Deck 7: The Revenuereceivablescash Cycle

Question 1

A discount given to a customer for purchasing a large volume of merchandise is typically referred to as a

A)quantity discount.
B)cash discount.
C)trade discount.
D)size discount.

Answer 1

A

Question 2

What is the accounting principle underlying the recognition of an estimated liability for warranties in the period of product sale?

A)Matching
B)Materiality
C)Full Disclosure
D)Conservatism

Answer 2

A

Question 3

The amount reported as "Cash" on a company's balance sheet normally should exclude

A)postdated checks that are payable to the company.
B)cash in a payroll account.
C)undelivered checks written and signed by the company.
D)petty cash.

Answer 3

A

Question 4

When the allowance method of recognizing bad debt expense is used,the entry to record the write-off of a specific uncollectible account would decrease

A)allowance for doubtful accounts.
B)net income.
C)net realizable value of accounts receivable.
D)working capital.

Question 5

An operating cycle

A)is twelve months or less in length.
B)is the average time required for a company to collect its receivables.
C)is used to determine current assets when the operating cycle is longer than one year.
D)begins with inventory and ends with cash.

Question 6

If the balance shown on a company's bank statement is less than the correct cash balance,and neither the company nor the bank has made any errors,there must be

A)deposits credited by the bank but not yet recorded by the company.
B)outstanding checks.
C)bank charges not yet recorded by the company.
D)deposits in transit.

Question 7

In calculating a company's accounts receivable turnover,which of the following sets of factors would be used?

A)Net income and average accounts receivable
B)Average accounts receivable and average total assets
C)Average accounts receivable and net credit sales
D)Net credit sales and average stockholders' equity

Question 8

Which one of the following statements is NOT correct?

A)The accounting function should be separated from the custodianship of a company's assets.
B)Certain clerical personnel in a company should be rotated among various jobs.
C)A company's personnel should be given well-defined responsibilities.
D)The responsibility of receiving merchandise and paying for it usually should be given to one person.

Question 9

If the cash balance shown in a company's accounting records is less than the correct cash balance,and neither the company nor the bank has made any errors,there must be

A)outstanding checks.
B)deposits in transit.
C)deposits credited by the bank but not yet recorded by the company.
D)bank charges not yet recorded by the company.

Question 10

When the allowance method of recognizing bad debt expense is used,the entries at the time of collection of a small account previously written off would

A)increase net income.
B)increase the allowance for doubtful accounts.
C)decrease net income.
D)decrease the allowance for doubtful accounts.

Question 11

When comparing the allowance method of accounting for bad debts with the direct write-off method,which of the following is true?

A)The direct write-off method is exact and also better illustrates the matching principle.
B)The allowance method is less exact but it better illustrates the matching principle.
C)The direct write-off method is theoretically superior.
D)The direct write-off method requires two separate entries to write off an uncollectible account.

Question 12

When a specific customer's account is written off by a company using the allowance method,the effect on net income and the net realizable value of the accounts receivable is

Question 13

A method of estimating bad debts that focuses on the balance sheet rather than the income statement is the allowance method based on

A)direct write-off.
B)specific accounts determined to be uncollectible.
C)credit sales.
D)aging the trade receivable accounts.

Question 14

Which of the following is NOT a basic characteristic of a system of cash control?

A)Use of a voucher system
B)Combined responsibility for handling and recording cash
C)Daily deposit of all cash received
D)Internal audits at irregular intervals

Question 15

The FASB specified in Statement No.140 three conditions that must be met if a transfer of receivables is to accounted for as a sale.Which of the following is not one of the three conditions specified?

A)The transferred assets have been isolated from the transferor.
B)The transferor's obligation under the recourse provisions can be reasonably estimated.
C)The transferee has the right to pledge or exchange the transferred assets.
D)The transferor does not maintain effective control over the assets through an agreement to repurchase the assets before their maturity.

Question 16

Bank statements provide information about all of the following except

A)checks cleared during the period.
B)NSF checks.
C)bank charges for the period.
D)errors made by the company.

Question 17

Which of the following is NOT correct?

A)The operating cycle sometimes is longer than one year in duration.
B)The operating cycle always is one year in duration.
C)The operating cycle sometimes is shorter than one year in duration.
D)The operating cycle is a concept applicable both to manufacturing and retailing enterprises.

