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Study Resources (Accounting)

MATCHING 258.Match the items below by entering the appropriate code letter in the space provided. A.Aging the accounts receivableF.Percentage of receivables basis B.Direct write-off methodG.Promissory note C.Obligation DueH.Dishonored note D.Trade receivablesI.Cash net realizable value E.Receivables turnover ratioJ.Credit card sales ____              1.A written promise to pay a specified amount on demand or at a definite time. ____              2.Sales that.
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              249.The difference between the cash in bank balance shown on the company's books and the cash balance shown on the bank statement may be caused by ______________ and by ______________ in recording transactions by either party.               250.In preparing a bank reconciliation, outstanding checks are ______________ from the cash balance.
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MATCHING 256.Match the items below by entering the appropriate code letter in the space provided. A.Prenumbered documentsG.Cash budget B.Custody of an asset should be kept H.Restricted cash separate from the record-keeping I.Invest idle cash for that assetJ.Canceled checks C.Television monitors, garment sensors K.NSF checks and burglar alarms are examplesL.Outstanding checks D.Bonding employeesM.Petty cash receipt E.CollusionN.Cash equivalents F.Cash ____              1.Segregation of duties. ____             .
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Ex. 232 The percentage of receivables approach to estimating bad debts expense is used by Hayes Company. On February 28, the firm had accounts receivable in the amount of $555,000 and Allowance for Doubtful Accounts had a credit balance of $370 before adjustment. Net credit sales for February amounted to $3,000,000..
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COMPLETION STATEMENTS               239.Internal control consists of the related methods and measures adopted within a business to ____________ its assets and enhance the ______________ and ______________ of its accounting records.               240.The principle of internal control that prevents one individual from being responsible for all the related activities of a given task.
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IFRS QUESTIONS               1.Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP? a.the use of allowance accounts and the allowance method. b.how to record discounts. c.how to record factoring. d.all of the above are essentially the same for IFRS and GAAP.               2.Which receivables accounting and reporting issue is essentially.
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Ex. 243 Shafer Company has the following accounts in its general ledger at July 31: Accounts Receivable $49,000 and Allowance for Doubtful Accounts $3,400. During August, the following transactions occurred. Aug.15Sold $20,000 of accounts receivable to More Factors, Inc. who assesses a 2% finance charge. 25Made sales of $1,500 on Visa credit cards..
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116.One might infer from a debit balance in Allowance for Doubtful Accounts that a.a posting error has been made. b.more accounts have been written off than had been estimated. c.the direct method is being used. d.Bad Debt Expense has been overestimated.               117.Using the allowance method, the uncollectible accounts for the year are estimated to.
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146.The interest on a $8,000, 6%, 60-day note receivable is a.$480. b.$80. c.$160. d.$240. 147.The interest on a $4,000, 6%, 90-day note receivable is a.$240. b.$120 c.$60. d.$180. 148.The interest on a $6,000, 10%, 1-year note receivable is a.$6,000. b.$50. c.$600. d.$6,600. 149.The interest on a $9,000, 6%, 60-day note receivable is a.$45. b.$540 c.$270. d.$90. 150.The interest on a $6,000, 9%, 90-day note receivable is a.$135. b.$540. c.$45. d.$90. 151.A note receivable is a.
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Ex. 226 The December 31, 2011, balance sheet of the Kramer Company had Accounts Receivable of $650,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2012, the following transactions occurred: sales on account $1,450,000; sales returns and allowances, $100,000; collections from customers, $1,250,000; accounts written off, $35,000;.
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166.The maturity value of a $30,000, 9%, 40-day note receivable dated July 3 is a.$30,000. b.$33,000. c.$32,700. d.$30,300. 167.Barber Company lends Monroe Company $20,000 on April 1, accepting a four-month, 6% interest note. Barber Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared? a.Note Receivable             .
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S-A E 262 How do these principles apply to cash disbursements: (a)Physical controls? (b)Documentation controls? S-A E 263 The preparation of a bank reconciliation is an important cash control procedure. If a company deposits cash receipts daily and makes all cash disbursements by check, explain why the cash balance per books might not agree with.
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Be. 214 Assuming that the allowance method is being used, prepare general journal entries without explanations to record the following transactions. January 1Sold merchandise to Mary Baden for $500 on account. February 1Received $200 from Baden. July 1Wrote off Baden’s account as uncollectible. September 1Unexpectedly received payment in full from Baden. Be. 215 The ledger of the.
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176.The receivables turnover ratio is computed by dividing a.total sales by average receivables. b.total sales by ending receivables. c.net credit sales by average receivables. d.net credit sales by ending receivables. 177.The receivables turnover ratio is used to analyze a.profitability. b.liquidity. c.risk. d.long-term solvency. 178.A high receivables turnover ratio indicates a.the company’s sales are increasing. b.a large proportion of the company’s sales.
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              11.The allowance method of accounting for bad debts violates the matching principle.               12.When using the allowance method bad debt expense is recorded when an individual customer defaults.               13.Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.               14.If a company uses.
