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

The following information is provided for Atlanta Inc. What is the amount of the Net Realizable Value of the receivables at December 31, 2010? a. $198,000 b. $154,000 c. $193,600 d. $190,400

Use the information that follows concerning the current assets and current liabilities of Ryan Company at December 31, 2010, to answer problems 3 through 8. Each problem is independent of the others. -How would the quick ratio be affected if Ryan purchased $500 of inventory on account?

If a company uses the allowance method to account for bad debts, the company's owners' equity will decrease

If a company with a current ratio of 2.0 pays $2,000 of its salaries payable, then its current ratio will

Preston Bank has $50 million of loans outstanding on December 31 of the current year, in which it recorded net income of $770,000. Preston did not provide for any uncollectible loans because all of its loans are collateralized by real estate. That is, if the loans were to default, Preston would obtain the title to the real estate for which the loans were made. However, during the audit of Preston's financial statements, the auditing company determined that $5 million of the outstanding loans would probably be dishonored (uncollectible). Because during the last three years real estate values have deteriorated, they also investigated the real estate that backed these collateralized loans. The market value of that real estate is negligible. Recalculate Preston's loans receivable on December 31 and current net income to an amount that would be acceptable to the auditors.

Before adjusting entries, Martin's accounts receivable and allowance for doubtful accounts are $65,000 and $1,500 (debit balance), respectively. Using an aging schedule of accounts receivable, it is determined that $4,000 of the accounts receivable would probably be uncollectible. Calculate bad debts expense to be reported on Martin's current year's income statement?

A cash discount differs from a trade discount in that the cash discount is

On December 1, 2010, 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:

Use the information that follows concerning the current assets and current liabilities of Ryan Company at December 31, 2010, to answer problems 3 through 8. Each problem is independent of the others. -Calculate Ryan's working capital, current ratio, and quick ratio at December 31, 2010.

Most companies

Before adjusting entries, Dormont Corp's accounts receivable and allowance for doubtful accounts are $800,000 and $7,000 (credit balance), respectively. Using an aging schedule of accounts receivable, it is determined that $44,000 of the accounts receivable would probably be uncollectible. Calculate the net realizable value of Dormont's receivables at year end.

On March 1, 2010, Silver Corp. sold goods to a Chinese company for 10,000 Chinese yuan (10,000 RMB) to be paid on April 1, 2010. The exchange rates on March 1 and April 1, 2010 are US$8.0 = 1 RMB and US$8.5 = 1 RMB, respectively. What is Silver's revenue in US dollars and its 2009 exchange gain or loss?

Why is too much cash undesirable?

The following are partial balance sheets for Pedro Co, dated December 31: During 2010, $4,000 of accounts receivable were written off as uncollectible. Calculate the amount of bad debts expense recognized on Pedro's 2010 income statement.

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 total current liabilities for Pines Company at December 31, 2010.

Before adjusting entries, Clark's accounts receivable and allowance for doubtful accounts are $42,000 and $300 (credit balance), respectively. Clark determined that 0.4% of net sales would probably be uncollectible. Sales during the year were $500,000 and sales returns amounted to $6,000. Calculate the net realizable value of accounts receivable on Clark's balance sheet at year-end.

Why is the timing of recording a receivable important?

Matching Questions -For each item numbered 1 through 5 below, identify the letter of the best description by selecting from items a through e below. You may use each letter more than once or not at all. ____ 1. Current liabilities ____ 2. Current assets ____ 3. Quick ratio ____ 4. Working capital ____ 5. Current ratio

Hedging is used to

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