Question 18

When the direct write-off method of recognizing bad debt expense is used,the entry to write off a specific customer account would

A)increase net income.
B)have no effect on net income.
C)increase the accounts receivable balance and increase net income.
D)decrease the accounts receivable balance and decrease net income.

Question 19

Which of the following factors are used to compute the number of days' sales in accounts receivable?

A)Inventory turnover and 365 days
B)Accounts receivable turnover and 365 days
C)Net sales and average inventory
D)Average accounts receivable and cost of goods sold

Question 20

Which of the following would NOT be classified as cash?

A)Personal checks
B)Travelers' checks
C)Cashiers' checks
D)Postdated checks

Question 21

Which of the following items would be added to the book balance on a bank reconciliation?

A)Outstanding checks
B)A check written for $96 entered as $69 in the accounting records
C)Interest paid by the bank
D)Deposits in transit

Question 22

See Abe Company information above.What was the total cash received from Bee during July?

A)$441
B)$450
C)$793
D)$800

Question 23

Teeming Company uses the allowance method of accounting for bad debts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year.
The following additional information is available for the current year:

See Teeming Company information above.If Teeming bases its estimate of bad debts on the aging of accounts receivable,doubtful accounts expense for the current year ending December 31 is

A)$47,000.
B)$48,000.
C)$50,000.
D)$54,000.

Question 24

Based on the aging of its accounts receivable at December 31,Quanto Company determined that the net realizable value of the receivables at that date is $760,000.Additional information is as follows:

Quanto's doubtful accounts expense for the year ended December 31 is

A)$80,000.
B)$96,000.
C)$120,000.
D)$160,000.

Question 25

For the month of December,the records of Former Corporation show the following information:

The corporation uses the direct write-off method in accounting for uncollectible accounts receivable.What are the gross sales for the month of December?

A)$144,000
B)$130,000
C)$118,000
D)$120,000

Question 26

Bank reconciliations are normally prepared on a monthly basis to identify adjustments needed in the depositor's records and to identify bank errors.Adjustments should be recorded for

A)bank errors, outstanding checks, and deposits in transit.
B)all items except bank errors, outstanding checks, and deposits in transit.
C)book errors, bank errors, deposits in transit, and outstanding checks.
D)outstanding checks and deposits in transit.

Question 27

In preparing a monthly bank reconciliation,which of the following items would be added to the balance reported on the bank statement to arrive at the correct cash balance?

A)Outstanding checks
B)Bank service charge
C)Deposits in transit
D)A customer's note collected by the bank on behalf of the depositor

Question 28

Carter Appliance Center sells washing machines that carry a three-year warranty against manufacturer's defects.Based on company experience,warranty costs are estimated at $60 per machine.During the year,Carter sold 48,000 washing machines and paid warranty costs of $340,000.In its income statement for the year ended December 31,Carter should report warranty expense of

A)$680,000.
B)$960,000.
C)$2,200,000.
D)$2,880,000.

Question 29

Windward Corporation's books disclosed the following information for the year ended December 31,2014:

Windward's accounts receivable turnover is

A)3.75 times.
B)4.35 times.
C)5.00 times.
D)5.80 times.

Question 30

Selected information from the accounting records of Monroe Manufacturing Company follows:

What is the number of days' sales in average inventories for the year?

A)102.2
B)94.9
C)87.6
D)68.1

Question 31

Based on its past collection experience,Base Company provides for bad debts at the rate of 2 percent of net credit sales.On January 1,2014,the allowance for doubtful accounts credit balance was $10,000.During 2014,Base wrote off $18,000 of uncollectible receivables and recovered $5,000 on accounts written off in prior years.If net credit sales for 2014 totaled $1,000,000,the doubtful accounts expense for 2014 should be

A)$17,000.
B)$20,000.
C)$23,000.
D)$35,000.

Question 32

In preparing a bank reconciliation,interest paid by the bank on the account is

A)added to the book balance.
B)subtracted from the bank balance.
C)added to the bank balance.
D)subtracted from the book balance.

Question 33

A new product introduced by Sunbound Promotions carries a two-year warranty against defects.The estimated warranty costs related to dollar sales are as follows:

Sales and actual warranty expenditures for the years ended December 31,2013 and 2014,are as follows:

What amount should Sunbound report as its estimated liability as of December 31,2014?

A)$4,000
B)$24,000
C)$56,000
D)$74,000

Question 34

See Abe Company information above.How much was the total Sales Discounts given to Bee during July?

