Deck 5: Cash and Receivables

Question 1

Which statement is correct about the bank reconciliation?

A)It compares cash in the company's records with those of the bank.
B)It does not identify accounting errors made by the bank.
C)It interferes with other internal controls over cash.
D)It compares cash in the general ledger with the monthly budgets.

Answer 1

A

Question 2

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \text { Treasury bills maturing in } 30 \text { days } & \$ 24,000 \\\hline \text { Six-month U.S. term deposit } & 12,000 \\\hline \text { U.S. dollars on hand } & 18,000 \\\hline \text { Bonds of a publicly traded U.S. company } & 10,000 \\\hline\end{array}$$

A)$30,000
B)$36,000
C)$40,000
D)$42,000

Answer 2

$42,000

Question 3

Explain why the definition of cash and cash equivalents is important for the financial statements. How would a transfer from one bank account to another be reported in the cash flow statement?

Answer 3

The definition impacts the cash flow statement. Only changes in cash and cash equivalents result in cash flows; changes in the composition of cash and cash equivalents does not constitute a cash flow.

Question 4

Define "cash" and explain how funds that are subject tor restrictions should be accounted for in the accounting records.

Question 5

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Treasury bills maturing in } 10 \text { days } & \$ 12,000 \\\hline \text { Four-month U.S. term deposit } & 18,000 \\\hline \text { Bonds of a publicly traded U.S. company } & 10,000 \\\hline \text { U.S. treasury bill maturing in } 120 \text { days } & 24,000 \\\hline\end{array}$$

A)$0
B)$12,000
C)$36,000
D)$64,000

Question 6

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Euro treasury bills maturing in } 140 \text { days } & \$ 12,000 \\\hline \text { U.S. treasury bill maturing in } 120 \text { days } & 18,000 \\\hline \text { Bonds of a publicly traded U.S. company } & 10,000 \\\hline \text { U.S. dollars on hand } & 24,000 \\\hline\end{array}$$

A)$12,000
B)$18,000
C)$24,000
D)$54,000

Question 7

What is included in "cash and cash equivalents"?

A)Guaranteed Investment Certificate maturing in 181 days.
B)Four-month term deposits.
C)U)S. cash on hand.
D)Guaranteed Investment Certificate maturing in 125 days.

Question 8

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Investment in shares of a public company } & \$ 12,000 \\\hline \text { Investment in a money market fund } & 18,000 \\\hline \text { Bonds of a publicly traded company } & 10,000 \\\hline \text { Two-month U.S. dollar term deposits } & 24,000 \\\hline\end{array}$$

A)$18,000
B)$22,000
C)$30,000
D)$42,000

Question 9

What is included in "cash and cash equivalents"?

A)Short term, liquid investments convertible into known amounts of cash.
B)Short term, highly liquid investment convertible into known amounts of cash.
C)Cash restricted for plant expansion.
D)Sinking funds.

Question 10

What is included in "cash and cash equivalents"?

A)Petty cash.
B)Six-month term deposits in Canadian dollars.
C)Guaranteed Investment Certificate maturing in 100 days.
D)Four-month term deposit in U.S. dollars.

Question 11

What is not included in "cash and cash equivalents"?

A)Canadian cash on hand.
B)Demand deposits.
C)Six-month term deposits.
D)Three-month Treasury bills.

Question 12

What dollar amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \text { Treasury bills maturing in } 30 \text { days } & \$ 12,000 \\\hline \text { Investment in a money market fund } & 8,000 \\\hline \text { Cash on hand } & 1,000 \\\hline \text { Postage stamps } & 1,000 \\\hline\end{array}$$

A)$9,000
B)$12,000
C)$21,000
D)$22,000

Question 13

What criterion is not required for a "cash equivalent"?

A)Convertibility into cash.
B)Long term investment.
C)Insignificant risk of change in value.
D)Highly liquid investment.

