Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

Cyclone Inc. reported the following figures from its financial statements for the years 2013 through 2015: Net revenues \ 717,422 \ 1,110,178 \ 591,786 Gross profit 560,421 960,434 498,605 Net income (net loss) (92,788) 70,776 47,811 Cash flow from operations 106,850 509,707 204,496 Accounts receivable 68,648 90,561 56,454 Describe how the change in accounts receivable will affect the calculation of cash flow from operating activities for 2015 and 2014.

The Rye Corporation has provided the following information: • Total sales were $1,200,000. • Beginning net accounts receivable was $45,000. • Ending net accounts receivable was $65,000. • Sales returns and allowances totaled $100,000. What was Rye's receivables turnover ratio?

When a particular account receivable is determined to be uncollectible, the journal entry to write-off the account reduces cash.

Which of the following transactions does not affect gross profit?

Which of the following would be included in Latimer Company's sales in 2014?

At year-end, Chief Company has a balance of $10,000 in accounts receivable of which $1,000 is more than 30 days overdue. Chief has a credit balance of $100 in the allowance for doubtful accounts before any year-end adjustments. Chief estimates that 1% of current accounts and 10% of accounts over thirty days are uncollectible. How much is bad debt expense?

The Conner Company's August 31, 2014 cash balance on its books was $90,000. As of August 31, outstanding checks total $44,000 and deposits in transit total $30,000. How much was Conner's August 31, 2014 cash balance on Conner's bank statement?

When goods are shipped FOB destination, the revenue from the sale is recognized on the shipment date.

CHS Company has just finished preparing its bank reconciliation. If CHS did everything correctly, which items would have been included as an addition to the company's cash account?

The Soft Company has provided the following information after year-end adjustments: • Allowance for doubtful accounts was $11,000 at the beginning of the year and $30,000 at the end of the year. • Accounts receivable were $80,000 at the beginning of the year and $420,000 at the end of the year. • Accounts written off as uncollectible totaled $20,000. • Net sales totaled $2,700,000. • Sales discounts were $100,000. How much was Soft's bad debt expense for the year?

When goods are shipped FOB shipping point, title passes to the buyer on the shipment date.

What would be incorrect about reporting accounts receivable in the balance sheet?

A customer purchased and received $5,000 of goods on credit from Discount Paper Supply on September 1. The customer received the bill on September 13 and mailed a $5,000 check on September 30. Discount Paper Supply received the check on October 4. On which of the following dates should Discount Paper Supply record sales revenue?

The cash account and the December bank statement of Gomez Company showed the following: deposits made by Gomez Company during December $90,000; deposits reflected on the December bank statement, $88,000; and deposits in transit on November 30, $5,000. How much were the deposits in transit at the end of December?

Redwing Company sold inventory costing $500 to a customer on account for $700. Which of the following correctly describes the collection of $686 cash when the customer takes advantage of a sales discount?

Newark Company has provided the following information: • Cash sales, $450,000 • Credit sales, $1,350,000 • Selling and administrative expenses, $330,000 • Sales returns and allowances, $90,000 • Gross profit, $1,360,000 • Increase in accounts receivable, $55,000 • Bad debt expense, $33,000 • Sales discounts, $43,000 • Net income, $1,030,000 What is the effect of collections from customers on cash flow from operating activities, using the indirect method?

If a check received from a customer has been deposited by the seller and is marked on the bank statement as a nonsufficient funds (NSF) amount, then it would appear on the seller's bank reconciliation as a deduction from the ending bank statement balance.

Which of the following accounts is not a contra-revenue account?

When credit terms for a sale are 2/15, n/40, the customer saves by paying early. What percent (rounded) would this savings amount to on an annual basis?

The Tanner Company has provided the following information after year-end adjustments: • Allowance for doubtful accounts increased $19,000. • Accounts receivable increased $390,000 during the year. • Accounts written off as uncollectible totaled $20,000. • Sales totaled $2,500,000. • Sales discounts were $100,000. How much were Tanner's net sales?