Exam 7: Cash and Receivables

Grieves Company has the following items at year end: Cash in bank...................................................................................$42,,000 Petty cash........................................................................................1,500 Short-term paper with maturity of 2 months.................................6,500 Postdated chequer..........................................................................3,400 Grieves should report cash and cash equivalents of

Which of the following statements is correct?

Reporting of cash At December 31, 2020, Burkina Ltd.'s general ledger Cash balance was $24,600. In addition, Burkina held the following items in its safe on December 31: 1. A cheque for $780 from Zambia Ltd. received December 30, 2020, which was not deposited until January 2, 2021. 2. A cheque from Zanzibar Inc. for $1,800 that had been deposited on December 20, but was returned NSF on December 29. The cheque was to be re-deposited on January 3, 2021. The original deposit has been included in the December 31 chequebook balance. 3. Coin and currency on hand: $2,630. Instructions Calculate the proper amount to be reported as cash on Burkina's statement of financial position at December 31, 2020.

Bank overdrafts are generally reported as

Dishonoured note receivable On November 1, 2019, Mandrake Corp. and Olivier Ltd. reached an agreement to convert Olivier's outstanding account receivable of $27,000 into a 3-month, 8% note receivable. On February 1, 2020, Olivier dishonoured the note receivable. Prepare all required journal entries for Mandrake for the above transactions, assuming a December 31 year end and assuming adjusting journal entries are recorded at the end of its fiscal year.

Starlight Ltd. assigned $600,000 of Accounts Receivable to Moonbeam Management as security for a loan of $580,000. Moonbeam charged a 3% commission on the amount of the loan; the interest rate on the loan was 10%. During the first month, Starlight collected $320,000 of the assigned accounts, after deducting $500 of discounts. As well, Starlight accepted returns worth $2,600 and wrote off assigned accounts totalling $4,500. The amount of cash Starlight received from Moonbeam at the time of the transfer was

For the year ended December 31, 2020, Ferguson Corp. estimated its allowance for doubtful accounts using the year-end aging of accounts receivable. Additional information for calendar 2020 follows: Allowance for doubtful accounts, beginning. \7 4,000 Estimated uncollectible accounts during 2020 (1 \% of credit sales of \ 8,000,000) 80,000 Uncollectible accounts written off during year. 104,000 Estimated uncollectible accounts per year-end aging. 148,000 For the year ended December 31, 2020, Ferguson's bad debt expense should be

Reconciliation of cash account Bestway Corp.’s book balance of the cash account shows an unadjusted balance of $72,000 before reconciliation. The following data was also available: 1. The bank statement does not include a deposit of $3,100 made on the last day of the month. 2. The bank statement shows a collection of a note receivable by the bank of $1,400 and a customer's cheque for $420 was returned because it was NSF. 3. A customer's cheque for $450 was recorded on the books as $540. 4. A cheque written for $185 was recorded as $851. Instructions Calculate the correct balance in the cash account.

Using the allowance method, when an account receivable is written off, the account to be debited is

On Cairo Corp.'s December 31, 2020 statement of financial position, the current receivables consisted of the following: Trade accounts receivable \7 4,000 Allowance for doubtful accounts (3,500) Claim against shipper for goods lost in transit (Nov. 2020). 4,000 Selling price of unsold goods sent by Cairo on consignment at 130 percent of cost (not included in Cairo's ending inventory) 29,000 Security deposit on lease of warehouse used for storing some inventories. Total At December 31, 2020, the correct total of Cairo's current net receivables was

In preparing its September 30 bank reconciliation, Frieda Corp. has the following information available: Balance per bank statement............................... $\$ 34,510$ Deposit in transit......................................................4,650 Customer's cheque returned NSF..............................325 Outstanding cheques.....................................................1,925 Bank service charges for September..............................40 Frieda's correct cash balance at September 30 is Frieda's correct cash balance at September 30 is

If a note receivable was issued at an amount that is more than its face value, then

Because of their special nature, nontrade receivables are generally

The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

If the month-end bank statement shows a balance of $51,000, outstanding cheques are $14,000, a deposit of $3,000 was in transit at month end, and a cheque for $800 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Entries for bad debt expense A trial balance before adjustment included the following: Accounts receivable. \1 20,000 Allowance for doubtful aceounts. \7 30 Sales 51,000 Sales returns and allowances 8,000 . Instructions Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by taking a) 5% of gross accounts receivable, and b) 1% of net sales.

Restricted cash balances Some lending institutions require customers who borrow money from them to keep minimum cash balances in their chequing or savings accounts. What are these balances called? Explain why they might need to be separately reported on the company's statement of financial position.

Receivables are initially valued based on their ______.

"Allowance for Doubtful Accounts" is a(n)

The ratio that is used to assess the liquidity of accounts receivable is the