Question 14

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Treasury bills maturing in } 140 \text { days } & \$ 12,000 \\\hline \text { Euro-denominated savings account } & 18,000 \\\hline \text { U.S. dollar chequing account } & 10,000 \\\hline \text { Treasury bills maturing in } 30 \text { days } & 24,000\end{array}$$

A)$36,000
B)$42,000
C)$52,000
D)$64,000

Question 15

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \text { Treasury bills maturing in } 125 \text { days } & \$ 12,000 \\\hline \text { Treasury bills maturing in } 30 \text { days } & 24,000 \\\hline \text { U.S. dollar chequing account } & 18,000 \\\hline \text { Shares of a U.S. publicly traded company } & 10,000 \\\hline\end{array}$$

A)$36,000
B)$42,000
C)$54,000
D)$64,000

Question 16

Which of the following is not a reason for preparing a bank reconciliation?

A)It explains differences between cash in the general ledger and cash on the bank statement.
B)It is necessary in order to prevent fraud committed by employees.
C)It is helpful in identifying any errors made by the bank.
D)It is helpful in identifying any bookkeeping errors made in the general ledger.

Question 17

What dollar amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Investment in shares of a public company } & \$ 11,000 \\\hline \text { Investment in a money market fund } & 8,000 \\\hline \text { Cash restricted for plant expansion } & 1,000 \\\hline \text { Three-month term deposits } & 2,000 \\\hline\end{array}$$

A)$8,000
B)$10,000
C)$19,000
D)$21,000

Question 18

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Treasury bills maturing in } 140 \text { days } & \$ 12,000 \\\hline \text { Investment in a money market fund } & 18,000 \\\hline \text { U.S. dollar bonds of a publicly traded company } & 10,000 \\\hline \text { Treasury bills maturing in } 30 \text { days } & 24,000 \\\hline\end{array}$$

A)$36,000
B)$42,000
C)$54,000
D)$64,000

Question 19

Which statement about "cash and cash equivalents" is correct?

A)The definition for "cash and cash equivalents" used on the balance sheet differs from the definition for "cash and cash equivalents" used on the cash flow statement.
B)A change in the composition of "cash and cash equivalents" is considered an operating activity on the cash flow statement.
C)A change in the composition of "cash and cash equivalents" is not considered a cash flow for purposes of the cash flow statement.
D)"Cash and cash equivalents" are short term liquid investments that can be converted to cash within a short time frame.

Question 20

What dollar amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \text { Treasury bills maturing in } 30 \text { days } & \$ 11,000 \\\hline \text { Investment in a money market fund } & 8,000 \\\hline \text { Cash restricted for plant expansion } & 1,000 \\\hline \text { Three-month term deposits } & 2,000 \\\hline\end{array}$$

A)$9,000
B)$11,000
C)$21,000
D)$22,000

Question 21

Which statement about "cash and cash equivalents" is correct?

A)The definition for "cash and cash equivalents" used on the balance sheet differs from the definition for "cash and cash equivalents" used on the cash flow statement.
B)A change in the composition of "cash and cash equivalents" is considered a financing activity on the cash flow statement.
C)A change in the composition of "cash and cash equivalents" is considered a cash flow for purposes of the cash flow statement.
D)The definition for "cash and cash equivalents" used on the balance sheet is the same as the definition for "cash and cash equivalents" used on the cash flow statement.

Question 22

What amount will be included in "cash and cash equivalents"? $$\begin{array} { | l | r | } \hline \text { Treasury bills maturing in } 101 \text { days } & \$ 12,000 \\\hline \text { Six-month U.S. term deposit } & 18,000 \\\hline \text { Bonds of a publicly traded U.S. company } & 10,000 \\\hline \text { U.S. treasury bill maturing in } 120 \text { days } & 24,000 \\\hline\end{array}$$

A)$0
B)$12,000
C)$36,000
D)$64,000

Question 23

Explain some controls that can be used in an organization to safeguard cash and other assets.

Question 24

What are the general recognition criteria for non-cash assets under GAAP?

A)If the item meets the definition of an asset, it must have an indefinite life.
B)If the item meets the definition of an expense, it must be measurable.
C)In order for the item to be an asset, it will have future economic benefits, be under the entity's control, and result form past transactions.
D)Future transactions can be recorded under GAAP.

Question 25

During May 2021, ABC Company wrote a cheque (#345)to a supplier as a payment on its account. The cheque was written for the correct amount of $16,900. The May bank statement listed the cheque at $61,900 and an ending account balance of $(50,500)in overdraft.
Required:
a. Given the above information, prepare the portion of the May cash reconciliation that reconciles the bank balance to the cash balance to be used in the financial statements.
b. Where on the balance sheet should the cash (or overdraft)balance be shown?

