Exam 7: Reporting and Analysing Cash and Receivables

Match the items below by choosing the appropriate code letter : -A measure of the liquidity of receivables, calculated by dividing net credit sales by average net receivables.

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Bank service charge

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Bank charged a cheque against the company, which should have been charged to another company.

Accounts receivable includes:

The following information is available for Chancellor Company: profit $3.600 million; net cash provided by operating activities $1,250 million; total expenses $2,500 million; depreciation expense $350 million; cash dividends $400 million; capital expenditures $650 million; and cash and cash equivalents $900 million. Chancellor's cash to daily cash expenses ratio is calculated as:

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Bank collects notes receivable and interest for depositor

Please complete the following statements: -One method of accounting for ________ debts involves estimating uncollectible accounts at the end of each period and recognising an _____________ account as a contra account.

Match the items below by choosing the appropriate code letter : -Issued cheques that have not been paid by the bank.

Management of cash is the responsibility of the company:

Please complete the following statements: -A basic principle of cash management is to delay payment of _____________.

Match the items below by choosing the appropriate code letter : -Cheques which have been paid by the depositor's bank.

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Cheque for $320 correctly written and paid by the bank but incorrectly entered in the cash payments journal for $230

K2 Limited received a notice with its bank statement that the bank had collected a note receivable for $8,000 plus $400 of interest. The bank had credited these amounts to K2's account less a collection fee of $10. K2 Ltd had already accrued the interest for this note on its books. (a) How will these items affect K2's bank reconciliation? (b) Prepare the journal entry that K2 Ltd will make to record this information on its books.

Match the items below by choosing the appropriate code letter : -Anything that a bank will accept for deposit.

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply. Possible errors or problems: -A small fire destroys 3 days of cash receipts.

The following information is available for Grosvenor Company: profit $2,200 million; net cash provided by operating activities $1,200 million; total expenses $1,700 million; depreciation expense $275 million; cash dividends $330 million; capital expenditures $750 million; and cash and cash equivalents $700 million. Grosvenor's cash to daily cash expenses ratio is calculated as:

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Outstanding cheques

Siew Lan uses the allowance method to record bad debts expense. When accounts receivable is aged at the end of December, it is estimated that 2% of Siew Lan's accounts receivable will be uncollectable. Accounts receivable at 31 December are $300,000 and the Allowance for doubtful debts has a credit balance of $5,000. Required: (a) Prepare the adjusting journal entry to record bad debts expense for the year ended 31 December. (b) Determine the amount of the bad debts expense if the balance in the Allowance account is a debit of $500 instead of a credit of $5,000.

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Bank returns deposited cheque marked NSF

The Tarragon Trading Company's bank statement for the month of November showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $5,659 at 30 November. Other information is as follows: (1) Cash receipts for 30 November recorded on the company's books were $5,200 but this amount does not appear on the bank statement. (2) The bank statement shows a debit memorandum for $40 for cheque printing charges. (3) Cheque No. 119 payable to Burns Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Burns Company and that the payment to them should have been for $284. (4) The total amount of cheques still outstanding at 30 November amounted to $5,800. (5) Cheque No. 138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Cheque No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $490. (6) The bank returned a dishonoured cheque from a customer for $560. (7) The bank included a credit memorandum for $1,260, which represents collection of a customer's note by the bank for the company; principal amount of the note was $1,200 and interest was $60. Interest has not been accrued. Required: (a) Prepare a bank reconciliation for the Tarragon Trading Company at 30 November. (b) Prepare any adjusting entries necessary as a result of the bank reconciliation.