A)$7
B)$0
C)$441
D)$2,441

Question 35

An analysis and aging of accounts receivable of the Gibson Company at December 31,2014,showed the following:

Compute the net realizable value of the accounts receivable of Gibson Company at December 31,2014.

A)$804,000
B)$799,200
C)$723,200
D)$727,200

Question 36

An analysis and aging of the accounts receivable of Mahi Company at December 31 revealed the following data:

The net realizable value of the accounts receivable at December 31 should be

A)$450,000.
B)$443,000.
C)$425,000.
D)$418,000.

Question 37

The following information is from the records of Sumter,Inc.for the year ended December 31,2014.

If the basis for estimating bad debts is 1 percent of net sales,the correct amount of doubtful accounts expense for 2014 is

A)$22,800.
B)$23,200.
C)$28,880.
D)$34,880.

Question 38

Harris,Inc.reported the following balances (after adjustment)at the end of 2014 and 2013.

During 2014,Harris wrote off customer accounts totaling $3,200 and collected $800 on accounts written off in previous years.Harris' doubtful accounts expense for the year ending December 31,2014 is

A)$1,500.
B)$2,400.
C)$3,000.
D)$3,900.

Question 39

Teeming Company uses the allowance method of accounting for bad debts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year.
The following additional information is available for the current year:

See Teeming Company information above.If Teeming determines bad debt expense using 1.5 percent of net credit sales,the net realizable value of accounts receivable on the December 31 balance sheet will be

A)$738,000.
B)$740,000.
C)$744,000.
D)$750,000.

Question 40

Aspen Company provides for doubtful accounts expense at the rate of 3 percent of credit sales.The following data are available for last year:

The allowance for doubtful accounts balance at December 31,after adjusting entries,should be

A)$45,000.
B)$99,000.
C)$90,000.
D)$84,000.

Question 41

Alonso Company had the following bank reconciliation at March 31:

All reconciling items at March 31 cleared through the bank in April.Outstanding checks at April 30 totaled $15,000.What is the amount of cash disbursements per books in April?

A)$89,200
B)$99,400
C)$109,600
D)$114,400

Question 42

During 2012,Grinder Machinery company introduced a new line of machines that carry a three-year warranty against manufacturer's defects.Based on industry experience,warranty costs are estimated at 2% of sales in the year of sale,4% in the year after sale,and 6% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows:

What amount should Grinder Machinery report as a liability at December 31,2014?

A)$0
B)$5,625
C)$76,500
D)$118, 125

Question 43

Which of the following would be considered part of the category "trade receivables"?

A)Advances to employees
B)Amounts due from customers
C)Dividends receivable
D)Income tax refunds receivable

Question 44

The following information is available for Longview Company:

As a result of a review and aging of accounts receivable,it has been determined that the Allowance for Doubtful Accounts should show a balance of $2,400 at December 31,2014.What amount should Longview record as bad debt expense for the year ended December 31,2014?

A)$2,500
B)$1,300
C)$2,400
D)$3,700

Question 45

Sandy Corporation uses the allowance method of accounting for uncollectible accounts.During 2014,Sandy had charged $80,000 to Bad Debt Expense,and wrote off accounts receivable of $90,000 as uncollectible.What was the amount of the decrease in working capital as a result of these entries?

A)$0
B)$90,000
C)$80,000
D)$10,000

Question 46

Assume the following facts for Lowmann Company: The month-end bank statement shows a balance of $40,000; outstanding checks total $2,000; a deposit of $8,000 is in transit at month-end; and a check for $400 was erroneously charged against the account by the bank.What is the correct cash balance at the end of the month?

A)$33,600
B)$34,400
C)$45,600
D)$46,400

Question 47

Which of the following is NOT acceptable in estimating uncollectible accounts receivable under GAAP?

A)The estimate of uncollectible accounts is based on a percentage of sales for the period.
B)The estimate of uncollectible accounts is based on a percentage of the accounts receivable balance at the end of a period.
C)The estimate of uncollectible accounts is based on an aging schedule.
D)No estimate of uncollectible accounts is made; accounts are written off when it is determined they cannot be collected.

Question 48

For tax purposes,an entry should be made to Bad Debt Expense

A)when an account is determined to be uncollectible.
B)in the period in which the sale that created the receivable was made.
C)when an account determined to be uncollectible is collected.
D)when an account with terms 2/10, n30 is still unpaid after thirty days.

