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S-A E  228 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 the cash balance shown on the bank statement. Identify specific examples.
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48.Which of the following would require a compound journal entry? a.To record merchandise returned that was previously purchased on account. b.To record sales on account. c.To record purchases of inventory when a discount is offered for prompt payment. d.To record collection of accounts receivable when a cash discount is taken. 49.Which of the following would.
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BE 184 Twain Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500. During August, the following transactions occurred. Oct.15Sold $16,000 of accounts receivable to Nelson Factors, Inc. who assesses a 4% finance charge. 25Made sales of $900 on VISA credit cards..
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Ex. 201 The income statement approach to estimating uncollectible accounts expense is used by Kerley Company. On February 28, the firm had accounts receivable in the amount of $437,000 and Allowance for Doubtful Accounts had a credit balance of $2,140 before adjustment. Net credit sales for February amounted to $3,000,000. The.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  224 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  225 Important objectives of a system of internal controls are to safeguard assets and to enhance the accuracy and reliability.
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Ex. 198 Compute bad debt expense based on the following information: (a)LRP Company estimates that 3% of net credit sales will become uncollectible. Sales revenue are $600,000, sales returns and allowances are $30,000, and the allowance for doubtful accounts has a $5,000 credit balance. (b)LRP Company estimates that 10% of accounts.
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Ex. 197 Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2016, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:               Estimated Percentage          Uncollectible   Current Accounts$120,0001% 1–30 days past due20,0003% 31–60 days past due10,0006% 61–90 days past due10,00012% Over 90 days past.
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MULTIPLE CHOICE QUESTIONS 38.Claims for which formal instruments of credit are issued as proof of the debt are a.accounts receivable. b.interest receivable. c.notes receivable. d.other receivables. 39.Interest is usually associated with a.accounts receivable. b.notes receivable. c.doubtful accounts. d.bad debts. 40.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. 41.Which of the following.
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MATCHING 223.Match the items below by entering the appropriate code letter in the space provided. A.Prenumbered documentsG.Bank signature card B.Custody of an asset should be kept H.Payee separate from the record-keeping I.Maker for that assetJ.Canceled checks C.Cash registers, garment sensors K.NSF checks and burglar alarms are examplesL.Outstanding checks D.Bonding employeesM.Petty cash receipt E.CollusionN.Cash equivalents F.CashO.Voucher system _____              1.Segregation of duties. _____              2.One.
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Ex. 213 Morton Company had the following select transactions. Apr.    1, 2016Accepted Remington Company's 1-year, 12% note in settlement of a $25,000 account receivable. July    1, 2016Loaned $15,000 cash to Jenny Green on a 9-month, 10% note. Dec. 31, 2016Accrued interest on all notes receivable. Apr.    1, 2017Received principal plus interest on the Remington note. Apr.   .
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S-A E 230(Communication) Legalaid is a legal office management franchise. There are currently twenty-five legal offices managed by a Legalaid franchisee. One of the services provided to franchisees is assistance in training various staff members. Legalaid is preparing a manual for the front office staff to use as a reference guide. It.
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158.Writing off an uncollectible account under the allowance method requires a debit to a.Accounts Receivable. b.Allowance for Doubtful Accounts. c.Bad Debt Expense. d.Uncollectible Accounts Expense. 159.When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense a.increases net income. b.decreases current assets. c.has no effect on current assets. d.has no effect on net.
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128.The two key parties to a promissory note are the a.maker and a bank. b.debtor and the payee. c.maker and the payee. d.sender and the receiver. 129.When calculating interest on a promissory note with the maturity date stated in terms of days, the a.maker pays more interest if 365 days are used instead of 360. b.maker pays.
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S-A E  236 Banks that issue credit cards generally charge retailers a fee of 2 to 6% of the amount of sale. List reasons why companies are willing to pay these fees. S-A E  237 An article recently appeared in the Wall Street Journal indicating that companies are selling their receivables at a.
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21.A factor purchases receivables from businesses for a fee and collects the remittances directly from customers. 22.A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services. 23.Receivables may be sold because they may be the only.
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Ex. 202 The cash records of George Company show the following: 1.In September, deposits per the bank statement totaled $36,800; deposits per books $38,000; and deposits in transit at September 30 were $4,900. 2.In September, cash disbursements per books were $35,600; checks clearing the bank were $38,900; and outstanding checks at September 30.
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S-A E 226 Your friend, Carlos, has opened a movie theater. Carlos states that he does not have time to develop and implement a system of internal controls. a.Provide Carlos with the objectives of a system of internal controls. b.Explain to Carlos why he should develop a system of internal controls. S-A E  227 (a)Identify.