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IFRS QUESTIONS 1.The principles of internal control activities are used in the a.U.S. but not globally. b.internationally but not in the U.S. c.in the U.S. and Canada but not globally. d.globally. 2.Sarbanes Oxley applies to a.U.S companies but not international companies. b.international companies but not U.S. companies. c.U.S. and Canadian companies but not other international companies. d.U.S and international companies. 3.The.
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156.Short-term notes receivable a.have a related allowance account called Allowance for Doubtful Notes Receivable. b.are reported at their gross realizable value. c.use the same estimations and computations as accounts receivable to determine cash realizable value. d.present the same valuation problems as long-term notes receivables. 157.A 90-day note dated April 30, 2012, would mature on: a.July 30,.
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S-A E 269(Communication) Schmidt Company received a letter from Deborah Stine, a customer. Deborah had purchased $325 worth of clothing from Schmidt on credit. She has made two payments of $50 each. She has missed the last two payments, and has received a collection letter from Schmidt. Her total debt presently,.
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              11.Recording depreciation each period is an application of the matching principle.               12.The Accumulated Depreciation account represents a cash fund available to replace plant assets.               13.In calculating depreciation, both plant asset cost and useful life are based on estimates.               14.The declining-balance method of depreciation is called an accelerated depreciation method.
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              21.The Allowance for Doubtful Accounts is a liability account.               22.Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.               23.If bad debt losses are significant, the direct write-off method is acceptable for financial reporting purposes.               24.Bad debt losses are a cost of selling on credit.              .
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              96.Bad Debts Expense is reported on the income statement as a.part of cost of goods sold. b.an expense subtracted from net sales to determine gross profit. c.an operating expense. d.a contra revenue account.               97.When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded a.in the year after the.
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              76.Under the allowance method, writing off an uncollectible account a.affects only balance sheet accounts. b.affects both balance sheet and income statement accounts. c.affects only income statement accounts. d.is not acceptable practice.               77.The net amount expected to be received in cash from receivables is termed the a.cash realizable value. b.cash-good value. c.gross cash value. d.cash-equivalent value.               78.If a.
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TRUE-FALSE STATEMENTS               1.All plant assets (fixed assets) must be depreciated for accounting purposes.               2.When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.               3.When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Delivery Equipment.               4.Land improvements.
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Ex. 236 Record the following transactions in general journal form for the Newell Company. July1Received a $7,000, 8%, 3-month note, dated July 1, from Lois Patton in payment of her open account. Oct.1Received notification from Lois Patton that she was unable to honor her note at this time. It is expected that Jordan.
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Ex. 229 The Garvey Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 5% of accounts receivable will eventually be uncollectible. Selected account balances at December 31, 2011, and December 31, 2012, appear below: 12/31/201112/31/2012 Net Credit Sales$400,000$500,000 Accounts Receivable80,000100,000 Allowance for Doubtful Accounts4,000? Instructions (a)Record the following events in 2012. Aug.10Determined.
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SHORT-ANSWER ESSAY QUESTIONS S-A E 257 Fraud experts often say that there are three primary factors that contribute to employee fraud. Identify the three factors and explain what is meant by each. S-A E 258 (a)Explain the control principle of independent internal verification? (b)What practices are important in applying this principle? S-A E 259 Your friend, Jeff,.
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              86.An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a a.debit to Bad Debts Expense for $4,000. b.debit to Allowance for Doubtful Accounts for.
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Ex. 237 Grey Boat Company often requires customers to sign promissory notes for major credit purchases. Journalize the following transactions for Grey Boat Company. Feb.12Accepted a $40,000, 6%, 60-day note from Bill Bazil for a 19-foot motorboat built to his specifications. April14Received notification from Bill Bazil that he was unable to honor his.
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SHORT-ANSWER ESSAY QUESTIONS S-A E 259 List the characteristics of promissory notes. List the reasons for obtaining promissory notes from customers. What action relating to promissory notes must be taken at the end of the accounting period? S-A E 260 Two methods can be used in accounting for uncollectible accounts. Identify and contrast the two methods..
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Ex. 238 Compute the maturity value as indicated for each of the following notes receivable. 1.An $6,000, 6%, 3-month note dated April 20. Maturity value $____________. 2.A $14,000, 9%, 72-day note dated March 5. Maturity value $____________. 3.A $12,000, 5%, 30-day note dated September 10. Maturity value $____________. 4.A $9,000, 7%, 6-month note dated November 15. Maturity value.
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Ex. 239 Great Plains Supply Co. has the following transactions related to notes receivable during the last 2 months of the year. Nov.1Loaned $90,000 cash to B. Benson on a 1-year, 8% note. Dec.11Sold goods to Roswell, Inc., receiving a $9,000, 90-day, 7% note. 16Received a $20,000, 6-month, 9% note to settle an open.
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Ex. 234 Hachey Company has accounts receivable of $85,100 at March 31, 2012. An analysis of the accounts shows these amounts.    Balance, March 31        Month of Sale            2012    2011  March$65,000$75,000 February12,6008,000 December and January10,1002,400 November and October    7,400    1,100 $95,100$86,500 Credit terms are 2/10, n/30. At March 31, 2012, there is a $2,500 credit.
