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Exam 7: Cash and Receivables

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Question 21

True/False

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Unless specific sales criteria are met,the factoring of accounts receivable with recourse is accounted for as a loan.

A) True
B) False

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Question 22

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The journal entry to record the replenishment of a petty cash fund includes a credit to the petty cash fund.

A) True
B) False

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Question 23

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If cash has been collected from a customer,recognizing estimated sales returns results in recognizing a refund liability.

Long-term notes receivable issued for noncash assets at an unrealistically low interest rate will be:

Briefly explain the accounting treatment for estimated sales returns at the end of an accounting period for which accounts receivable remain outstanding..

Ireland Corporation obtained a $40,000 note receivable from a customer on June 30,2016.The note,along with interest at 6%,is due on June 30,2017.On September 30,2016,Ireland discounted the note at Cloverdale bank.The bank's discount rate is 10%.What amount of cash did Ireland receive from Cloverdale Bank?

False Value's 2016 income statement would report net sales of:

Calistoga's accounts receivable at December 31,2016,are:

Huckabee's 2016 average collection period (rounded) is:

The receivables turnover ratio provides a way for an analyst to assess the effectiveness of a company in managing its investment in receivables.

Use the following to answer questions Wilson Company had the following cash balance items listed in its trial balance at 12/31/2016: -If Wilson reports under IFRS,its 12/31/2016 balance sheet would show what cash balance?

Although the net method is theoretically more sound,most companies use the gross method of accounting for cash discounts related to sales on account.Explain this statement.

Cashmere Soap Corporation had the following items listed in its trial balance at 12/31/2016: What amount will Cashmere Soap include in its year-end balance sheet as cash and cash equivalents?

As of December 31,2015,Gill Co.reported accounts receivable of $216,000 and an allowance for uncollectible accounts of $8,400.During 2016,accounts receivable increased by $22,000,and $7,800 of bad debts were written off.An analysis of Gill Co.'s December 31,2016,accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable.Bad debt expense for 2016 would be:

The income statement approach to estimating bad debts requires an adjusting entry at the end of the period to reduce receivables to net realizable value.

Under IFRS,accounts receivable can be accounted for at fair value whenever company management wants to do so.

The allowance for uncollectible accounts is a:

What is the correct entry for Flores on December 5,assuming the correct payment was received on that date?

A summary of London Fashion's December 31,2016,accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group: The allowance for uncollectible accounts had a balance of $1,600 at January 1,2016.During the year bad debts of $1,150 were written off. Required: Prepare all 2016 journal entries with respect to bad debts and the allowance for uncollectible accounts.

As of December 31,2016,Amy Jo's Appliances had unadjusted account balances in accounts receivable of $311,000 and $970 in the allowance for uncollectible accounts,following 2016 write-offs of $6,450 in bad debts.An analysis of Amy Jo's December 31,2016,accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable.Bad debt expense for 2016 should be: