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

Sanchez Inc. sells to customers only on credit. For the year ended December 31, 2010, the following information is provided: What is the balance of the Accounts Receivable account at December 31, 2010? a. $1,525,000 b. $590,000 c. $205,000 d. $135,000

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

The following information was taken from the unadjusted trial balance and aging schedule of Diane Company on December 31, 2010. All sales are on account. Accounts and related balances at December 31, 2010 before adjustment: Aging Schedule of Accounts Receivable: If Diane uses the aging schedule of accounts receivable to determine bad debts, what is the Allowance for Doubtful Accounts balance at December 31, 2010?

Before adjusting entries, Kilby Corp's accounts receivable and allowance for doubtful accounts are $745,000 and $7,000 (credit balance), respectively. Using an aging schedule of accounts receivable, it is determined that $60,000 of the accounts receivable would probably be uncollectible. Calculate the net realizable value of Truman's receivables at year end. a. $681,000 b. $695,000 c. $809,000 d. $685,000

A compensating balance is

Current assets are assets which

On December 1, 2010, Casio Trading Co. sold goods to a German company for 20,000 German marks (20,000 DM) to be collected on January 12, 2011. The exchange rates on December 1 and December 31, 2010 are US$0.50 = 1 DM and US$.60 = 1 DM, respectively. Calculate Casio's revenue in U.S. dollars and its exchange gain or loss for 2010.

On August 1, Compass Co. made a $10,000 credit sale under the terms 2/10, n/30. If Compass receives full payment of the account on August 8, how much cash will it receive?

On November 3, Carol Company made a $2,000 credit sale under the terms 3/10, n/60. If Carol receives full payment of the account on November 14, how much cash will it receive?

Use the information that follows from the financial statements of Pines Company at December 31, 2010, to answer questions 16 through 20 that follow. -Calculate the current ratio for Pines Company at December 31, 2010.

Accounts used to cover day-to-day office expenses are referred to as

An exchange rate

The following information is provided for Atlanta, Inc.. How much is the balance in the Accounts Receivable account at December 31, 2010? a. $193,600 b. $158,600 c. $202,600 d. $203,600

A company has a significant debit or credit accumulation in the preadjustment balance of allowance for doubtful accounts over several periods. Required: (1) What would this indicate? (2) How can users detect the source of this problem?

On December 31, 2010, Priya Co. has accounts receivable of $400,000. It uses the direct write-off method of accounting for bad debts because this is what is required for determining its U.S. taxable net income. The opinion of management is that what is acceptable to the Internal Revenue System should be acceptable under generally accepted accounting procedures. However, its independent auditor disagrees with this impassioned argument and does not accept the direct write-off method of accounting for bad debts. Present the reason(s) for the auditor's objection to the direct write-off method, and indicate the method that must be used under GAAP. Indicate how Priya's 2010 net income, current ratio, and quick ratio will be affected by following the auditor's position.

The balances of the allowance for doubtful accounts on the balance sheets dated December 31 of 2010 and 2009 were $1,000 and $4,000, respectively. During 2010, bad debts expense was $9,000. What is the amount of accounts receivable that were written off as uncollectible during 2010?

The following information concerning the current assets and current liabilities of Mason Company at December 31, 2010, is presented below. Based on this information, what would the quick ratio be if Mason sold all of its inventory for $6,000 cash? a. The quick ratio would decrease from 1.09 to 0.19. b. The quick ratio would decrease from 1.30 to 0.85. c. The quick ratio would increase from 1.30 to 1.54. d. The quick ratio would increase from 1.09 to 1.54.

Which of the following would be separately reported as restricted cash in the balance sheet or footnotes to the financial statement?

The following information was taken from the unadjusted trial balance and aging schedule of Diane Company on December 31, 2010. All sales are on account. Accounts and related balances at December 31, 2010 before adjustment: Aging Schedule of Accounts Receivable: If Diane Company estimates bad debts as 6% of net credit sales, what is the amount of bad debts expense to be reported on the income statement for the period ending December 31, 2010? a. $27,019 b. $29,820 c. $30,000 d. $29,779

Delvin Co. uses the percentage of credit sales approach in estimating its bad debt expense. The total estimate that is calculated by multiplying the percentage times the net sales revenue for the period will be equal to