Cash & Cash Equivalents (F4)

Question 1

Collection of Account previously written off

Answer 1

Dr AR
Cr Allowance
Dr Cash
Cr AR

Question 2

Uncollectible accounts expense

Answer 2

Allowance for Uncollectible
Dr | Cr
| Beg Allowance 12,000
Write-Off 48,000 |
| Uncollectible Expense 86,000
| Recovery 0
| Ending Allowance 50,000

Question 3

Cash & Cash Equivalents

Answer 3

Checking Account
+ Petty Cash
+ Commercial Paper Maturing

Question 4

Adjusted Cash Balance

Answer 4

Cash Balance
- Erroneous check amount (check amount - recorded amount)
+ Interest Earned
- Service Charge

Question 5

Current Assets

Answer 5

Total Current Assets 250,000
- Inventory at Selling Price 26,000
+ Inventory at Cost (26,000 / 1.30) 20,000
= Total Current Assets 244,000

Question 6

Interest Revenue

Answer 6

Payments                  5,009
* periods                           5
=                                25,045
- Present Value         19,485
= Interest Revenue     5,560

Question 7

Correct Cash Balance

Answer 7

Balance Per Bank 18,050
+ Deposits in Transit 3,250
- Outstanding Checks 2,750
= Ending Balance 18,550

*Insufficient Funds and Service charge already included in bank balance

Question 8

Proceeds from note

Answer 8

Face Value                  500,000 
* Annual Interest                 1.08
= Maturity Value           540,000
* 10% Discount
* 6/12 holding period  (27,000)
= Proceeds                  513,000

Question 9

Net Receivables

Answer 9

Trade Receivables 93,000
- Allowance 2,000
+ Claims against shipper 3,000
= 94,000