Question 26

Pomegranate Company's bank balance on its October 31, 2021 bank statement is $11,500. Pomegranate's accountant is preparing a bank reconciliation and determined that three cheques issued by Pomegranate to its suppliers for a total of $6,500 had not yet cleared the bank. Also, a deposit for $700 made by Pomegranate on October 31 did not appear on the bank statement. Bank service charges of $240 appear on the bank statement, but have not yet been recorded in the general ledger.
Given the above information, prepare a bank reconciliation to determine the correct cash balance that should be reflected in Pomegranate's general ledger at October 31, 2021.

Question 27

The following accounts were abstracted from Almond Co.'s unadjusted trial balance at December 31, 2019: $\begin{array}{c}\begin{array}{lll}\\\text {Accounts receivable}\\\text {Allowance for uncollectible accounts}\\\text {Net credit sales}\end{array}\begin{array}{lll}\underline{\text {Debit}}\\\$ 3,850,000 \\\\\\\end{array}\begin{array}{lll}\underline{\text { Credit }}\\\\51,000\\\$5,950,000\end{array}\end{array}$
The company estimates that 5 percent of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2019, the allowance for doubtful accounts should have a credit balance of

A)192,500
B)243,500
C)246,500
D)297,500

Question 28

Small Company (SC)is in its fourth year of retail operations. The owner/manager previously employed a part-time bookkeeper to sign cheques, as well as to prepare journal entries, bank reconciliations, and monthly financial statements. SC has just hired you as the first full-time accountant to replace the bookkeeper, and you are preparing the December 31, 2021 financial statements.
Required:
a. Briefly explain the concept of "segregation of duties."
b. Identify an internal control issue relating to SC's cash-handling procedures, and provide your recommendation(s)to improve SC's internal controls over cash.

Question 29

Which statement about internal controls over cash is correct?

A)Internal controls should not be designed to be preventative.
B)A bank reconciliation is designed for prevention of problems before the fact.
C)Controls should restrict sales staff ability to modify or delete accounts receivable.
D)Credit notes should not be issued for customer refunds.

Question 30

Explain why it is important to segregate duties of employees dealing with cash in an organization. Provide at least three examples of ways which this segregation could be made on the receivables side.

Question 31

Identify whether each of the following items should be classified in "cash and cash equivalents" on the balance sheet. Assume that the reporting entity has operations in Canada.

Question 32

Identify if the following investments meet the requirements to be classified as cash and cash equivalents.

Question 33

The following accounts were abstracted from Almond Co.'s unadjusted trial balance at December 31, 2019: $\begin{array}{c}\begin{array}{lll}\\\text {Net credit sales}\\\text {Accounts receivable}\\\text {Allowance for uncollectible accounts}\end{array}\begin{array}{lll}\underline{\text {Debit}}\\\\\$800,000\\\\\end{array}\begin{array}{lll}\underline{\text { Credit }}\\\$2,950,000\\\\11,000\end{array}\end{array}$
The company estimates that 1.5 percent of the net credit sales will become uncollectible. After adjustment at December 31, 2019, the allowance for doubtful accounts should have a credit balance of

A)11,000
B)12,000
C)44,250
D)55,250

Question 34

Which of the following would not be an example of segregation of duties?

A)Sales employees have restricted ability to delete or modify accounts receivables.
B)Employees make sales to customers and record the credit sales in the accounts receivables.
C)Customer refunds are recorded on a written credit note.
D)Employees depositing funds to the bank do not prepare the bank reconciliation.

Question 35

Which statement about internal controls over cash is correct?

A)A bank reconciliation is the only control required for cash.
B)A bank reconciliation is designed for detection of problems after the fact.
C)A bank reconciliation is a tool to investigate employee fraud.
D)A bank reconciliation is designed to prevent problems from happening.

Question 36

Identify the two criteria for classifying an investment as a cash equivalent.

Question 37

Which of the following would be an example of segregation of duties?

A)Sales employees have the ability to delete or modify accounts receivables.
B)Employees who make sales to customers record the credit sales in the accounts receivables.
C)Customer refunds are not recorded on a credit note.
D)Employees depositing funds to the bank do not prepare the bank reconciliation.

