Exam 6: The Current Asset Classification, Cash, and Accounts Receivable

Polo, Inc. uses the allowance method of accounting for bad debts. During July, Torey's account was written off as uncollectible. The write-off of Torey's account

On 12/31/16, Phoebe Company's balance sheet revealed a $7,000 balance in its allowance for doubtful accounts. During 2017, $2,000 of accounts were written off and $500 of accounts receivable previously written off were collected. On 12/31/17, bad debt expense was estimated to be 5% on net credit sales, which were $400,000. Calculate the balance in the allowance for doubtful accounts on 12/31/17.

Under the allowance method of accounting for bad debts, the write-off of an account receivable determined to be uncollectible

What accounting requirements brought significant opposition from the banking industry?

Paxton's aging schedule of its accounts receivable on December 31 follows: Account Age Balance Non-collection Likelihood 1-30 days \ 100,000 3\% 31-90 days 70,000 7\% Over 90 days 40,000 10\% The balance in Paxton's allowance for doubtful accounts immediately prior to December 31 adjusting entries is $700 credit. Determine bad debt expense and the net realizable value of the December 31 accounts receivable.

Summers, Inc. uses the allowance method to account for bad debts. The entry to record the write-off of a customer's account balance decreases

The following information was taken from the unadjusted trial balance and aging schedule of Diane Company on December 31, 2017. All sales are on account. Accounts and related balances at December 31, 2017 before adjustment: Debit Credit Accounts receivable \ 46,000 Allowance for doubtful accounts \6 80 Sales (all on account) 500,000 Sales returns 3.000 Aging Schedule of Accounts Receivable: Age Amount \% Uncollectible 0 -30 days \ 14,000 5\% 30-60 days 20,000 8\% Over 60 days 12,000 12\% If Diane Company estimates bad debts as 6% of net credit sales, what is the amount of bad debt expense to be reported on the income statement for the period ending December 31, 2017?

On December 11, 2017, Bisbee Co. purchased capsules from a Canadian company for 10,000 Canadian dollars (10,000 C$) to be paid on January 2, 2018. The exchange rates on December 11 and December 31, 2017 are US$0.79 = 1C$ and US$0.82 = 1C$, respectively. What is the cost of the capsules in U.S. dollars and the 2017 exchange loss?

Use the information that follows taken from the unadjusted trial balance and aging schedule of Behrend Company on December 31, 2017 to answer the questions below. All sales are on account. Accounts and related balances at December 31, 2017 before adjustment: Debit Credit Accounts receivable \ 47,000 Allowance for doubtful accounts \ 420 Sales (all on account) 400,000 Sales returns 2,000 Aging Schedule of Accounts Receivable: Age Amount \% Uncollectible 0 -30 days \ 15,000 2\% 30-60 days 18,000 7\% Over 60 days 14,000 13\% If Behrend uses the aging schedule of accounts receivable to determine bad debts, determine the following: A. Bad debt expense for the year ending December 31, 2017 B. Allowance for Doubtful Accounts balance at December 31, 2017 C. Net realizable value of accounts receivable on the 2017 financial statements

How would the current ratio be affected if Ryan collects $600 from customers for amounts owed?

Which of the following are components of the current ratio?

Use the information that follows from the financial statements of Pines Company at December 31, 2017, to answer questions 16 through 20 that follow. Accounts payable \ 2,000 Accounts receivable 3,000 Capital stock 8,000 Cash 5,000 Inventory 19,000 Land 24,000 Notes payable (short-term) 5,000 Cost of goods sold 12,000 Retained earnings 21,000 Sales revenue 20,000 -Calculate total current liabilities for Pines Company at December 31, 2017.

Use the information that follows from the financial statements of Pines Company at December 31, 2017, to answer questions 16 through 20 that follow. Accounts payable \ 2,000 Accounts receivable 3,000 Capital stock 8,000 Cash 5,000 Inventory 19,000 Land 24,000 Notes payable (short-term) 5,000 Cost of goods sold 12,000 Retained earnings 21,000 Sales revenue 20,000 -Calculate the quick ratio for Pines Company at December 31, 2017.

Under the allowance method of accounting for bad debts, the actual write-off of an account receivable determined to be uncollectible

The allowance method of accounting for bad debts emphasizes the net realizable value of accounts receivable on the balance sheet when

Identify the limitations of current asset classification.

If a company with working capital of $210,000 pays $4,000 of bonds payable, then its working capital will

A company that maintains a cash balance of more than is necessary for its day-to-day needs

Sanchez Inc. sells to customers only on credit. For the year ended December 31, 2017, the following information is provided: Sales revenue \8 50,000 Accounts receivable, 1/01/17 230,000 Allowance for doubtful accounts, 12 / 31 / 17 (before adjustment for bad debts) 600 Collections during 2017 470,000 Accounts written off as uncollectible during 2017 13,000 Sales returns 7,000 What is the balance of the Accounts Receivable account at December 31, 2017?

On December 1, 2017, Smith Company delivered a shipment of goods to a Danish customer for a price of 160,000 euros. If on that date 1.3 U.S. dollars could be exchanged for 1 euro. If Smith closes its books on December 31 and 1 U.S. dollar is trading for 1 euro at that time, the adjusting entry that Smith would record would include: