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Exam 9: Cash and Receivables

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Question 71

Multiple Choice

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During the month, a company learns that a check it issued has been accidentally destroyed. On the bank reconciliation, the company would

A) deduct the amount from the balance per bank.
B) deduct the amount from the balance per books.
C) add the amount to the balance per bank.
D) add the amount back to the balance per books.

E) A) and B)
F) C) and D)

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Question 72

Multiple Choice

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On a bank reconciliation, interest earned on a checking account should be

A) deducted from the balance per books.
B) added to the balance per books.
C) added to the balance per bank.
D) deducted from the balance per bank.

E) None of the above
F) A) and D)

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Question 73

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Use this information to answer the following question. The general ledger account for Accounts Receivable shows a debit balance of $50,000. Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the year were $500,000. In the past, 2 percent of sales have proved uncollectible, and an aging of accounts receivable accounts results in an estimate of $10,700 of uncollectible accounts. Using the accounts receivable aging method, the Allowance for Uncollectible Accounts balance (after adjustment) would be

Which of the following methods of recording uncollectible accounts expense would be described best as an income statement method?

Cottage Sales Company made most of its sales on credit during its first year of operation, 2010. At the end of the year, accounts receivable amounted to $100,000. On December 31, 2010, management reviewed the collectible status of the accounts receivable. Approximately $6,000 of the $100,000 of accounts receivable were estimated to be uncollectible. As per the accounts receivable aging method the adjusting entry that would be made on December 31 of that year is:

A company issues a check for $362 but records it as $326. On the bank reconciliation, the $36 error should be

On a balance sheet, what items normally are included in Cash?

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

Under securitization, a company sells its receivables in batches at a discount.

The Allowance for Uncollectible Accounts is a contra-asset account.

The existence of uncollectible accounts is evidence of poor credit policies.

Purchasing receivables with recourse is riskier than purchasing them without recourse.

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

Which of the following situations results in a contingent liability?

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

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

A company that uses the allowance method writes off a specific account as uncollectible, but then the customer pays. The entries made upon receiving payment will

Assume that part of accounts and other receivables on Thompson Toys' February 2, 2010, balance sheet is comprised of $43,225,000 of notes receivable. Two notes make up the amount. The first note has a face value of $30,000,000 and bears interest at 7 percent for 90 days. The second note has a face value of $13,225,000 and bears interest at 9 percent for 120 days. Record the journal entry for the collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2. (Omit explanations; assume no interest had been accrued; amounts rounded to nearest dollar.)

Cash consists of all of the following except

A company has net sales of $50,000 during the year. At year end (before an adjustment is made) , Allowance for Uncollectible Accounts has a credit balance of $2,500. If the company estimates that 3 percent of net sales are uncollectible, what is the balance in the allowance account after the year-end adjustment has been made using the percentage of net sales method?