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Exam 8: Cash and Receivables

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Question 1

True/False

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When a bank reconciliation balances,no errors could have been made by the bank or the company.

A) True
B) False

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Question 2

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On a bank reconciliation,interest income would be added to the balance per book.

A) True
B) False

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Question 3

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

The fee for factoring with recourse is normally higher than it would be without recourse.

The debtor named in a promissory note is called the maker.

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. Using the percentage of net sales method,the Allowance for Uncollectible Accounts balance (after adjustment)would be a.$15,000. b.$20,000. c.$18,000. d.$12,000.

Match each definition with the correct term below. -Imprest system

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

A check that is outstanding for two consecutive months will appear only on the first month's bank reconciliation.

Carlson Corporation engaged in the following transactions involving promissory notes in 2012 and 2013.Journalize these transactions in the journal provided.(Omit explanations.)Round to nearest whole dollar.

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

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.

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

A company has net sales of $100,000 during the year.At year end (before an adjustment is made),Allowance for Uncollectible Accounts has a credit balance of $5,000.If the company estimates that 3 percent of net sales are uncollectible and the company uses percentage of net sales method,what is the balance in the allowance account after the year-end adjustment has been made? a.$3,000 debit balance b.$3,000 credit balance c.$8,000 credit balance d.$2,000 debit balance

A contingent liability is generally not disclosed in the notes to the financial statements.

At year end,Blue Earth Company has a $3,600 credit balance in Allowance for Uncollectible Accounts.If an accounts receiving aging method analysis indicates that an estimated $22,800 of year-end receivables are uncollectible,what will be the balance in Allowance for Uncollectible Accounts after the appropriate adjusting entry for uncollectible accounts has been made? Indicate if the balance is a debit or credit.

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment) would be

Assume that part of accounts and other receivables on Kittson Company's February 2,2010,balance sheet is comprised of $4,322,500 of notes receivable.Two notes make up the amount.The first note has a face value of $3,000,000 and bears interest at 7 percent for 90 days.The second note has a face value of $1,322,500 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.)Round amounts to nearest dollar.

Receivable turnover cannot be calculated without first knowing the days' sales uncollected.

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