Exam 7: Cash and Receivables

Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account

The following information is available for Pirate Company: Allowance for Doubtful Accounts at December 31, 2020.................................... $\$ 7,000$ Credit Sales during 2021 .......................................................................................270,000 Accounts Receivable deemed worthless and written off during 2021...................2,800 As a result of a review and aging of Accounts Receivable in early January 2022, however, it has been determined that an Allowance For Doubtful Accounts of $7,500 is required at December 31, 2021. What amount should Pirate record as bad debt expense for calendar 2021?

Cookie Ltd. receives a four-year, $100,000 zero-interest-bearing note. The present value of this note is $82,270. Interest income to be recognized for calendar 2021 will be

Regarding treatment of cash and cash equivalents under ASPE vs. IFRS, which of the following is NOT correct?

Under the allowance method of recognizing uncollectible accounts, the entry to recognize the collection of a previously written off uncollectible account

The likelihood of loss because of the failure of the other party to fully pay the amount owed is called

ASPE/IFRS Differences While most requirements set out under ASPE are not likely to change in the short term, what is one area open to change? Explain.

What is the single most important indicator used to identify impaired accounts receivable?

Lebanon Ltd. prepared an aging of its accounts receivable at December 31, 2020 and determined that the net realizable value of the receivables was $290,000. Additional information for calendar 2020 follows: Allowance for doubtful accounts, beginning. ......................................... $\$ 34,000$ Uncollectible account written off during year.......................................... 23,000 Accounts receivable, ending.................................................................... 320,000 Uncollectible accounts recovered during year. ........................................5,000For the year ended December 31, 2020, Lebanon's bad debt expense should be

At the beginning of 2020, Graham Company received a three-year zero-interest-bearing $5,000 trade note. The market rate for equivalent notes was 10% at that time. Gannon reported this note as a $5,000 trade note receivable on its 2020 year-end statement of financial position and $5,000 as sales revenue for 2020. What effect did this accounting for the note have on Gannon's net earnings for 2020, 2021, 2022, and its retained earnings at the end of 2022, respectively?

Cash management from a business perspective Cite and explain three (3) practices and/or procedures companies engage in to manage their cash balances.

If receivables are used as collateral in borrowing transactions,

Control of petty cash Under an imprest petty cash system, the petty cash custodian has a significant amount of responsibility. Describe two (2) procedures a company could put in place to obtain more complete control over the petty cash fund.

Accounts receivable assigned Moonbeam Ltd. assigned $520,000 of their accounts receivable to Sunbright Finance Company, as security for a loan of $430,000. Sunbright charged a 3.5% commission on the face amount of the loan, and the note bears interest at 9%. During the first month, Moonbeam collected $260,000 on assigned accounts. This amount was paid to the finance company along with one month's interest on the note. Instructions Prepare the required journal entries on Moonbeam's books related to the transfer of the accounts receivable, the loan, and the payment to the finance company.

Definitions Provide clear, concise answers for the following: 1. What are cash and cash equivalents and how are they reported? 2. What are receivables and how are they reported? 3. How are receivables measured? 4. How are impairments relating to uncollectible receivables accounted for? 5. How can receivables be "converted" to cash prior to their collection from customers? 6. How are receivables analyzed? 7. Identify the main differences between private entity GAAP and IFRS with respect to the accounting for receivables?

During the year, Popsicle Inc., which uses the allowance method, made an entry to write off a $4,000 uncollectible account. Before this entry was posted, the balance in accounts receivable was $80,000 and the balance in the allowance account was $7,000. The net realizable value of accounts receivable after the write off entry was

Cookie Ltd. receives a four-year, $100,000, zero-interest-bearing note. The present value of this note is $82,270. Assuming the note was issued on January 1, 2020, and the effective interest method is used, the interest income to be recognized for calendar 2020 will be

Terminology In the space provided at right, write the word or phrase that is defined or indicated.

Note with fair value not equal to cash consideration On January 1, 2020, Cameroon Corp. lent $50,000 to its CEO, interest-free. The loan is repayable in full in five years. The market rate for similar loans (with similar credit risk) is 4%. Instructions a)Calculate the present value (fair value) of this loan (round to the nearest dollar). Why is it not the same as the actual cash advanced? b)Prepare the journal entry to record this transaction.

On February 1, 2020, Strawberry Corp. factored receivables with a carrying amount of $250,000 to Shortcake Inc. Shortcake assessed a finance charge of 3% of the receivables and retained 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on disposal to be reported in the income statement of Strawberry Corp. for February. Assume that Strawberry factors the receivables on a without recourse basis. The loss to be reported is