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Be. 218 Compute the maturity value as indicated for each of the following notes receivable. 1.A $7,000, 6%, 3-month note dated July 20. Maturity value $____________. 2.A $16,000, 9%, 150-day note dated August 5. Maturity value $____________. Be. 219 Determine the interest on the following notes: (a)$4,000 at 6% for 90 days. (b)$800 at 9% for 5.
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TRUE-FALSE STATEMENTS               1.Trade receivables occur when two companies trade or exchange notes receivables.               2.Trade receivables can be an account receivable or a note receivable.               3.Other receivables include non-trade receivables such as loans to company officers.               4.Advances to employees are referred to as accounts receivable.               5.Both accounts receivable and notes receivable.
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S-A E  265 Company Name Net Credit Sales Beginning Net Receivables Ending Net Receivables Brown $180,000 $  5,000 $30,000 Pink $400,000 $52,000 $42,000 Yellow $  75,000 $  5,400 $  5,800 (a)Which company is doing the best job of managing its accounts receivable? Why? Be sure to support your answer with computations. (b)What are your concerns about these companies? S-A E  266 Banks that issue credit cards generally charge retailers.
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Be. 222 The following data exists for Mather Company. 20122011 Accounts Receivable$  80,000$  70,000 Net Sales465,000410,000 Calculate the receivable turnover ratio and the average collection period for accounts receivable in days for 2012. Be. 223 Donaldson Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts.
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136.During 2012 Wheeler Inc. had sales on account of $396,000, cash sales of $162,000, and collections on account of $252,000. In addition, they collected $4,350 which had been written off as uncollectible in 2011. As a result of these transactions the change in the accounts receivable indicates a a.$301,650 increase. b.$144,000 increase. c.$139,650.
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Ex. 227 An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Dec.17Cash .......................................2,940 Sales Discounts ................................60 Accounts Receivable ........................3,000 (To record collection of 12/4 sales, terms 2/10, n/30) 27Cash .......................................1,200 Bad Debts Expense .........................1,200 (Collection of account previously written off as uncollectible under allowance method) 31Bad Debts Expense .............................1,200 Allowance for Doubtful.
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              31.Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.               32.An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.               33.When an account receivable that was.
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MULTIPLE CHOICE QUESTIONS               56.Interest is usually associated with a.accounts receivable. b.notes receivable. c.doubtful accounts. d.bad debts.               57.The receivable that is usually evidenced by a formal instrument of credit is a(n) a.trade receivable. b.note receivable. c.accounts receivable. d.income tax receivable.               58.Which of the following receivables would not be classified as an "other receivable”? a.Advance to an employee b.Refundable income tax c.Notes receivable d.Interest.
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106.Under the allowance method, when a specific account is written off a.total assets will be unchanged. b.net income will decrease. c.total assets will decrease. d.total assets will increase.               107.The percentage of receivables basis for estimating uncollectible accounts emphasizes a.cash realizable value. b.the relationship between accounts receivable and bad debts expense. c.income statement relationships. d.the relationship between sales and.
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186.The receivables turnover ratio a.Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period. b.Can be used to compute the average collection period. c.Is a method of evaluating the solvency of net accounts receivable. d.Is only important.
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              41.The basic formula for computing interest on an interest-bearing note is face value of note x annual interest rate x time in terms of one year = interest.               42.When a note is written to settle an open account no entry is necessary.               43.A dishonored note is a note that.
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126.Net credit sales for the month are $900,000. The accounts receivable balance is $180,000. The allowance is calculated as 5% of the receivables balance using the percentage of receivables basis. If the Allowance for Doubtful Accounts has a credit balance of $6,000 before adjustment, what is the balance after adjustment? a.$ .
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COMPLETION STATEMENTS               244.Notes and accounts receivable that result from sales transactions are often called ______________ receivables.               245.Two accounting problems associated with accounts receivable are (1) ______________ and (2) ______________ accounts receivable.               246.The net amount expected to be collected in cash from receivables is the _____________.               247.When credit sales are made,.
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196.XYZ Company accepted a national credit card for a $5,000 purchase. The cost of the goods sold is $4,000. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income? a.increase by $970. b.increase by $1,000. c.increase by $850. d.increase by $4,850. 197.A company sells $800,000 of.
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BRIEF EXERCISES Be. 210 Presented below are various receivable transactions entered into by Renner Tool Company. Indicate whether the receivables are reported as accounts receivable, notes receivable, or other receivables on the balance sheet. a.Advanced $1,000 to a trusted employee. b.Accepted a $2,000 promissory note from a customer as payment on account. c.Determined that a.
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              66.On January 15, Nifty Company sells merchandise on account to Martinez Associates for $2,000 with terms 3/10, n/05. On January 20, Martinez returns merchandise worth $400 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received? a.$1,600 b.$1,552 c.$1,540 d.$1,120               67.Wilton sells.
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Ex. 230 Erickson Company had a $400 credit balance in Allowance for Doubtful Accounts at December 31, 2012, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:               Estimated Percentage          Uncollectible   Current Accounts$170,0001% 1–30 days past due15,0003% 31–60 days past due12,0006% 61–90 days past due5,00012% Over 90 days past.
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