Exam 5: Accounting for and Presentation of Current Assets

a.Use the horizontal model or write the journal entry to record the payment of a one-year insurance premium of $18,000 on October 1, 2019. b.Use the horizontal model or write the adjusting entry that will be made at the end of every month to show the amount of insurance premium "used" that month. c.Calculate the amount of prepaid insurance that should be reported on the December 31, 2019 balance sheet with respect to this policy.

The effect of an error resulting in an understatement of ending inventory is to:

Which of the following is true regarding notes receivables?

A cash equivalent is a current asset that:

A firm has used LIFO for several years during which costs have trended higher.The effect on 2020 net income using LIFO, relative to FIFO, will be:

The Allowance for Bad Debts account had a balance of $20,400 at the beginning of the year and $24,500 at the end of the year.During the year (including the year-end adjustment), bad debts expense of $33,600 was recognized. Required: Calculate the total amount of past-due accounts receivable that were written off as uncollectible during the year.(Hint: Make a T-account for the Allowance for Bad Debts account, plug in the amounts that you know, and solve for the missing amount.)

The accounting concept or principle applied when an allowance is provided for estimated uncollectible accounts receivable is:

At the beginning of the year, accounts receivable were $45,000 and the allowance for bad debts was $4,200.During the year, sales (all on account)were $180,000, cash collections were $165,000, bad debts expense totaled $3,100, and $2,600 of accounts receivable were written off as bad debts. The balance at the end of the year for the Allowance for Bad Debts account was:

Prepare a bank reconciliation for Show Me, Inc., as of June 30 from the following information: (a.) The June 30 balance shown on the bank statement is $\$ 5,796$ . (b.) Outstanding checks at June 30 totaled $\mathbf { \$ 3 3 0 }$ . (c.) A deposit of $424 made on June 30 was not included in the balance shown on the bank statement. (d) The bank statement contained an adjustment of $410 for a note receivable collected by the bank on behalf of show Me, Inc. (\$382 principal and \$28 interest). (e.) A bank charge of $34 was made to the account during June. Although the company was expecting a charge, the amount was not known until the bank statement arrived. (f.) The bank erroneously charged a $\$ 340$ check of Shirt, Inc., against the Show Me, Inc, bank account. (g) The June 30 balance in the general ledger Cash account, before reconciliation, is $\$ 6,026$ . (h.) The bank statement included a notice that a customer's check for \$172 that had been deposited on June 14 had been returned NSF. Required: (1.)Prepare the bank reconciliation for Show Me, Inc., as of June 30. (2.)Prepare the appropriate adjusting entry(ies)or show the reconciling items in a horizontal model, for Show Me, Inc., related to the bank reconciliation.

Which of the following is the correct balance sheet presentation for current assets?

One inventory cost flow assumption will result in different cost of goods sold from another inventory cost flow assumption only if:

Regardless of the inventory cost flow assumption used, inventories on the balance sheet are stated at:

At the beginning of the year, accounts receivable were $39,000 and the allowance for bad debts was $2,400.During the year, sales (all on account)were $120,000, cash collections were $114,000, bad debts expense totaled $1,700, and $2,000 of accounts receivable were written off as bad debts. Required: Calculate the balances at the end of the year for the Accounts Receivable and Allowance for Bad Debts accounts.(Hint: Use T-accounts to analyze each of these accounts, plug in the amounts that you know, and solve for the ending balances.)

With respect to the write-off of an uncollectible account receivable against the Allowance for Bad Debts account, a sound system of internal control would require:

On January 1, 2020, the balance in Great Lakes Co.'s Allowance for Bad Debts account was $15,600.During the year, a total of $10,500 of delinquent accounts receivable were written off as bad debts.The balance in the Allowance for Bad Debts account at December 31, 2020, was $21,900. (a.)What was the total amount of bad debts expense recognized during the year? (b.)As a result of a comprehensive analysis, it is determined that the December 31, 2020, balance of Allowance for Bad Debts should be $18,900.Show, in general journal format the adjustment required.

The valuation of short-term marketable securities on the balance sheet is likely to be for an amount that is approximately equal to the cost of these investments because:

The principal reason for reconciling the cash balance per books with the balance shown on the bank statement is to:

The following is a portion of the current assets section of the balance sheets of The Sweet Cafe at December 31, 2020 and 2019: 12/31/20 12/1/19 Accounts receivable, less allowance for bad debts of \ 14,400 (for 2020) and \ 10,200( for 2019) \ 487,200 \ 431,600 (a.)If bad debts expense for 2020 totaled $32,800, what was the amount of accounts receivable written off during the year? (b.)The December 31, 2020, Allowance account balance includes $6,800 for a past due account that is not likely to be collected.This account has not been written off.If it had been written off, what would have been the effect of the write off on: (1.)The current ratio at December 31, 2020? (2.)Net income and ROE for the year ended December 31, 2020? (c.)What do you suppose was the level of The Sweet Cafe's sales in 2020, compared to 2019? Explain your answer.

The balance in Jahapp Inc.'s Cash account was $6,320 at April 30, 2019 before reconciliation.The April 30, 2019 balance shown in the bank statement was $4,590.Reconciling items included deposits in transit, $2,600; bank service charges, $140; outstanding checks, $950; and interest credited to the bank account during the month but not recorded on the company's books, $60.The reconciled balance at April 30, 2019 is:

The balance sheet presentation of accounts receivable net of the allowance for bad debts has the effect of stating accounts receivable at: