Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

The journal entry to record bad debt expense is made during the year in which it is determined that a particular receivable is uncollectible, regardless of the year of sale.

A deposit in transit in a bank reconciliation should be:

Which of the following is correct when bad debt expense is recorded at year-end?

The following data were taken from the records of Lilo Corporation for the year ended December 31, 2016 before any adjustment for bad debt expense: The following items have not been included in above amounts: Estimated bad debt expense is 1% of credit sales. The income tax rate is 35%. 10,000 of shares of common stock are outstanding. Required: A.Calculate the bad debt expense. B.Prepare a multiple-step income statement (including gross profit, income before income taxes, and earnings per share).

On June 1, 2016, Concorde Company sold merchandise on credit at an invoice price of $1,000; terms 2/10, n/30. Required: Prepare the journal entries to record the following: A.To record the sale. B.Assumption A: To record collection on June 28, 2016. C.Assumption B: To record collection on June 9, 2016.

The CHS Company has provided the following information: • Accounts receivable written-off as uncollectible during the year amounted to $11,500. • The accounts receivable balance at the beginning of the year was $150,000. • The accounts receivable balance at the end of the year was $210,000. • The allowance for doubtful accounts balance at the beginning of the year was $14,000. • The allowance for doubtful accounts balance at the end of the year after the recording of bad debt expense was $12,900. • Credit sales during the year totaled $900,000. How much was CHS Company's bad debt expense?

A recent annual report for Kirova Company contained the following data: Required: A.Calculate the accounts receivable turnover ratio. B.Calculate the average days' sales in receivables for 2016 (rounded to the nearest day). C.Explain the meaning of each number.

Which of the following transactions will result in a decrease in the receivable turnover ratio?

The journal entry to write off an uncollectible account does not change the net realizable value (book value) of accounts receivable.

Which of the following is not a reason for the Jones Hardware Store to accept credit cards from customers?

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017: Describe how the change in accounts receivable will affect the calculation of cash flow from operating activities for 2017 and 2016.

Flyer Company has provided the following information prior to any year-end bad debt adjustment: • Cash sales, $150,000 • Credit sales, $450,000 • Selling and administrative expenses, $110,000 • Sales returns and allowances, $30,000 • Gross profit, $490,000 • Accounts receivable, $110,000 • Sales discounts, $14,000 • Allowance for doubtful accounts credit balance, $1,200 Flyer estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. How much is Flyer's bad debt expense?

A portion of the income statement for Lone Star Company is shown below. Provide the missing account titles and amounts. A._______________________ $380,000 Sales discounts 20,000 Net sales B.________ Cost of sales $100,000 C._______________________ D.________

Prior to the year-end adjustment to record bad debt expense for 2016 the general ledger of Stickler Company included the following accounts and balances: Cash collections on accounts receivable during 2016 amounted to $450,000. Sales revenue during 2016 amounted to $800,000, of which 75% was on credit, and it was estimated that 2% of these credit sales made in 2016 would ultimately become uncollectible. Required: A.Calculate the bad debt expense for 2016. B.Determine the adjusted 2016 year-end balance of the allowance for doubtful accounts. C.Determine the net realizable value of accounts receivable for the December 31, 2016 balance sheet.

Effective internal control of cash should include the separation of the duties for receiving and disbursing cash.

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance. Record your answer to the left of each account by entering either Dr or Cr.

When a depositor receives a bank statement indicating that there was a "NSF check," the depositor should do which of the following?

If the accounts receivable turnover ratio increases, the number of days it takes to collect the receivables also increases.

Determine the effect of the following transactions on the financial statement components identified. Code your answers as follows: A: If the transaction results in an increase in the financial statement component. B: If the transaction results in a decrease in the financial statement component. C.If the transaction does not affect the financial statement component.Transaction 1: The adjusting entry to record bad debt expense was made.Gross profit _____ Current assets _____ Stockholders' equity _____ Transaction 2: An account receivable was collected for which the customer took advantage of a 2% discount and remitted the payment less the discount.Net sales _____ Gross Profit _____ Current assets _____

On January 1, American Company's allowance for doubtful accounts had a credit balance of $3,000. The balance in the Accounts Receivable account on that date was $75,000. On January 2, prior to any credit sales, a $500 account from National Company was deemed to be uncollectible and written off. Required: A.Compute the net realizable value of American's receivables on January 1. B.Prepare the journal entry American would record on January 2 related to the write-off of National's account. C.Compute the net realizable value of American's receivables on January 2, immediately following the write-off of National's account.