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Exam 7: Cash and Receivables

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Question 81

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On a bank reconciliation,outstanding checks are deducted from the balance per books.

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Question 82

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Trade credit arises from wholesale or retail sales.

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Question 83

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Cash consists of all of the following except

The interest on a three-month,12 percent,$8,300 note receivable is

In the journal provided,prepare the entries for the following transactions.(Omit explanations.) Dec. 1 Sold merchandise on account to Katurah Wells for $\$ 600$ . 12 Received payment of $\$ 400$ from Katurah Wells. 31 Made adjusting entry for Uncollectible Accounts Expense, using the percentage of net sales method. Net sales for the year totaled $\$ 14,000$ , uncollectible accounts are estimated at 2 percent, and Allowance for Uncollectible Accounts has a $\$ 50$ credit balance prior to adjustment. Feb. 5 Wrote off Katurah Wells's balance because she filed for bankruptcy. 17 Unexpectedly received the $\$ 200$ from Katurah Wells.

Cash equivalents are defined as investments that carry a term of less than one year.

The allowance for uncollectible accounts is necessary because

Under the allowance method,when a year-end adjustment is made for estimated uncollectible accounts,

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

If a promissory note is dishonored,the payee should record interest income.

If the amount of uncollectible accounts expense is overstated at year end,

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

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

In the journal provided,prepare entries for the following (assume a calendar-year accounting period): Omit explanations. Dec. 1Received a three-month, 15 percent note receivable for $\$ 800$ from a customer as an extension of his past-due account. 31 Made the year-end adjustment for accrued interest. Mar. 1Received full payment on the note.

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 $522,000.In the past,2 percent of sales have proved uncollectible,and an aging of accounts receivable accounts results in an estimate of $13,500 of uncollectible accounts. Using the percentage of net sales method,Uncollectible Accounts Expense would be debited for

Assume that on December 1,a note which has a face value of $1,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his of past - due account is honored on due date.The entry that would be made to record the receipt on due date (ignoring interest) is:

The receivable turnover is expressed in terms of dollars.

Notes receivable and cash are examples of short-term financial assets.

On a bank reconciliation,an NSF check would be deducted from the balance per bank.

Assume that part of accounts and other receivables on Thompson Toys' balance sheet is $16 million as of February 2,2010.Also assume that Allowance for Uncollectible Accounts has a credit balance of $550,000 and that Thompson estimates its uncollectible accounts as 0.1 percent of net sales and the sales for the year is $11,019,000,000.Record the adjusting entry to recognize uncollectible accounts using the percentage of net sales method.Omit explanations.