Question 38

What is one way to segregate duties to improve controls over cash?

A)Request all customers to pay in cash.
B)Separate sales employees from employees who book the accounting entries.
C)Request all customers to pay by cheques made payable to "CASH."
D)Have the employee who is responsible for making cash deposits to the bank also do the bank reconciliations.

Question 39

Explain why a bank reconciliation is necessary.

Question 40

Explain why it is important to segregate duties of employees dealing with cash in an organization. Provide an example of ways which this segregation could be made on the payable side

Question 41

A $50,000 sale transaction is made with terms of 2/10, net 30. Assuming that the customer takes the discount, what amount is booked to the "cash discount" account under the gross method of accounting for cash discounts?

A)$0
B)$1,000 debit
C)$1,000 credit
D)$49,000 debit

Question 42

A $100,000 sale transaction is made with terms of 5/10, net 30. What amount is debited to the accounts receivable account when the sale is made under the gross method of recording a discount?

A)$95,000 credit
B)$95,000 debit
C)$100,000 credit
D)$100,000 debit

Question 43

A $50,000 sale transaction is made with terms of 2/10, net 30. What amount is debited to the accounts receivable account when the sale is made under the gross method of accounting for cash discounts?

A)$49,000 credit
B)$49,000 debit
C)$50,000 credit
D)$50,000 debit

Question 44

A $50,000 sale transaction is made with terms of 2/10, net 30. Assuming that the customer takes the discount, what amount is booked to the "cash discount" account under the net method of recording a discount?

A)$0
B)$1,000 debit
C)$1,000 credit
D)$49,000 debit

Question 45

Which statement about receivables is correct?

A)Receivables are non-monetary items.
B)Monetary items are measured at their present value.
C)Trade receivables generally have payments terms extending beyond 3 months.
D)Trade receivables should generally be recorded at their discounted present value.

Question 46

Which of the following is one of the general criteria for recognizing an asset?

A)The item must have future economic benefits.
B)The item must have an indefinite life.
C)The item must be tangible.
D)The item must be material.

Question 47

Which statement is not correct?

A)Factoring with recourse creates a liability on the balance sheet.
B)Factoring with recourse reduces a current ratio that is >1.
C)Factoring with recourse negatively impacts working capital.
D)Factoring without recourse reduces a current ratio that is >1.

Question 48

Which statement is not correct?

A)Factoring with recourse creates a liability on the balance sheet.
B)Factoring with recourse creates a receivable on the balance sheet.
C)Factoring without recourse negatively impacts working capital.
D)Factoring without recourse means that the seller takes the collection risk.

Question 49

Which statement is correct?

A)The "net" method for recording cash discounts is conceptually inferior to the "gross" method.
B)Under the "net" method, an entry is needed if the discount is not taken.
C)The "gross" method for recording cash discounts is conceptually superior to the "net" method.
D)The gross method overstates revenue.

Question 50

EasyCredit Inc. reported cash sales of $45,000, credit sales of $280,000 and write-offs of bad debts of $7,000 for last year. Accounts receivable had a balance of $327,000 at the beginning of the year and $381,000 at the end of the year. How much cash was collected from customers during the year?

A)$54,000
B)$219,000
C)$264,000
D)$334,000

Question 51

Jackie Co.'s allowance for doubtful accounts was $15,000 at the end of 2022 and $205,000 at the end of 2021. For the year ended December 31, 2022, Jackie reported bad debt expense of $48,000 in its income statement. What amount did Jackie debit to the appropriate account in 2022 to write off actual bad debts?

Question 52

Which statement is correct?

A)A transfer with recourse means that the purchaser of the receivables takes the collection risk.
B)A transfer without recourse means that the seller of the receivables takes the collection risk.
C)Factoring with recourse reduces a current ratio that is >1.
D)Factoring without recourse creates a liability on the balance sheet.

Question 53

Which statement best describes the net method of accounting for cash discounts?

A)Records receivables at their face value.
B)Records any discounts forfeited as income.
C)Records any discounts taken as an expense.
D)Records any discounts taken as a reduction in revenue.

Question 54

Which statement is correct?

A)A transfer with recourse means that the purchaser cannot go back to the company for compensation of bad debts.
B)A transfer with recourse means that the purchaser of the receivables takes the collection risk.
C)A transfer with recourse means that the seller of the receivables takes the collection risk.
D)A transfer without recourse means that the seller of the receivables takes the collection risk.

