EXAM #3: (Ch 8, 9) Review (In Class) Flashcards
The term cash includes
a) Coins and currency (paper money).
b) Money on deposit at a bank that is available for unrestricted withdrawal.
c) Checks, money orders and traveler’s checks.
d) All the above
d) All the above
The amount of outstanding checks is included on a bank reconciliation as a(n):
a) deduction from the balance on the business’ books (general ledger)
b) deduction from the balance on the bank statement
c) addition to the balance on the bank statement
d) addition to the balance on the business’ books (general ledger)
b) deduction from the balance on the bank statement
Which of the following would be deducted from the balance per books (general ledger) on a bank reconciliation? How are the other items treated?
a) Outstandng checks
b) Deposits in transit
c) Notes collected by the bank
d) Service charges
d) Service charges
On which financial statement at what amount are accounts receivable reported?
a) Balance sheet at the net realizable value
b) Balance sheet at the total amount owed by customers
c) Income statement at the net collectible amount
d) Income statment at the amount written off
a) Balance sheet at the net realizable value
What is the type of account and normal balance of Allowance for Doubtful Accounts?
a) Asset, debit
b) Asset, credit
c) Contra asset, debit
d) Contra asset, credit
d) Contra asset, credit
When the allowance method is used to estimate the uncollectible accounts, Bad Debts Expense is debited when:
a) a customer’s accoumt becomes past due
b) management estimates the amount of uncollectible accounts
c) a sale is made
d) an account becomes bad and is written off
b) management estimates the amount of uncollectible accounts
On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to:
a) The sum of all accounts that are past due
b) The uncollectible accounts expense for the year
c) The total of the accounts receivables written-off during the year
d) The total amount of accounts receivable a company does not expect to collect
d) The total amount of accounts receivable a company does not expect to collect
Name 3 Advantages of Notes Receivables
- Stronger legal claim
- Earns interest
- More liquid – it is a negotiable instrument
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer. Determine the following.
What is the Face value of the note
$200,000
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer. Determine the following.
Total interest on the note
p * r * t = 200,000 * 9% * 4/12mo = $6,000
200,000 x .09 = 18,000
18,000 / 12 = 1,500
1,500 * 4 = $6,000
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer. Determine the following.
Maturity value of the note
p + i = $206,000
p * r * t = 200,000 * 9% * 4/12mo = $6,000
200,000 x .09 = 18,000
18,000 / 12 = 1,500
1,500 * 4 = $6,000
+ 200,000 = 206,000
Prepare the following journal entries.
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer.
Issuance of the note on December 1
Prepare the following journal entries.
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer.
Accrual of interest on December 31
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer. Prepare the following journal entries.
Receipt of payment of the note at maturity
On December 1, Cannondale Supply Company lent money and received a 4 month, 9% note for $200,000 from a customer. Prepare the following journal entries.
If the note had been issued on Jan 1 instead of Dec 1, what would be the entry for the collection of the note at maturity?
At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $11,250; and net sales for the year total $4,100,000. Determine the following items based on 2 separate assumptions.
PART A: Assume Bad Debt expense is estimated at 1/2 of 1% of net sales.
What is the adjusting entry for uncollectible accounts?
At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $11,250; and net sales for the year total $4,100,000. Determine the following items based on 2 separate assumptions.
PART A:
Assume Bad Debt expense is estimated at 1/2 of 1% of net sales.
What is the adjusted balance of Allowance for Doubtful Accounts?
At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $11,250; and net sales for the year total $4,100,000. Determine the following items based on 2 separate assumptions.
PART A:
Assume Bad Debt expense is estimated at 1/2 of 1% of net sales.
What is the Net Realizable Value of Accounts Receivable after adjustment?
At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $11,250; and net sales for the year total $4,100,000. Determine the following items based on 2 separate assumptions.
PART B:
Assume that using the Aging Method the balance of Allowance for Doubtful Acccounts is estimated as $30,000.
What is the amount of the adjusting entry for uncollectible accounts?
At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $11,250; and net sales for the year total $4,100,000. Determine the following items based on 2 separate assumptions.
PART B:
Assume that using the Aging Method the balance of Allowance for Doubtful Acccounts is estimated as $30,000.
What is the adjusted balance of Allowance for Doubtful Accounts?
At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $11,250; and net sales for the year total $4,100,000. Determine the following items based on 2 separate assumptions.
PART B:
Assume that using the Aging Method the balance of Allowance for Doubtful Acccounts is estimated as $30,000.
What is the Net Realizable Value of Accounts Receivable after adjustment?