Question 49

Conan Corporation had the following transactions in its first year of operations:

What is the cash balance at December 31 of the first year?

A)$170,000
B)$200,000
C)$240,000
D)$290,000

Question 50

In preparing the bank reconciliation of Yardley Company for the month of July,the following information is available:

What is the correct cash balance at July 31?

A)$52,875
B)$54,375
C)$54,825
D)$60,450

Question 51

A debit balance in the Allowance for Doubtful Accounts

A)should never occur.
B)is always the result of management not providing a large enough allowance in order to manage earnings.
C)may occur before the end-of-period adjustment for uncollectibles.
D)may exist even after the end-of-period adjustment for uncollectibles.

Question 52

Donovan Company had the following cash balances at December 31,2014:

Cash in banks includes $125,000 of compensating balances against short-term borrowing arrangements at December 31,2014.The compensating balances are legally restricted as to withdrawal by Donovan.In the current asset section of Donovan's December 31,2014,balance sheet,what total amount should be reported as Cash?

A)$380,000
B)$375,000
C)$255,000
D)$250,000

Question 53

The August 31 bank statement of Mervin Inc.showed a balance of $113,000.Deducted in arriving at this amount was a customer's NSF check for $2,400 that had been returned.Mervin had received no prior notice concerning this check.In addition to the bank statement,other records showed there were deposits in transit totaling $17,200 and that outstanding checks totaled $10,800.What is the cash balance per books at August 31 (prior to adjustments)?

A)$121,800
B)$119,400
C)$117,000
D)$115,400

Question 54

Lawson Corporation's checkbook balance on December 31,2014,was $8,000.In addition,Lawson held the following items in its safe on December 31:

The proper amount to be shown as cash on Lawson's balance sheet at December 31,2014,is

A)$7,600.
B)$8,000.
C)$8,600.
D)$9,750.

Question 55

On December 1,2014,Laramie Company received a $10,000,60-day,6% note from a customer.On December 31,2014,the company discounted the note at the bank.The bank's discount rate is 9%.What were the proceeds that Barnes received from the discounting of the note?

A)$10,024.25
B)$9,700.00
C)$9,924.25
D)$10,050.00

Question 56

Which of the following accounts is not affected when an account receivable written off as uncollectible is unexpectedly collected?

A)Cash
B)Accounts Receivable
C)Bad Debt Expense
D)Allowance for Bad Debts

Question 57

In preparing its bank reconciliation for the month of February,Vance Company has available the following information:

What is the corrected cash balance at February 28?

A)$18,125
B)$18,150
C)$18,275
D)$18,400

Question 58

Under GAAP,an entry should be made to the Bad Debt Expense account

A)when an account receivable with terms 2/10, n30 is past thirty days due.
B)when an account receivable previously written off is determined to be collectible.
C)when an account receivable is determined not to be collectible and is written off.
D)in the period when a sale is made and not when the receivable associated with the sale is determined to be uncollectible.

Question 59

Estimation of uncollectible accounts receivable based on a percentage of sales

A)emphasizes measurement of the net realizable value of accounts receivable.
B)is only acceptable for tax purposes.
C)emphasizes measurement of total assets.
D)emphasizes measurement of bad debt expense.

Question 60

The following information is available for Closer Company relative to 2014 operations:

What is Closer Company's accounts receivable balance at December 31,2014?

A)$82,000
B)$62,000
C)$20,000
D)$146,000

Question 61

The following information was abstracted from the records of the Norrick Corporation:

Prepare the adjusting entry for doubtful accounts expense under each of the following assumptions:
(1)3 percent of outstanding accounts receivable are uncollectible.
(2)1.5 percent of 2014 net sales are uncollectible.
(3)An aging schedule of the accounts shows that $21,400 of the accounts are uncollectible.

Question 62

Receivables can be used to generate cash through two general categories of transactions:
1.A secured borrowing
2.A sale of the receivables.
Both of these types of transactions require a transfer of the receivables to a new holder,typically a financial institution.
A sale of receivables results in the receivables being removed from the books of the transferor and the recognition of gain or loss.From the transferee's standpoint,a sale of receivables results in the receivables being recorded on its books at their fair value.
Required:
Identify the conditions that must exist for a transfer of receivables to be accounted for as a sale.

