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

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Question 21

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Cyclone Inc.reported the following figures from its financial statements for the years 2018 through 2020: Describe how the change in accounts receivable will affect the calculation of cash flow from operating activities for 2020 and 2019.

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In 2020,accounts receivable decreased $2...

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Question 22

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The Tanner Company has provided the following information after year-end adjustments: • Allowance for doubtful accounts increased $19,000. • Accounts receivable increased $390,000 during the year. • Accounts written off as uncollectible totaled $20,000. • Sales totaled $2,500,000. • Sales discounts were $100,000. What was the amount of Tanner's net sales?

A) $1,990,000.
B) $2,380,000.
C) $2,400,000.
D) $2,420,000.

E) B) and C)
F) None of the above

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Question 23

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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?

On December 31,2019,Colonial Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries: Required: Prepare the necessary year-end adjusting entry related to uncollectible accounts for each of the following independent assumptions: A.An aging of accounts receivable is completed.It is estimated that $2,150 of the receivables outstanding at year-end will be uncollectible. B.Assume the same information presented in part A above except that,prior to adjustment,the allowance for doubtful accounts had a debit balance of $200 rather than a credit balance of $200. C.It is estimated that a provision for bad debts is required for 1% of credit sales for the year.

Woodland Company uses the allowance method to account for bad debts.During the current year,a customer declared bankruptcy and a receivable of $10,000 was deemed uncollectible.Which of the following journal entries records Woodland's uncollectible account write-off?

When goods are shipped FOB shipping point,title passes to the buyer on the shipment date.

On January 2,2019,Boulder Pointe Air Conditioning and Heating sold and installed an HVAC system to DeMille Co.for $2,750.The selling price is allocated as follows: (1)90% for the HVAC unit and (2)10% for an ongoing 4-year service contract for the HVAC unit. A.Determine each of the following related to this sale: 1.Identify the contract between the company and the customer. 2.Identify the performance obligations of Boulder Pointe. 3.Determine the transaction price. 4.Allocate the transaction price to the performance obligations. B.What amount of revenue should Boulder Pointe recognize for the year ended December 31,2019?

Burke Company has just received its June 30 bank statement from Urban Bank.The bank statement and the cash account per the books,summarized below,are to be reconciled for the month of June. Other Data: A.Prepare the June 30 bank reconciliation. B.Prepare the journal entries that should be made in the accounts of Burke Company as a result of the bank reconciliation.

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 prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible.How much is bad debt expense?

An objective of preparing the bank reconciliation is to reconcile the bank balance at the end of the period with the company's book balance at the end of the period.

Which of the following correctly describes the effect of a journal entry involving the recording of a sales return?

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?

Which of the following does not correctly describe the effect of recording a credit sale of inventory for a profit?

When using the percentage of credit sales method,net sales multiplied by a historical percentage for credit losses equal bad debt expense.

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 cash was received from collections of accounts receivable?

A.What are "cash equivalents"? B.Specifically where would cash equivalents appear on the financial statements?

When completing the bank reconciliation,bank service charges should be deducted from the company's cash balance.

Which of the following does not correctly describe the following journal entry?

Upon completing an aging analysis of accounts receivable,the accountant for Rosco Works prepared an aging of accounts receivable and estimated that $5,000 of the $98,000 accounts receivable balance would be uncollectible.The allowance for doubtful accounts had a $400 debit balance at year-end prior to adjustment.What is the amount of bad debt expense?

At year-end,Chief Company has a balance of $10,000 in accounts receivable of which $1,000 is more than 30 days overdue.Chief has a credit balance of $100 in the allowance for doubtful accounts before any year-end adjustments.Using the aging of accounts receivable method,Chief estimates that 1% of current accounts and 10% of accounts over thirty days are uncollectible.What is the amount of bad debt expense?