Question 55

Which statement is correct?

A)The "gross" method for recording cash discounts is conceptually better than the "net" method.
B)The net method understates expenses.
C)The gross method overstates revenue.
D)Under the "gross" method, an entry is needed if the discount is taken.

Question 56

Which statement best describes the gross method of accounting for cash discounts?

A)Records receivables at their present value amount.
B)Records any discounts forfeited as income.
C)Records any discounts taken as a reduction in revenue.
D)Records any discounts taken as an expense.

Question 57

Which statement is correct?

A)A transfer without recourse means that the purchaser can go back to the company for compensation of bad debts.
B)A transfer without recourse means that the purchaser of the receivables takes the collection risk.
C)A transfer without recourse means that the seller of the receivables takes the collection risk.
D)A transfer with recourse means that the purchaser of the receivables takes the collection risk.

Question 58

Which statement is correct?

A)Factoring without recourse creates a receivable on the balance sheet.
B)Factoring without recourse reduces a current ratio that is >1.
C)Factoring with recourse negatively impacts working capital.
D)Factoring without recourse creates a liability on the balance sheet.

Question 59

Maximum Inc. reported credit sales of $880,000, bad debt write-offs of $297,000 and bad debt expense of $257,000 for last year. Accounts receivable had a balance of $1,367,000 at the beginning of the year and $1,381,000 at the end of the year. How much cash was collected from customers during the year?

A)$457,000
B)$569,000
C)$714,000
D)$866,000

Question 60

Philip Corp reported credit sales of $240,000 and write-offs of bad debts of $57,000 for last year. Accounts receivable had a balance of $1,127,000 at the beginning of the year and $881,000 at the end of the year. How much cash was collected from customers during the year?

A)$246,000
B)$429,000
C)$486,000
D)$669,000

Question 61

Micelle Inc. reported credit sales of $600,000, cash collections of $450,000 and bad debt expense of $15,000 for last year. Accounts receivable had a balance of $1,000,000 at the end of the year. Assuming there are no write-offs made during the year, what was the balance in the accounts receivable account at the beginning of the year?

A)$400,000
B)$850,000
C)$865,000
D)$1,150,000

Question 62

Fruit Valley Inc. reported cash sales of $250,000, credit sales of $850,000, cash collections from receivables of $500,000, bad debt write-offs of $25,000 and bad debt expense of $35,000 for last year. Accounts receivable had a balance of $1,000,000 at the end of the year. What was the balance in the accounts receivable account at the beginning of the year?

A)$425,000
B)$460,000
C)$650,000
D)$675,000

Question 63

Micelle Inc. reported credit sales of $600,000 and cash collections of $450,000 for last year. The ending balance in accounts receivable was $800,000. Bad debt expense is estimated at 1% of credit sales. The allowance for doubtful accounts had a balance of $80,000 at the beginning of the year. Assuming there are no write-offs made during the year, what was the balance in the allowance for doubtful accounts at the end of the year?

A)$6,000
B)$8,000
C)$81,500
D)$86,000

Question 64

Micelle Inc. reported credit sales of $700,000 and cash sales of $100,000 for last year. The ending balance in accounts receivable was $1,500,000. Bad debt expense is estimated at 1% of credit sales. The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year. Assuming there are no write-offs made during the year, what was the balance in the allowance for doubtful accounts at the end of the year?

A)$7,000
B)$8,000
C)$47,000
D)$150,000

Question 65

Fitness Machines reported cash sales of $50,000, credit sales of $800,000 and bad debt expense of $150,000 for last year. Accounts receivable had a balance of $1,000,000 at the beginning of the year and $1,250,000 at the end of the year. Assuming there are no write-offs during the year, how much cash was collected from customers during the year?

A)$400,000
B)$450,000
C)$550,000
D)$600,000

Question 66

Pauline Company estimates the allowance for doubtful accounts by aging its accounts receivable. At the end of 2021, the balance in the allowance account was $50,000. During 2022, the company wrote off $5,000 and collected a $3,000 receivable that had been previously written off as uncollectable. At the end of 2022, the aging schedule indicated that the balance of the allowance for doubtful accounts should be $64,000. What is the bad debt expense for 2022?

