Question 1

Calistoga's 2013 bad debt expense is:

Accepted Answer

A)  $1,720.
B)  $1,650.
C)  $1,505.
D)  $1,575.E) A) and B)
F) C) and D)

Question 2

Depending on the circumstances, the classification of a compensating balance may be either current or noncurrent, and the arrangement should be disclosed in the notes.

Accepted Answer

A) True 
 B)False

Question 3

If Wilson reports under IFRS, its 12/31/2013 balance sheet would show what cash balance?

Accepted Answer

A)  ($5,000) .
B)  $55,000.
C)  $60,000.
D)  None of the above.E) All of the above
F) A) and D)

Question 4

A note receivable Mild Max Cycles discounted with recourse was dishonored on its maturity date. Mild Max would debit:

Accepted Answer

A)  A loss on dishonored receivable.
B)  A receivable.
C)  Dishonored note expense.
D)  Interest expense.E) C) and D)
F) A) and D)

Question 5

As of January 1, 2013, Farley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's credit sales have been uncollectible. During 2013, Farley wrote off $650,000 of accounts receivable. Credit sales for 2013 were $18,000,000. In its December 31, 2013, balance sheet, what amount should Farley report as allowance for uncollectible accounts?

Accepted Answer

A)  $230,000.
B)  $360,000.
C)  $590,000.
D)  $880,000.E) B) and D)
F) All of the above

Question 6

The following information relates to Halloran Co.'s accounts receivable for 2013:  What amount should Halloran report for accounts receivable, before allowances, at December 31, 2013?

Accepted Answer

A)  $1,040,000.
B)  $970,000.
C)  $760,000.
D)  None of the above.E) B) and C)
F) None of the above

Question 7

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting accounts receivable and debiting:

Accepted Answer

A)  Sales.
B)  Sales discounts.
C)  Sales returns.
D)  Sales allowances.E) None of the above
F) All of the above

Question 8

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

Accepted Answer

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

Question 9

Explain how a company could manipulate cash flow from operations by changing the extent to which it factors accounts receivable and treats those factoring arrangements as sales of receivables.

Accepted Answer

Assume all else equal, and that the comp...

Question 10

To correct error in recording cash disbursement.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Note: Each of the adjustments...

Question 11

On April 1 of the current year, Troubled Company factored receivables with a carrying value of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse. On April 1, Troubled would:

Accepted Answer

A)  Credit deferred interest expense for $25,000.
B)  Credit factored accounts receivable for $85,000.
C)  Debit discount on liability for $25,000.
D)  Debit loss on sale of receivables for $25,000.E) B) and D)
F) A) and C)

Question 12

Beethoven Music Company started business in March 2013. Sales for its first year were $400,000. Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars. Industry statistics suggest that 10% of the merchandise sold to customers will be returned. Beethoven estimated its sales returns based on the industry average. During the year, customers returned $30,000 in sales. Beethoven uses a perpetual inventory system.
Required:
Prepare summary journal entries to record (1) sales, (2) sales returns, and (3) the year-end adjusting entry for estimated sales returns.

Accepted Answer

The answer of Beethoven Music Company started business in March...

Question 13

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:

Accepted Answer

A)  Effectiveness and efficiency of operations.
B)  Reliability of financial advice.
C)  Compliance with local ordinances.
D)  All of the above are correct.E) C) and D)
F) None of the above

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

On February 1, 2013, Stealth Trucks sold a diesel rig to Kansas Transports for $250,000, receiving a $50,000 down payment and a 12-month, 10% note for the balance. Principal and interest are due at maturity, and the 10% interest rate reflected the market rate of interest at the time of sale. On August 1, 2013, Kansas Transports discounted the note without recourse at the First South Bank at 12% interest.
Required:
Prepare all required journal entries at August 1 to recognize interest revenue and the discounting of the note.

Accepted Answer

The answer of On February 1, 2013, Stealth Trucks sold...

