Exam 5: Accounting for and Presentation of Current Assets

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 $2,898. (b.) Outstanding checks at June 30 totaled $165. (c.) A deposit of $212 made on June 30 was not included in the balance shown on the bank statement. (d.) The bank statement contained an adjustment of $205 for a note receivable collected by the bank on behalf of Show Me, Inc. ($191 principal and $14 interest). (e.) A bank charge of $17 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 $170 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 $3,013. (h.) The bank statement included a notice that a customer's check for $86 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.

A cash equivalent is a current asset that:

Bad debt expense is recognized in the same accounting period as the revenue that is related to the receivable because:

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

When an uncollectible account receivable is written off against the allowance for bad debts:

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

For which of the following reconciling items would an adjusting entry be necessary on the company's book?

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

In an inflationary economic environment, the selling price set for a firm's products will:

The principal reason for converting a customer's account receivable to a note receivable is:

When costs are rising over time:

The allowance for uncollectible accounts is a(n):

The following is a portion of the current assets section of the balance sheets of The Sweet Cafe at December 31, 2014 and 2013: 12/31/14 12/31/13 Accounts receivable, less allowance for bad debts of \ 243,600 \ 215,800 \ 7,200 and \ 5,100 , respectively. (a.) If bad debts expense for 2014 totaled $16,400, what was the amount of accounts receivable written off during the year? (b.) The December 31, 2014, Allowance account balance includes $8,400 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, 2014? (2.) Net income and ROE for the year ended December 31, 2014? (c.) What do you suppose was the level of The Sweet Cafe's sales in 2014, compared to 2013? Explain your answer.

Which of the following is true regarding notes receivables?

Assume that on September 1, 2013, a 6-month rent payment for $3,000 per month (for a total of $18,000) was made with respect to a commercial lease that the company entered into on that date as a tenant. The company took occupancy of the rented space immediately. The lease term will expire on February 28, 2014. The $18,000 payment was recorded as a debit to Prepaid Rent on September 1, 2013. The adjusting entry on December 31, 2013, is as follows: A. Dr. Prepaid Rent $\quad 6,000$ $\quad$ $\quad$ $\quad$ Cr. Rent Expense $\quad$ $\quad$ 6,000 B. Dr. Prepaid Rent $\quad 12,000$ $\quad$ $\quad$ Cr. Rent Expense $\quad$ $\quad$ $\quad$ 12,000 C. Dr. Rent Expense $\quad 6,000$ $\quad$ $\quad$ Cr. Prepaid Rent $\quad$ $\quad$ $\quad$ 6,000 D. Dr. Rent Expense $\quad 12,000$ $\quad$ $\quad$ $\quad$ $\quad$ Cr. Prepaid Rent $\quad$ 12,000

If an organization purchases $700 of supplies on account, with terms of 2/15, n50:

An organization's system of internal control is designed primarily to:

Which of the following is NOT an example of an inventory account a manufacturing firm might use?

Which of the following is(are) a category for securities?

When a manufacturer invests in short-term marketable securities: