Exam 5: Cash and Receivables

Jackie Co.'s allowance for doubtful accounts was $15,000 at the end of 2013 and $205,000 at the end of 2012. For the year ended December 31, 2013, Jackie reported bad debt expense of $48,000 in its income statement. What amount did Jackie debit to the appropriate account in 2013 to write off actual bad debts?

Explain two problems associated with the direct write-off method.

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?

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?

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?

Which of the following is not a reason for preparing a bank reconciliation?

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

Soorya Inc. had the following balances for fiscal 2012. Additional information on 2012 transactions: Here is an aging of the accounts receivable: Required: a)How much cash was collected from accounts receivable during 2012? b)Prepare the journal entry to record the discounts using both the gross and net method of accounting; assume that the total discounts given related to sales totaling $450,000. Also prepare the journal entry that would be required if the discounts were not taken by customers under the net method. c)Assume all discounts were taken by customers and that the company used the gross method. Complete the following chart: d)What would the bad debt expense be if Soorya wanted to use the percentage of sales method and felt that its experience showed that 4.5% of sales were not collectible?

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

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.

Which of the following is one of the general criteria for recognizing an asset?

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

What is one way to segregate duties to improve controls over cash?

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?

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

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

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

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.

Which statement is not correct?