Question 63

Barter Company borrows $20,000 for one year a 9% interest,but must maintain a $1,600 compensating balance.The effective rate of interest on this loan is

A)9.0%.
B)17.0%.
C)9.8%.
D)8.0%.

Question 64

Receivables can be used to generate cash through two general categories of transactions:
1.A secured borrowing
2.A sale of the receivables.
Both of these types of transactions require a transfer of the receivables to a new holder,typically a financial institution.
Required:
Distinguish between a secured borrowing and a sale of receivables as regards the rights of the transferor and transferee as well as regards the accounting for each type of transaction.

Question 65

On August 1,a firm assigned $30,000 of its $56,000 of accounts receivable.The finance company advanced 90% of the assigned accounts less a $2,000 fee.Interest is 12% and payable monthly on the beginning-of-period loan balance.A loan payment is remitted at the end of each month.Each payment includes principal and interest.The amount of each loan payment equals the cash collected on receivables during the month plus interest on the loan balance.
If $8,000 was collected on accounts receivable during August,the entry for the first loan payment would include a

A)debit to Interest Expense of $280.
B)credit to Cash of $8,000.
C)credit to Account Receivable Assigned of $8,000.
D)debit to Notes Payable of $8,280.

Question 66

Which of the following is not correct regarding IAS 39,International Accounting Standard 39,"Financial Instruments: Recognition and Measurement," and SFAS No.140,Statement of Financial Accounting Standards No.140,"Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities: A Replacement of FASB Statement No.125"?

A)IAS 39 represents a principles-based approach to standard setting.
B)SFAS No. 140 represents a principles-based approach to standard setting.
C)SFAS No. 140 represents a rule-based approach to standard setting.
D)In the large majority of cases, application of the two standards will result in the same accounting treatment for a receivable transfer.

Question 67

A firm factors $40,000 of accounts receivable without recourse.The factor agrees to provide financing based on these receivables,but imposes a 10% fee.In addition,the transferor and transferee agree that $3,000 of sales returns and allowances can be expected from these accounts.What is the loss or expense to recorded by the transferor?

A)$7,000
B)$4,000
C)$3,000
D)$0

Question 68

From inception of operations to December 31,2013,Centaur Corporation provided for uncollectible accounts receivable under the allowance method: Provisions were made monthly at 2 percent of credit sales; bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account; and no year-end adjustments to the allowance account were made.Centaur's usual credit terms are net 30 days.
The credit balance in the allowance for doubtful accounts was $260,000 at January 1,2014.During 2014,credit sales totaled $18,000,000,interim provisions for doubtful accounts were made at 2 percent of credit sales,$180,000 of bad debts were written off,and recoveries of accounts previously written off amounted to $30,000.Centaur installed a computer system in November 2014 and an aging of accounts receivable was prepared for the first time as of December 31,2014.A summary of the aging is as follows:

Based on the review of collectibility of the account balances in the "prior to January 1,2014" aging category,additional receivables totaling $120,000 were written off as of December 31,2014.Effective with the year ended December 31,2014,Centaur adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.
(1)Prepare a schedule analyzing the changes in the allowance for doubtful accounts for the year ended December 31,2014.Show supporting computations in good form.
(2)Prepare the journal entry for the year-end adjustment to the allowance for doubtful accounts balance as of December 31,2014.

Question 69

Corbin Company has two checking accounts.A special account is used for the weekly payroll only,and the general account is used for all other disbursements.Every week,a check in the amount of the net payroll is drawn on the general account and deposited in the payroll account.The company maintains a $5,000 minimum balance in the payroll account.On a monthly bank reconciliation,the payroll account should

A)reconcile to $5,000.
B)show a zero balance per the bank statement.
C)show a $5,000 balance per the bank statement.
D)be reconciled jointly with the general account in a single reconciliation.

Question 70

Accounts receivable usually are factored

A)with recourse on a notification basis.
B)with recourse on a no-notification basis.
C)without recourse on a notification basis.
D)without recourse on a no-notification basis.

Question 71

The Ryan Manufacturing Company received its bank statement for the month ending May 31.The bank statement indicates a balance of $32,400.The cash account as of the close of business on May 31 has a balance of $8,350.In reconciling the balances,the following items are discovered.
(a)Collection by bank of note for $1,500 less collection fees of $250.
(b)Deposits in transit,$51,000.
(c)The bank charged the depositor $800 for overdrafts.
(d)Checks outstanding on May 31,$79,100.
(e)A canceled check issued to Kate Corp.for $4,500 was not recorded on Ryan Manufacturing Company's books.
Prepare a bank reconciliation statement.(Use the format of reconciling bank and depositor figures to corrected cash balance.)

