounts receivable was $1,500,000.Bad debt expense was $15,000.The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year.What was the balance in the allowance for doubtful accounts at the end of the year?

Identify if the following investments meet the requirements to be classified as cash and cash equivalents.

Super Corp.reported credit sales of $2,000,000,cash sales of $200,000 and bad debt write-offs of $100,000 for last year.The ending balance in accounts receivable was $4,500,000.Bad debt expense was 2% of credit sales.The allowance for doubtful accounts had a balance of $400,000 at the beginning of the year.What was the balance in the allowance for doubtful accounts at the end of the year?

Johnson Credit Union is a small,regional financial institution with a loyal customer base.Like most financial institutions,Johnson has a significant portfolio of home mortgages.Because of the nature of its operations,the risks relating to these mortgages are geographically concentrated.To reduce this risk,the credit union securitized $25 million of mortgages receivable for proceeds of $21.5 million.Under the securitization arrangement,investors in the mortgage-backed securities bear the cost of any defaults on the mortgages.Johnson's only continuing involvement in the mortgages is the administration of the cash receipts and the transfer of that cash to the investors. Required: a.Should Johnson record this securitization as a sale or as a borrowing transaction? Explain. b.Record the entry in Johnson's books relating to Johnson's securitization of mortgage receivables.

What is included in "cash and cash equivalents"?

Gossamer Furnishings extends generous payment terms to its customers.As a result,it has accumulated a substantial portfolio of accounts receivable.To improve cash flow,the company decided to sell $600,000 of these receivables to a factor.The company had previously checked the credit worthiness of its customers,so it is confident that few accounts will become uncollectable.Therefore,Gossamer chose to factor these receivables with recourse.In exchange for these receivables,the factor paid Gossamer 93¢ on each dollar of receivables on the date of transfer.The factor also held 2¢ on each dollar for potential uncollectable accounts.Ultimately,the factor collected $593,800 from these receivables. Record the entries on Gossamer's books relating to the $600,000 factoring of accounts receivable.

During May 2018,ABC Company wrote a cheque (#345)to a supplier as a payment on its account.The cheque was written for the correct amount of $16,900.The May bank statement listed the cheque at $61,900 and an ending account balance of $(50,500)in overdraft. Required: a.Given the above information,prepare the portion of the May cash reconciliation that reconciles the bank balance to the cash balance to be used in the financial statements. b.Where on the balance sheet should the cash (or overdraft)balance be shown?