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168.The accounts receivable turnover is computed by dividing a.total sales by average net accounts receivable. b.net credit sales by average net accounts receivable. c.total sales by ending net accounts receivable. d.net credit sales by ending net accounts receivable. 169.Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP? a.The use of.
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BRIEF EXERCISES BE 180 Record the following transactions for Cyrus Company. 1.On August 4, Cyrus sold merchandise on account to Swift Company for $700, terms 2/10, n/30. 2.On August 7, Cyrus granted Swift a sales allowance and reduced the cost of the merchandise by $50 because some of the goods were slightly damaged. 3.On August.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  234 Management can choose between two bases in calculating the estimated uncollectible accounts under the allowance method. One basis emphasizes an income statement viewpoint whereas the other emphasizes a balance sheet viewpoint. Identify the two bases and contrast the two approaches. How do the different points of.
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TRUE-FALSE STATEMENTS 1.Trade receivables occur when two companies trade or exchange notes receivables. 2.Other receivables include nontrade receivables such as loans to company officers. 3.Both accounts receivable and notes receivable represent claims that are expected to be collected in cash. 4.Receivables are valued and reported in the balance sheet at their gross amount less.
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148.When a note receivable is honored, Cash is debited for the note's a.net realizable value. b.maturity value. c.gross realizable value. d.face value. 149.Xenox Company had net credit sales during the year of $1,300,000 and cost of goods sold of $800,000. The balance in accounts receivable at the beginning of the year was $185,000, and the.
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88.An aging of a company's accounts receivable indicates that $6,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record bad debts for the period will require a a.debit to Bad Debt Expense for $6,000. b.debit to Allowance for Doubtful Accounts for $5,200. c.debit.
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Ex. 215 Record the following transactions in general journal form for Karen Heller Company. July1Received a $20,000, 8%, 3-month note, dated July 1, from Nancy Freeman in payment of her open account. Oct.1Received notification from Nancy Freeman that she was unable to honor her note at this time. It is expected that Freeman.
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Ex. 194 Record the following transactions for Kline Company. 1.On April 12, sold $12,000 of merchandise to Milton Inc., terms 2/10, n/30. 2.On April 15, Milton returned $2,500 of merchandise. 3.On April 22, Milton paid for the merchandise. Ex. 195 (a)On January 6, Whitson Co. sells merchandise on account to Garcia Inc. for $7,000, terms 2/10,.
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Ex. 198 The cash balance per books for Potter Company on September 30, 2015 is $10,740.93. The following checks and receipts were recorded for the month of October, 2015:            Checks                 Receipts      No. Amount No. Amount   Amount Date 27$372.9632$   578.84$843.8610/  5 28$770.6233$1,786.50$941.5410/21 29$257.0034$   921.30$880.5810/27 30$578.5035$   246.03$976.0010/30 31$234.15 In addition, the bank statement for the month of October is presented below: Balance.
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MATCHING 233.Match the items below by entering the appropriate code letter in the space provided. A.Aging of receivablesF.Percentage of receivables basis B.Direct write-off methodG.Factoring C.Promissory noteH.Dishonored note D.Trade receivablesI.Average collection period E.Percentage of sales basisJ.Credit card sales _____              1.A written promise to pay a specified amount on demand or at a definite time. _____              2.Sales that involve the.
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Ex. 204 The following information was used to prepare the March 2016, bank reconciliation for Sam's Store. Identify the items that require adjustment to the cash balance per books and prepare the appropriate adjusting entries.               1.Included with the bank statement materials was a check from Stan Kenton for $50 stamped "NSF."              .
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EXERCISES Ex. 192 Presented below are various receivable transactions entered into by Parton Tool Company. Indicate whether the receivables are reported as accounts receivable, notes receivable, or other receivables on the balance sheet. a.Loaned a company officer $6,000. b.Accepted a $3,000 promissory note from a customer as payment on account. c.Determined that a $12,000 income.
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78.Allowance for Doubtful Accounts on the balance sheet a.is offset against total current assets. b.increases the cash realizable value of accounts receivable. c.appears under the heading "Other Assets." d.is offset against accounts receivable. 79.When an account is written off using the allowance method, the a.cash realizable value of total accounts receivable will increase. b.cash realizable value of.
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Ex. 208 Yellowstone Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred. Jan. 15Made Yellowstone credit card sales totaling $28,000. (There were no balances prior to January 15.) 20Made Visa credit card sales (service charge fee 3%) totaling $5,000. Feb. 10Collected $17,000 on Yellowstone credit.
