Exam 6: Cash, Receivables, and the Time Value of Money

You are considering a cell phone package that needs no money down but has monthly payments of $18.50 for 36 months.The monthly interest rate for you is 1% per month.Alternatively, you can buy the cell phone outright for one fixed price.At which of the following prices would you be better to buy the cell phone?

The lottery has a choice of two different prize payouts.One is to receive a lump sum now; the second is to receive an annual payment of $25,000 a year for the next 40 years starting in one year.If interest rates are 5% the amount of the lump sum that would make you indifferent to the two prizes is closest to?

The December 31, 2013, unadjusted trial balance of Torengat Ltd contained the following balances: Accounts receivable \ 200,000 Allowance for uncollectibles \ 12,000 Net credit sales \ 700,000 Additionally, the firm has given up trying to collect a $9,500 receivable from a customer who recently declared bankruptcy.Torengat's management has not yet written off the amount but intends to do so before the books are closed for the year. Required: A) Provide the entry for the write-off.The company does not use the direct write-off method. B) i) Provide the entry to record the bad debt expense for 2013 assuming the firm uses the percentage-of-credit sales method for recording bad debt expense.On average Torengat has experienced a 4% rate of uncollectible accounts over the past 5 years. ii) What would be the final balances in accounts receivable and the allowance for uncollectibles accounts? iii) At what value would accounts receivable be shown on the balance sheet? C) i) Provide the entry to record the bad debt expense for 2013 assuming that after the firm recorded the $9,500 of write-offs, it determined that 18% of its remaining accounts receivable would be uncollectible under the aging method. ii) What would be the final balances in accounts receivable and the allowance for uncollectibles accounts? iii) At what value would accounts receivable be shown on the balance sheet?

The accounts receivable clerk had prepared the following aging of Northumberland Corp's accounts receivable.The current balance in the allowance for uncollectible receivables is $9,800 CR.What is the bad debt expense for the year? Date since due: \ \% uncollectible 0-30 days 500,000 1\% 30-60 days 200,000 4\% Over 60 davs 100,000 10\% Total \8 00,000 5\% (average)

What kind of account is "allowance for uncollectibles"?

If the company makes the following journal entry to record bad debt expense, which method of accounting for bad debts is it using? Dr. Bad debt expense $\quad$$\quad$$\quad$ xxx Cr. Allowance for uncollectible accounts $\quad$ xxx

The entry to record the return of goods from a customer would include a:

If a company is having difficulty collecting their accounts receivable, which of the following statements would be true?

The present value of an annuity stream of $5,000 per year for 10 years at 6% is closest to?

On January 1, 2013, Murphy Printing Company's allowance for doubtful accounts had a credit balance of $6,000.Sales revenue for 2013 was $1,000,000, of which 80% was on credit.Historical data indicates that 3% of gross credit sales prove uncollectible.What should the balance in the allowance account be after the adjusting entry for doubtful accounts is made?

High River Computing began operations on January 1, 2013.The following information was taken from the financial statements prepared at the end of its first fiscal year, December 31, 2013. Cash \ 6,750 Accounts receivable 126,000 Inventory 459,000 Prepaid expenses 4,450 Accounts payable 118,600 Short-term bank loan 50,000 Sales 1,135,000 Credit sales 800,450 Required:

Which of the following would be classified as an accounts receivable?

Which of the following is not included in the cash and cash equivalents on the balance sheet?

Which of the following would be an example of restricted cash?

Signal Hill Ltd.had the following accounts on their balance sheet: Cash $10,000, Accounts receivable $50,000, Inventory $45,000, Prepaid rent $2,500, Long-term receivable $12,000, Accounts payable $27,500, Interest payable $1,200, Current portion of long-term bank debt $50,000, and Long-term debt $100,000.What was their current ratio?

A company is using the percentage-of-credit-sales method to estimate their bad debts and has noticed that over the past few years there has been a build-up of a credit balance in the Allowance for uncollectible accounts.Which of the following is most likely the cause?

Which one of the following is an advantage of the direct writeoff method?

Selkirk Inc.sold a $500,000 machine to Gimly Company.The terms of the sale are that the full amount is due in 2 years plus interest payable annually at 6%.What amount would be recorded as revenue on the day the sale is made?

The Allowance for sales returns account is classified as a(n):

What is a Letter of Credit?