Exam 5: Cash and Receivables

What is included in "cash and cash equivalents"?

Sahil 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. What was the bad debt expense for the year?

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

A $50,000 sale transaction is made with terms of 2/10, net 30. Assuming that the customer takes the discount, what amount is booked to the "cash discount" account under the net method of recording a discount?

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

Marvelos Inc. 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. 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?

Which statement is not correct?

Which statement is correct?

Which statement is correct?

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.

At the end of its first year of operations, December 31, 2013, Felicity Ltd.'s accounts show the following amounts: The company estimates that the following amounts of accounts receivable will not be collectible: What should be the amount of bad debt expense for the year ended December 31, 2013?

Which statement about receivables is correct?

Pauline Company estimates the allowance for doubtful accounts by aging its accounts receivable. At the end of 2012, the balance in the allowance account was $50,000. During 2013, the company wrote off $5,000 and collected a $3,000 receivable that had been previously written off as uncollectible. At the end of 2013, the aging schedule indicated that the balance of the allowance for doubtful accounts should be $64,000. What is the bad debt expense for 2013?

Which statement is correct about the bank reconciliation?

The following accounts were abstracted from Almond Co.'s unadjusted trial balance at December 31, 2013: Debit Credit Net credit sales $2,950,000 Accounts receivable $800,000 Allowance for uncollectible accounts 11,000 The company estimates that 1.5 percent of the net credit sales will become uncollectible. After adjustment At December 31, 2013, the allowance for doubtful accounts should have a credit balance of

Pomegranite Company's bank balance on its October 31, 2012 bank statement is $11,500. Pomegranite's accountant is preparing a bank reconciliation and determined that three cheques issued by Pomegranite to its suppliers for a total of $6,500 had not yet cleared the bank. Also, a deposit for $700 made by Pomegranite on October 31 did not appear on the bank statement. Bank service charges of $240 appear on the bank statement, but have not yet been recorded in the general ledger. Given the above information, prepare a bank reconciliation to determine the correct cash balance that should be reflected in Pomegranite's general ledger at October 31, 2012.

Explain why the definition of cash and cash equivalents is important for the financial statements. How would a transfer from one bank account to another be reported in the cash flow statement?

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?

Which statement about internal controls over cash is correct?

Which statement is correct?