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

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Question 71

Multiple Choice

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Oakwood Company had accounts receivable of $750,000 and an allowance for doubtful accounts of $21,500 just prior to writing off as worthless a customer's $5,000 account receivable.The net realizable value of Oakwood's accounts receivable as shown by the accounting records before and after the write off was as follows:

A)
B)
C)
D)

E) B) and C)
F) A) and B)

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Question 72

Multiple Choice

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One of Trent Company's customers returned products that had been sold on account for $800.Which of the following correctly describes the effect on the financial statements of the return?

A) A contra-revenue account decreases $800.
B) Accounts receivable decrease $800.
C) Sales returns and allowances decrease $800.
D) Net sales increase $800.

E) A) and B)
F) A) and C)

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Question 73

Multiple Choice

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Which of the following statements is correct?

Which of the following transactions does not affect gross profit?

Hickory Corporation recorded sales revenue during the year of $350,000 of which $100,000 was on credit.The company has experienced an average bad debt loss rate of 2% of credit sales. Prepare the adjusting journal entry at the end of the year to record bad debt expense.

Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount?

A recent annual report for Kirova Company contained the following data: (in millions) A.Calculate the accounts receivable turnover ratio. B.Calculate the average days sales in receivables for 2019 (rounded to the nearest day). C.Explain the meaning of each number.

A portion of the income statement for Oscar Company is shown below.Provide the missing account titles and amounts.

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

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

The cash account and the December bank statement of Gomez Company showed the following: deposits made by Gomez Company during December,$90,000;deposits reflected on the December bank statement,$88,000;and deposits in transit on November 30,$5,000.What was the amount of deposits in transit at the end of December?

A deposit in transit in a bank reconciliation should be:

Newark Company has provided the following information: • Cash sales,$450,000 • Credit sales,$1,350,000 • Selling and administrative expenses,$330,000 • Sales returns and allowances,$90,000 • Gross profit,$1,360,000 • Increase in accounts receivable,$55,000 • Bad debt expense,$33,000 • Sales discounts,$43,000 • Net income,$1,030,000 - How much cash was collected from customers?