Question 16

When you use an aging schedule approach for estimating uncollectible accounts:

Accepted Answer

A)  Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured directly.
B)  Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured indirectly.
C)  Bad debts expense is measured directly, and the allowance for uncollectible accounts balance is measured directly.
D)  Bad debts expense is measured directly, and the allowance for uncollectible accounts balance is measured indirectly.E) B) and C)
F) A) and C)

Question 17

On October 18, 2013, Flying Chicken sold 2,000 pounds of chicken to Healthier Grocery for $3,400, subject to terms 2/10, n30. Flying Chicken uses the gross method of accounting for sales discounts.
Required:
1. Prepare the journal entry to record the sale.
2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on October 26, 2013.
3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on November 15, 2013.

Accepted Answer

The answer of On October 18, 2013, Flying Chicken sold...

Question 18

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit accounts receivable and debit:

Accepted Answer

A)  Sales.
B)  Sales discount.
C)  Sales returns.
D)  Sales allowances.E) A) and D)
F) All of the above

Question 19

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

Accepted Answer

A)   
B)   
C)   
D)   E) None of the above
F) All of the above

Question 20

The journal entry to replenish the petty cash fund includes:

Accepted Answer

A)  A credit to petty cash and a debit to various expenses for $126.
B)  A debit to petty cash and a credit to cash for $150.
C)  A credit to cash and a debit to various expenses for $126.
D)  None of the above.E) A) and B)
F) None of the above

Exam 7: Cash and Receivables

Correct Answer
verified

To correct error in recording cash disbursement.

Correct Answer
verified
Note: Each of the adjustments...
View Answer

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit accounts receivable and debit:

Correct Answer
verified

Correct Answer
verified

Depending on the circumstances, the classification of a compensating balance may be either current or noncurrent, and the arrangement should be disclosed in the notes.

Correct Answer
verified

If Wilson reports under IFRS, its 12/31/2013 balance sheet would show what cash balance?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The journal entry to replenish the petty cash fund includes:

Correct Answer
verified

Correct Answer
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A note receivable Mild Max Cycles discounted with recourse was dishonored on its maturity date. Mild Max would debit:

Correct Answer
verified

On April 1 of the current year, Troubled Company factored receivables with a carrying value of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse. On April 1, Troubled would:

Correct Answer
verified

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting accounts receivable and debiting:

Correct Answer
verified

Explain how a company could manipulate cash flow from operations by changing the extent to which it factors accounts receivable and treats those factoring arrangements as sales of receivables.

Correct Answer
verified
Assume all else equal, and that the comp...
View Answer

The following information relates to Halloran Co.'s accounts receivable for 2013: What amount should Halloran report for accounts receivable, before allowances, at December 31, 2013?

Correct Answer
verified

Correct Answer
verified

When you use an aging schedule approach for estimating uncollectible accounts:

Correct Answer
verified

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.

Correct Answer
verified

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:

Correct Answer
verified

Calistoga's 2013 bad debt expense is:

Correct Answer
verified

Exam 7: Cash and Receivables

Correct AnswerverifiedShow Answer

To correct error in recording cash disbursement.

Correct Answerverified Note: Each of the adjustments...View AnswerShow Answer

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit accounts receivable and debit:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Depending on the circumstances, the classification of a compensating balance may be either current or noncurrent, and the arrangement should be disclosed in the notes.

Correct AnswerverifiedShow Answer

If Wilson reports under IFRS, its 12/31/2013 balance sheet would show what cash balance?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The journal entry to replenish the petty cash fund includes:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A note receivable Mild Max Cycles discounted with recourse was dishonored on its maturity date. Mild Max would debit:

Correct AnswerverifiedShow Answer

On April 1 of the current year, Troubled Company factored receivables with a carrying value of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse. On April 1, Troubled would:

Correct AnswerverifiedShow Answer

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting accounts receivable and debiting:

Correct AnswerverifiedShow Answer

Explain how a company could manipulate cash flow from operations by changing the extent to which it factors accounts receivable and treats those factoring arrangements as sales of receivables.

Correct AnswerverifiedAssume all else equal, and that the comp...View AnswerShow Answer

The following information relates to Halloran Co.'s accounts receivable for 2013: What amount should Halloran report for accounts receivable, before allowances, at December 31, 2013?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When you use an aging schedule approach for estimating uncollectible accounts:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Calistoga's 2013 bad debt expense is:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Note: Each of the adjustments...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Assume all else equal, and that the comp...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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