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111.On July 1, 2016, Cromartie Furniture established a $150 petty

Question : 111.On July 1, 2016, Cromartie Furniture established a $150 petty : 1412684

 

 

111.On July 1, 2016, Cromartie Furniture established a $150 petty cash fund. A check for $150 was made out to the petty cash custodian. During July, the petty cash custodian paid the following bills from the petty cash fund:

 

Office supplies$ 36

Postage22

Delivery charges40

Bottled water28

Total$126



At the end of July the petty cash fund was replenished.

The journal entry to establish the petty cash fund includes:


 
 

A.A credit to petty cash and a debit to cash for $150.

 

B.A debit to petty cash and a credit to cash for $150.

 

C.A credit to cash and a debit to various expenses for $126.

 

D.A credit to petty cash and a debit to various expenses for $126.

 

 

 

 

112.On July 1, 2016, Cromartie Furniture established a $150 petty cash fund. A check for $150 was made out to the petty cash custodian. During July, the petty cash custodian paid the following bills from the petty cash fund:
 

Office supplies$ 36

Postage22

Delivery charges40

Bottled water28

Total$126


At the end of July the petty cash fund was replenished.

The journal entry to replenish the petty cash fund includes:


 
 

A.A credit to petty cash and a debit to various expenses for $126.

 

B.A debit to petty cash and a credit to cash for $150.

 

C.A credit to cash and a debit to various expenses for $126.

 

D.None of these answer choices are correct.

 

 

 

 

113.Hazelton Manufacturing prepares a bank reconciliation at the end of every month. At the end of May, the general ledger checking account showed a balance of $1,360 and the bank statement showed a bank balance of $1,445. Outstanding checks totaled $350 and deposits in transit were $150. The bank statement listed service charges of $30 and NSF checks totaling $85. The corrected cash balance is: 
 
 

A.$1,130.

 

B.$1,160.

 

C.$1,245.

 

D.$1,445.

$1,360 - 30 - 85 = $1,245, or
$1,445 - 350 + 150 = $1,245

 

 

 

114.Brockton Carpet Cleaning prepares a bank reconciliation at the end of every month. At the end of July, the balance in the general ledger checking account was $2,750 and the bank balance on the bank statement was $2,980. Outstanding checks totaled $680 and deposits in transited were $400. The bank statement revealed that a check written for $120 was incorrectly recorded by Brockton as a $220 disbursement. The bank statement listed service charges and NSF check charges totaling $150. The corrected cash balance is:  
 
 

A.$2,270.

 

B.$2,550.

 

C.$2,470.

 

D.$2,700.

$2,750 + 100($220 - 120) - 150 = $2,700, or
$2,980 - 680 + 400 = $2,700

 

 

 

115.Which of the following is true about accounting for a troubled debt restructuring? 
 
 

A.If a receivable becomes impaired, it is remeasured at the discounted present value of the cash flows that were originally expected to be collected, but at a revised discount rate.

 

B.Receivables are not remeasured; instead, fair values are obtained from reliable factors.

 

C.If a receivable is continued, but with modified terms, a loss is typically recorded.

 

D.Receivables are never settled outright at the time of a restructuring.

 

 

 

 

116.Brewer Inc. is owed $200,000 by Carol Co. under a 10% note with two years remaining to maturity. Due to financial difficulties Carol Co. did not pay the prior year's interest. Brewer agrees to settle the receivable (and accrued interest) in exchange for a cash payment of $150,000. The journal entry that Brewer would make to record this transaction would include a loss on troubled debt restructuring of: 
 
 

A.$0.

 

B.$20,000.

 

C.$50,000.

 

D.$70,000.

 

 

 

 

117.The O'Hara Group is owed $1,000,000 by Hilton Enterprises under an 8% note with three years remaining to maturity. The prior year of interest was unpaid. O'Hara agrees to restructure the note under terms that yield a present value of $880,000. The journal entry that O'Hara would make to record this transaction would include a loss on troubled debt restructuring of: 
 
 

A.$0.

 

B.$80,000.

 

C.$200,000.

 

D.$220,000.

 

 

 

 

118.Rebound Inc. reports under IFRS. In 2016 Rebound recognized an impairment of $200,000 due to a troubled debt restructuring. In 2017 Rebound was pleased to determine that more cash flows would be received from the receivable than was previously thought, such that, if the total impairment were to be calculated in 2017, it would be estimated as $150,000 rather than $200,000. How should Rebound treat this in its 2017 income statement? 
 
 

A.Rebound should ignore the change, given that recovery of its previous impairments is not allowed under IFRS.

 

B.Rebound should make a prior period adjustment of 2016 income, given that the impairment charge was in error.

 

C.Rebound should recognize an increase in 2017 net income of $50,000.

 

D.None of these answer choices are correct.

 

 

 

 

 

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