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

CHS Company has just finished preparing its bank reconciliation. If CHS did everything correctly, which items would have been included as an addition to the company's cash account?

Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection?

When using the allowance method for accounting for bad debts, accounts receivable is reported on the balance sheet at the expected net realizable value. When a particular receivable from a customer ultimately is determined to be uncollectible and is written off, the recording of this event will:

Redwing Company sold inventory costing $500 to a customer on account for $700. Which of the following correctly describes the collection of $686 cash when the customer takes advantage of a sales discount?

Which of the following correctly describes the effect of a sales discount?

A comparison of the balance in Cottonwood Company's cash account per its books as of April 30, 2016 and the bank statement dated April 30, 2016 revealed the following information: Required: Prepare a complete bank reconciliation using the format below. In each section of the bank reconciliation indicate the proper handling of each of the items shown above by listing the appropriate item code letter and the respective amount.

Which of the following correctly describes the following journal entry?

Which of the following accounts is not a contra-revenue account?

Which of the following statements is correct?

Illinois Company prepared the following bank reconciliation at May 31: Required: Prepare the necessary journal entries for Illinois Company required by the May 31 bank reconciliation.

Which of the following demonstrates a poor internal control procedure?

Which of the following transactions does not affect gross profit?

When credit terms for a sale are 2/15, n/40, the customer saves by paying early. What percent (rounded) would this savings amount to on an annual basis?

The Tanner Company's April 30, 2016 pre-reconciliation cash balance on its books was $35,000. While preparing the April 30 bank reconciliation, Tanner determined that outstanding checks total $11,000, deposits in transit total $7,000, and bank service charges are $50. What was Tanner's April 30, 2016 cash balance per the bank statement?

Cash equivalents on the balance sheet include certificates of deposit with maturities of 90 days or more.

Which of the following statements is correct?

The cash records and the bank statement of Frankel Company showed the following at the end of February 2016: Outstanding checks as of the beginning of February 2016, $8,000; checks written by Frankel Company according to its books during February 2016, $50,000; and checks cleared by the bank during February 2016, $54,000. What was the amount of the outstanding checks at the end of February 2016?

When goods are shipped FOB destination, the revenue from the sale is recognized on the shipment date.

A customer purchased and received $5,000 of goods on credit from Discount Paper Supply on September 1. The customer received the bill on September 13 and mailed a $5,000 check on September 30. Discount Paper Supply received the check on October 4. On which of the following dates should Discount Paper Supply record sales revenue?

When preparing the monthly bank reconciliation, the accountant for Farris Corporation discovered that a check correctly written to one of Farris' suppliers for $159 had been incorrectly recorded in the books as $195. Which of the following statements is correct with respect to the bank reconciliation process?