Exam 7: Cash and Receivables

The balance in accounts receivable at the beginning of 2016 was $300.During 2016,$1,600 of credit sales were recorded.If the ending balance in accounts receivable was $250 and $100 in accounts receivable were written off during the year,the amount of cash collected from customers during 2016 was:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

In a bank reconciliation,adjustments to the book balance could include adding or subtracting company errors.

Securitization of receivables is a type of secured borrowing.

What entry would Cherokee make on November 17,assuming the correct payment was received on that date?

Explain how a company could manipulate cash flow from operations by changing the extent to which it factors accounts receivable and treats those factoring arrangements as sales of receivables.

Assume a company has been maintaining a receivables factoring program for the past five years and has been experiencing the same level of sales,factoring,and bad debts over that period.Customers typically pay their receivables within 60 days.Which of the following is true with respect to the current period (all else equal)?

What amount of interest revenue would Frankenstein earn on these notes during 2017?

Rahal's adjusted allowance for uncollectible accounts at December 31,2016,is:

Which of the following is true about reporting cash under IFRS?

Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable.During 2016,Chez Fred's credit sales and collections were $125,000 and $131,000,respectively.What was the balance of accounts receivable on January 1,2016,if $180 in accounts receivable were written off during 2016 and if the allowance account had a balance of $750 on December 31,2016?

The journal entry to replenish the petty cash fund includes:

Briefly explain why the direct write-off of uncollectible accounts is not permitted by GAAP if bad debts are material.

Recognizing sales returns when merchandise is returned could result in an overstatement of income in the period of the related sale.

What entry would Harvey's make on June 10,assuming the customer made the correct payment on that date?

Which of the following is considered a sale of receivables?

Beethoven Music Company started business in March 2016.Sales for its first year were $400,000.Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars.Industry statistics suggest that 10% of the merchandise sold to customers will be returned.Beethoven estimated its sales returns based on the industry average.During the year,customers returned $30,000 in sales.Beethoven uses a perpetual inventory system. Required: Prepare summary journal entries to record (1)sales, (2)sales returns,and (3)the year-end adjusting entry for estimated sales returns.Assume that cash has not yet been collected for merchandise that could yet be returned.

Discounts on notes receivable are recognized as interest earned over the term of the related note.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Explain the transactions that typically would affect the discount on notes receivable account.