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

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Question 41

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

A) True
B) False

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Question 42

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Linetech Company's bank statement showed an ending balance of $8,000. Items appearing in the bank reconciliation included: outstanding checks, $500; deposits in transit, $1,000; bank service charges, $50; and Driver Company's $250 check erroneously deducted from Linetech's bank account by the bank. What is the correct cash balance at the end of the month?

A) $10,600.
B) $8,750.
C) $8,500.
D) $8,250.

E) B) and D)
F) A) and B)

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Question 43

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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: Required: 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.

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

Which of the following statements pertaining to bank reconciliations is false?

The year-end journal entry to record bad debt expense reduces the accounts receivable account and increases net income.

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?

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 What is the effect of collections from customers on cash flow from operating activities, using the indirect method?

A portion of the income statement for Oscar Company is shown below. Provide the missing account titles and amounts. A._______________________ $350,000 Sales returns and allowances B.________ C._______________________ $348,000 D._______________________

A company had the following partial list of account balances at year-end: How much is net sales revenue?

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?

Which of the following journal entries correctly records 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.

Merchandise was sold on credit for $30,000, terms 3/15, n/30. Which of the following journal entry descriptions correctly describes the cash collection?

A company purchased goods on credit with credit terms of 3/15, n/45. Although the company does not have cash available to pay within the discount period, the manager of the company is considering borrowing money to take advantage of the discount. In order to make the appropriate decision, the manager computed the annual interest rate associated with the sales discount. Which of the following is the annual interest rate (rounded) ?

Which of the following would be included in Latimer Company's sales in 2016?

The Roscoe Company's March 31, 2016 bank statement balance was $70,000. As of March 31, 2016, outstanding checks total $22,000 and deposits in transit total $15,000. What was the March 31, 2016 cash balance on Roscoe's books?

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?

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

When preparing a bank reconciliation, which of the following would be deducted from the company's cash balance?