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Exam 7: Cash and Receivables

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Question 41

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Jayne Luke started a computer business in her basement less than a year ago.Her personal attention to clients and persistence in obtaining new customers has caused the business to grow at a tremendous pace.Jayne has become so busy she has neglected to keep after clients who have failed to pay her.As a result,Jayne has a large amount of accounts receivable and notes receivable on her balance sheet but not much cash.She continues to service clients,but she now realizes that her cash will soon be exhausted.Suggest some options Jayne has to achieve a strong cash balance.

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Some options Jayne Luke could explore to...

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Question 42

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Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

A) FLK may ultimately have to pay the bank when the note is due.
B) If the maker of the note pays the bank on time, no liability will result to FLK.
C) FLK will receive the maturity value from the bank.
D) A contingent liability arises for FLK.

E) None of the above
F) B) and C)

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Question 43

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Carlson Corporation engaged in the following transactions involving promissory notes in 2009 and 2010.Journalize these transactions in the journal provided.(Omit explanations.)Round to nearest whole dollar. 2009 1 Sold land to Duane Eppy for $\$ 30,000$ . A six-month, 10 percent note was received in exchange (no gain or loss realized). 1 Received a 30-day, 12 percent note receivable from Tricha Kalson in settlement of her accounts receivable of $\$ 500$ . Dec. 1 Tricha Kalson dishonored her note issued 30 days earlier. Round to nearest whole dollar. 31 Recorded accined interest on the note received on September 1. 2010 Mar. 1 Received payment in full from Duane Eppy.

Which of the following would not be a valid reason to keep some currency on hand at a place of business?

What purpose is served by a factoring arrangement? What does it mean to factor accounts receivable with recourse?

One might infer from a debit balance in Allowance for Uncollectible Accounts that

The account Allowance for Uncollectible Accounts is classified as a(n)

Customers with credit balances in their accounts are entitled to a refund if they do not intend to make any future purchase.

Installment accounts receivable covering periods longer than twelve months are classified as long-term assets.

The matching rule

Which of the following account names should not be used in modern practice?

Which of the following statements is true about factoring without recourse?

All of the following bank reconciliation items would result in a journal entry on the company's books except

Loans to company employees should be classified on the balance sheet as accounts receivable.

On December 31,Alsop Products has a $300 credit balance in Allowance for Uncollectible Accounts.It estimates that 4 percent of the $60,000 in sales are uncollectible.After the appropriate adjusting entry for uncollectible accounts has been made using percentage of net sales method,what will be the balance in Allowance for Uncollectible Accounts? Indicate if the balance is a debit or credit.(Show your work.)

Which of the following would be added to the balance per books on a bank reconciliation?

The general ledger account for Accounts Receivable shows a debit balance of $25,000.Allowance for Uncollectible Accounts has a credit balance of $1,500.Net sales for the year were $250,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $10,000 of uncollectible accounts receivable. Using the percentage of net sales method,the Allowance for Uncollectible Accounts balance (after adjustment) would be

The general ledger account for Accounts Receivable shows a debit balance of $40,000.The Allowance for Uncollectible Accounts has a credit balance of $2,000.Net sales for the year were $250,000.In the past,3 percent of net sales have proved uncollectible.An aging of accounts receivable accounts results in an estimate of $9,000 of uncollectible accounts receivable.Calculate (1)Uncollectible Accounts Expense and (2)the ending balance of the Allowance for Uncollectible Accounts using (a)the percentage of net sales method and (b)the accounts receivable aging method.

Which of the following situations results in a contingent liability?

Which of the following topics involves a contingent liability?