Question 72

The plan of organization and all the methods and measures adopted within a business to safeguard its assets,check the accuracy of its accounting data,promote operational efficiency,and encourage adherence to managerial policies is called

A)accounting control.
B)administrative control.
C)managerial control.
D)internal control.

Question 73

Which of the following is one of the two steps of the 2-step test for derecognition of receivables stated in IAS 39,International Accounting Standard 39,"Financial Instruments: Recognition and Measurement"?

A)The transferred assets have been isolated from the transferor such that the transferor and its creditors cannot access the assets.
B)The transferee has the right to pledge or exchange the transferred assets.
C)If the receivable transfer does not involve the transfer of substantially all the risks and rewards of ownership, then test to determine if the transferor maintains effective control over the assets through either an agreement to repurchase the assets before their maturity, or by the ability to cause the transferee to return specific assets.
D)Determine whether the receivable transfer involves a transfer of substantially all the risks and rewards of ownership of the receivable and, if so, account for the transfer as a sale of the receivable.

Question 74

You are the auditor of Browning,Inc.,a manufacturer of plastic products.In reviewing the balance sheet of the company,you notice several receivables from the officers of the company.You report your findings to the president of the company and inform him that these receivables will be considered related party transactions for purposes of financial accounting and reporting.The president seems somewhat annoyed by your comments and asks you to explain what you mean by "related party" transactions and how the financial statements will be affected by these transactions.Prepare a brief response to the president's question.

Question 75

The information below is from the books of the Pawnee Corporation on June 30:

Assuming no errors were made,compute the cash balance per books on June 30 before any reconciliation adjustments.

Question 76

The accountant for the Teffen Company assembled the following data:


Prepare a 4-column bank reconciliation as of July 31,using the form that reconciles both the book and bank balances to a correct cash amount.

Question 77

The following information was abstracted from the 2014 financial statements of Keller Company:

Prepare the adjusting entry for doubtful accounts expense under each of the following assumptions:
(1)4 percent of current accounts receivable are uncollectible.
(2)2.5 percent of net credit sales are uncollectible.

Question 78

Halen Company factored $50,000 of its accounts receivable with recourse.The factor retained 8% for sales adjustments and charged $3,000 as a financing fee.For simplicity,assume the estimated and actual amounts of the following items are equal:

Assume the transfer is recorded as a sale by Halen Company.What is the loss or financing expense to be recognized on the transfer?

A)$11,000
B)$6,000
C)$3,000
D)$8,000

Question 79

The books of Barry's Service,Inc.disclosed a cash balance of $68,757 on June 30.The bank statement as of June 30 showed a balance of $54,780.Additional information that might be useful in reconciling the two balances follows:
(a)Check number 748 for $3,000 was originally recorded on the books as $4,500.
(b)A customer's note dated March 25 was discounted on April 12.The note was dishonored on June 29 (maturity date).The bank charged Barry's account for $14,265,including a protest fee of $42.
(c)The deposit of June 24 was recorded on the books as $2,895,but it was actually a deposit of $2,700.
(d)Outstanding checks totaled $9,885 as of June 30.
(e)There were bank service charges for June of $210 not yet recorded on the books.
(f)Barry's account had been charged on June 26 for a customer's NSF check for $1,296.
(g)Barry properly deposited $600 on June 3 that was not recorded by the bank.
(h)Receipts of June 30 for $13,425 were recorded by the bank on July 2.
(i)A bank memo stated that a customer's note for $4,500 and interest of $165 had been collected on June 27,and the bank charged a $36 collection fee.
Prepare a bank reconciliation statement,using the form reconciling bank and book balances to the correct cash balance.

Question 80

Eastern Company sells products covered by a 3-year warranty.Based on past experience of other entities in the industry,Eastern expects to incur warranty costs equal to 1% of sales.Eastern's sales were $45,000 in 2013 and $50,000 in 2014.In 2014,the company spent $200 to repair goods sold in 2013 and $300 to repair goods sold in 2014.Eastern received no warranty servicing demands from its customers in 2013,the company's first year of operations.
What is the balance in the warranty liability account on January 1,2015?

A)$450
B)$500
C)$300
D)$0