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68.A reasonable amount of uncollectible accounts is evidence a.that the credit policy is too strict. b.that the credit policy is too lenient. c.of a sound credit policy. d.of poor judgments on the part of the credit manager. 69.Bad Debt Expense is considered a.an avoidable cost in doing business on a credit basis. b.an internal control weakness. c.a necessary.
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98.In 2016, Winslow Company had net credit sales of $1,250,000. On January 1, 2016, Allowance for Doubtful Accounts had a credit balance of $25,000. During 2016, $32,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of.
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Ex. 203 Avett Furniture Store has credit sales of $400,000 in 2016 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2016, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that.
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118.Kirk Furniture factors $800,000 of receivables to Sulu Factors, Inc. Sulu Factors assesses a 4% service charge on the amount of receivables sold. Kirk Furniture factors its receivables regularly with Sulu Factors. What journal entry does Kirk make when factoring these receivables? a.Cash768,000 b.Cash768,000 c.Cash800,000 d.Cash768,000 119.When customers make purchases with a national credit card,.
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Ex. 218 Rivers Company had accounts receivable of $150,000 on January 1, 2016. The only transactions that affected accounts receivable during 2016 were net credit sales of $1,500,000, cash collections of $1,400,000, and accounts written off of $50,000. Instructions (a)Compute the ending balance of accounts receivable. (b)Compute the accounts receivable turnover for 2016. (c)Compute the.
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11.Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible. 12.Allowance for Doubtful Accounts is a contra asset account. 13.Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales. 14.Generally accepted accounting principles require that the direct write-off method be.
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COMPLETION STATEMENTS               206.Internal control consists of the related methods and measures adopted to ____________ its assets and enhance the ______________ and ______________ of its accounting records.               207.The three main factors that contribute to fraudulent activity are depicted by the _______________.               208.The principle of internal control that prevents one individual from.
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138.Notes receivable are recognized in the accounts at a.cash (net) realizable value. b.face value. c.gross realizable value. d.maturity value. 139.A note receivable is a negotiable instrument which a.eliminates the need for a bad debts allowance. b.can be transferred to another party by endorsement. c.takes the place of checks in a business firm. d.can only be collected by a bank. 140.A.
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Ex. 202 Shelton Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions: January5Sold merchandise to Luke Ryan for $1,700, terms n/15. April15Received $500 from Luke Ryan on account. August21Wrote off as uncollectible the balance of the Luke Ryan account when he declared bankruptcy. October5Unexpectedly received a check.
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Ex. 200 Megan's Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2016, the balance in Accounts Receivable was $308,000 and net credit sales amounted to $2,700,000 during 2016. An aging analysis of the accounts receivable indicated that $31,000 in accounts are expected to be.
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Ex. 196 Tubbs Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2015, and December 31, 2016, appear below: 12/31/1512/31/16 Net Credit Sales$300,000$400,000 Accounts Receivable60,00080,000 Allowance for Doubtful Accounts4,800? Instructions (a)Record the following events in 2016. Aug.10Determined.
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Ex. 211 Compute the missing amount for each of the following notes: PrincipalAnnual Interest RateTimeTotal Interest ——————————————————————————————————————— (a)$40,00010%2.5 years? ——————————————————————————————————————— (b)$120,000?9 months$7,200 ——————————————————————————————————————— (c)?10%90 days$1,500 ——————————————————————————————————————— (d)$40,0009%?$1,200 ——————————————————————————————————————— Ex. 212 Jasmine's Supply Co. has the following transactions related to notes receivable during the last 2 months of 2016. Nov.   1Loaned $24,000 cash to Simone Buil on a 1-year, 7% note. Dec. 11Sold goods to Dac.
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58.Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6,000, terms 2/10, n/30. On July 20 Cajon Co. returns merchandise worth $1,000 to Cosmos Company. On July 24 payment is received from Cajon Co. for the balance due. What is the amount of cash received? a.$4,800 b.$4,900 c.$5,000 d.$6,000 59.The existing.
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Ex. 205 Prepare the necessary journal entry for the following transaction. Linton Company sold $270,000 of its accounts receivables to a factor. The factor charges a 3% fee. Ex. 206 Lynn Company has accounts receivable of $54,000 in its general ledger at July 31: During August, the following transactions occurred. Aug.1Added 1% finance charges.
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COMPLETION STATEMENTS               219.Accounts receivable, which are also referred to as ______________ receivables, are amounts owed by customers on account.               220.The three primary accounting problems associated with accounts receivable are (1) ______________, (2) _______________, and (3) ______________ of accounts receivable.               221.In order to encourage prompt payment of a trade receivable, companies.
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