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Exam 7: Cash and Receivables

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Question 41

Multiple Choice

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Galaxy sells used videogames for cash and provides a one-week return right.Returns are material and reasonably predictable.Galaxy should:

A) Not record sales until the right to return has expired.
B) Record a contra-receivable in the year of the sale.
C) Recognize a refund liability associated with estimated returns.
D) Credit sales in the period of the return.

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

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Question 42

Multiple Choice

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What accounts receivable balance would Dinty report in its first year-end balance sheet?

A) $196,000.
B) $218,000.
C) $230,000.
D) None of the above is correct.

E) All of the above
F) A) and C)

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Question 43

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What entry would Oswego make on June 10,assuming the customer made the correct payment on that date?

Use the following to answer questions The following note disclosure is taken from the 2016 annual report to shareholders of Winchester International Corporation. NOTE 5: ALLOWANCE FOR LOAN LOSSES The allowance for loan loss is maintained at a level to absorb probable losses inherent in the loan portfolio.This allowance is increased by provisions charged to operating expense and by recoveries on loans previously charged off,and reduced by charge-offs on loans. The following is a summary of the changes in the allowances for loan losses for three years: Winchester also reported (in thousands)in its comparative balance sheet that it held Loans receivable,net,of $6,869,911 and $6,819,209 at December 31,2016,and December 31,2015,respectively. -For each posted entry in the Allowance account during 2016,indicate the remaining entry(ies)in other accounts.

Accounting for the pledging of accounts receivable as collateral for a loan requires:

What entry would Harvey's make on April 23,assuming the customer made the correct payment on that date?

What is the balance in the allowance for sales returns account at the end of 2016?

Use the following to answer questions The following note disclosure is taken from the 2016 annual report to shareholders of Winchester International Corporation. NOTE 5: ALLOWANCE FOR LOAN LOSSES The allowance for loan loss is maintained at a level to absorb probable losses inherent in the loan portfolio.This allowance is increased by provisions charged to operating expense and by recoveries on loans previously charged off,and reduced by charge-offs on loans. The following is a summary of the changes in the allowances for loan losses for three years: Winchester also reported (in thousands)in its comparative balance sheet that it held Loans receivable,net,of $6,869,911 and $6,819,209 at December 31,2016,and December 31,2015,respectively. -What kind of account is the Allowance for Loan Losses in Winchester's financial statements?

The annual interest rate on Note A is closest to:

On December 31,2015,Central Freight reported an allowance for uncollectible accounts of $15,300.During 2016,Central wrote off $17,000 in accounts receivable.Included in the write-off was Roskoff Corp.'s account in the amount of $750.Roskoff subsequently paid this balance.At December 31,2016,an analysis of the accounts receivable aging schedule indicated the need for an allowance for uncollectible accounts of $14,900. Required: Prepare all implied journal entries relative to bad debt expense and the allowance for uncollectible accounts.

The O'Hara Group is owed $1,000,000 by Hilton Enterprises under an 8% note with three years remaining to maturity.The prior year of interest was unpaid.O'Hara agrees to restructure the note under terms that yield a present value of $880,000.The journal entry that O'Hara would make to record this transaction would include a loss on troubled debt restructuring of:

Important elements of an internal control system for cash disbursements include each of the following except:

Cash is the most liquid of all assets but is not always reported under current assets.Explain this statement.

Which of the following does not reduce the balance in accounts receivable?

Alliance Software began 2016 with accounts receivable of $115,000.All sales are made on credit.Sales and cash collections from customers for the year were $780,000 and $700,000,respectively.Cost of goods sold for the year was $450,000.What was Alliance's receivables turnover ratio (rounded) for 2016?

Use the following to answer questions The following information is taken from the 2013 annual report to shareholders of Hewlett-Packard (HP)Co. -If HP is using the balance sheet approach to determining bad debt expense,what percentage of year-end receivables did it use in 2013 and 2012,respectively?

From a financial accounting perspective,the main purposes of a system of internal control are to improve the accuracy and reliability of accounting information and to safeguard assets.

Cash equivalents do not include:

COSO defines internal control as a process,affected by an entity's board of directors,management,and other personnel,designed to provide reasonable assurance regarding the achievement of objectives in:

A company's investment in receivables is affected by several related variables.Give an example of this interrelationship.