Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

When a net decrease in trade receivables for the period occurs,cash collected from customers exceeds revenue,and cash flows from operations increases.

When preparing the monthly bank reconciliation,the accountant for Treetop Towers noted that all cash deposits for the month were listed on the bank statement except one for $1,200 that was made on the last day of the month.In reconciling the bank balance with the company's cash account,how should the $1,200 be recorded?

One technique to provide better control over credit and collections of receivables is to have those functions managed by the accounting department instead of the sales department.

Both credit card discounts and cash discounts can be recorded either as contra revenues or as expenses.

Kansas Company has hired you to reconcile its bank statement and cash account.For June,the Cash account showed the following: The June bank statement,just received,showed the following: There were no outstanding cheques or deposits in transit at May 31.A.Prepare the reconciliation using the format below: B.The bank reconciliation requires that certain entries be made in the depositor's books; the journal entries are: C.The June 30 statement of financial position should report a cash balance of $_________________.

T Co.'s reported a deduction from profit of ($2,781)in thousands for the change in trade receivables on their 2012 cash flow statement.This was caused by an increase in trade receivable from 2011 to 2012.

A company purchased goods on credit with credit terms of 3/15,n/45.Although the company does not have cash available to pay within the discount period,the manager of the company is considering borrowing money to take advantage of the discount.In order to make the appropriate decision,the manager computed the annual interest rate associated with the sales discount.What is the approximate annual rate?

An aging of a company's trade receivables indicates that $6,500 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,200 debit balance,the adjustment to record bad debts for the period will require a

Calculate how the change in trade receivables will affect the statement of cash flows for 2012 and 2011: a.2012 __________ b.2011 __________

Which of the following is not an accurate description of allowance for doubtful accounts?

The following information comes from P Co.'s income statements for 2010 and 2009: 1.Compute the gross profit percentage for a.2012 __________ b.2011 __________ 2.Provide at least two potential causes for the change in P Co's gross profit percentage.

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

After adjustment,the net realizable value of trade receivables reported on the statement of financial position reflects expected cash inflow from credit customers.

Receivables turnover is computed as net credit sales divided by average net trade receivables.

Robertson's Toy World sells a variety of toys at discount prices.The following transactions occurred on May 16.Consider credit card discount a selling expense. Required: a.Present journal entries for each of the above transactions. b.Compute the net sales for the day.

Western Company sold $4,000 of goods to Southern Company on credit on May 1.At the time of the sale,Western recorded a debit to Trade Receivables and a credit to Sales Revenue for $4,000.Terms were 2/10,n/30. Required: Present the entries Western would record for each of the following independent situations: A.Southern paid the balance due,less the discount,on May 10. B.Southern returned half of the goods for credit on May 4.Paid the balance due,less the discount,on May 10. C.Southern paid their bill on May 30 (there were no returns).

The sales returns and allowances account should be reported as a deduction from sales revenue because it is a contra revenue account.

The following data were taken from the records of McMullen Appliances,Incorporated,at December 31,20D: Requirements: 1.Prepare a complete single-step income statement for the company (including pretax profit and earnings per share). 2.Prepare a complete multiple-step income statement for the company (including gross margin,pretax profit,and earnings per share).

During 20A,Thomas Company recorded bad debt expense of $15,000 and wrote off an uncollectible tradereceivable amounting to $5,000.Assuming a January 1,20A,credit balance in the allowance for doubtful accounts of $10,000,the December 31,20A,balance in the allowance account would be which of the following?

What are "cash equivalents"? Specifically where would they appear on the financial statements?