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Exam 7: Cash and Receivables

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Question 31

Multiple Choice

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What entry would Harvey's make on April 12?

A)
B)
C)
D)

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

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Question 32

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During Burns Company's first year of operations, credit sales totaled $140,000 and collections on credit sales totaled $105,000. Burns estimates that bad debt losses will be 1.5% of credit sales. By year-end, Burns had written off $300 of specific accounts as uncollectible. Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable.

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Question 33

Multiple Choice

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If Wilson reports under U.S. GAAP, its 12/31/2013 balance sheet would show what cash balance?

Under IFRS, accounts receivable can be accounted for at fair value whenever company management wants to do so.

Under IFRS, an overdraft in a cash account at one bank can be offset against a positive balance in the account at another bank for purposes of reporting cash on the company's balance sheet.

Brockton Carpet Cleaning prepares a bank reconciliation at the end of every month. At the end of July, the balance in the general ledger checking account was $2,750 and the bank balance on the bank statement was $2,980. Outstanding checks totaled $680 and deposits in transited were $400. The bank statement revealed that a check written for $120 was incorrectly recorded by Brockton as a $220 disbursement. The bank statement listed service charges and NSF check charges totaling $150. The corrected cash balance is:

What entry would Cherokee make on November 17, assuming the correct payment was received on that date?

Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, five-year, noninterest-bearing note when an equivalent loan would carry 10% interest. Drebin would record sales revenue on the date of sale equal to:

Accounts receivable are normally reported at the:

Montana Minerals sold coal to Beta Electric, receiving a six-month, noninterest-bearing note for $200,000. The implied discount rate on the note is 8% per annum. Montana uses a periodic inventory system. Required: 1. Prepare the journal entry to record the sale. 2. Compute the effective rate of interest.

What is the correct entry for Flores on November 17, assuming the correct payment was received on that date?

Explain the reason that Halliburton indicates that its receivables include notes with varying interest rates totaling $12 million at December 31. What significance does this have to the reader?

Memorex Disks sells computer disk drives with right-of-return privileges. Returns are material and reasonably predictable. Memorex should:

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

Cash equivalents do not include:

What entry would Cherokee make on November 10?

Is there any evidence in Winchester's disclosures above that are consistent with earnings management?

Rebound Inc. reports under IFRS. In 2013 Rebound recognized an impairment of $200,000 due to a troubled debt restructuring. In 2014 Rebound was pleased to determine that more cash flows would be received from the receivable than was previously thought, such that, if the total impairment were to be calculated in 2014, it would be estimated as $150,000 rather than $200,000. How should Rebound treat this in its 2014 income statement?

In Dinty's adjusting entry for bad debts at year-end, which of these would be included?

Baker Inc. acquired equipment from the manufacturer on 10/1/2013 and gave a noninterest-bearing note in exchange. Baker is obligated to pay $918,000 on 4/1/2014 to satisfy the obligation in full. If Baker accrued interest of $9,000 on the note in its 2013 year-end financial statements, what is its imputed annual interest rate?