A)$16,000
B)$19,000
C)$66,000
D)$69,000

Question 67

Fitness Machines reported credit sales of $880,000 and bad debt expense of $250,000 for last year. Accounts receivable had a balance of $1,400,000 at the beginning of the year and $1,350,000 at the end of the year. Assuming there are no write-offs made during the year, how much cash was collected from customers during the year?

A)$630,000
B)$680,000
C)$930,000
D)$1,180,000

Question 68

Lenient Corp. reported cash sales of $1,145,000, credit sales of $1,880,000, cash returns of $50,000, bad debt write-offs of $300,000 and bad debt expense of $250,000 for last year. Accounts receivable had a balance of $3,400,000 at the beginning of the year and $2,350,000 at the end of the year. How much cash was collected from customers during the year?

A)$2,630,000
B)$2,975,000
C)$3,725,000
D)$3,775,000

Question 69

Which statement is correct about estimating the allowance for doubtful accounts?

A)Under the income statement approach, bad debt expense is based on the accounts receivable amount.
B)Under the income statement approach, bad debt expense is based on the percentage of credit sales.
C)Under the income statement approach, bad debt expense is based on an aging of the accounts receivable amount.
D)Under the income statement approach, bad debt expense is based on the volume of sales transactions.

Question 70

Which statement is not correct about estimating the allowance for doubtful accounts under the balance sheet approach?

A)Accounts receivable are stated at their net realizable value.
B)Accounts receivable are stated at their fair value.
C)Bad debt expense is based on the accounts receivable balance.
D)Bad debt expense is based on an aging of the accounts receivable.

Question 71

Family Fun reported cash sales of $250,000, credit sales of $750,000, cash collections from receivables of $500,000, bad debt write-offs of $25,000 and bad debt expense of $35,000 for last year. Accounts receivable had a balance of $1,000,000 at the beginning of the year. What was the ending balance in the accounts receivable account?

A)$1,190,000
B)$1,225,000
C)$1,440,000
D)$1,475,000

Question 72

Medical Machines reported credit sales of $800,000, cash returns of $25,000 and bad debt expense of $150,000 for last year. Accounts receivable had a balance of $1,000,000 at the beginning of the year and $1,250,000 at the end of the year. Assuming there are no write-offs during the year, how much cash was collected from customers during the year?

A)$375,000
B)$525,000
C)$550,000
D)$650,000

Question 73

Medical Machines reported credit sales of $800,000, cash collections of $550,000 and bad debt write-offs of $15,000 for last year. Accounts receivable had a balance of $1,000,000 at the beginning of the year. What was the ending balance in the accounts receivable account?

A)$450,000
B)$1,235,000
C)$1,250,000
D)$1,800,000

Question 74

Sahil Inc. reported credit sales of $600,000 and cash collections of $450,000 for last year. The ending balance in accounts receivable was $800,000. Bad debt expense is estimated at 1% of credit sales. The allowance for doubtful accounts had a balance of $80,000 at the beginning of the year. What was the bad debt expense for the year?

A)$1,500
B)$6,000
C)$8,000
D)$86,000

Question 75

Karin-Jones Ltd. reported an opening balance of $1,712,000 in accounts receivable and of $147,000 in allowance for doubtful accounts for last year. During the year, sales on account were $2,500,000, collections of accounts receivable were $1,300,000, and bad debt expense was $89,000. At the end of the year, the company had a credit balance of $172,000 in the allowance for doubtful accounts. What amount of accounts receivable was written off during the year?

A)$25,000
B)$64,000
C)$83,000
D)$2,912,000

Question 76

A $100,000 sale transaction is made with terms of 5/10, net 30. What entry is made to the accounts receivable account when the sale is made under the net method of recording a discount?

A)$95,000 credit
B)$95,000 debit
C)$100,000 credit
D)$100,000 debit

Question 77

Which statement is correct about recording an allowance for doubtful accounts?

A)Accounts receivable are not adjusted for known uncollectable amounts.
B)Net accounts receivable is recalculated when there are changes recorded in the Allowance for Doubtful Accounts contra account.
C)Comparability is the reason an allowance for doubtful accounts is needed.
D)An allowance for doubtful accounts does not require estimates or judgments.

Question 78

Marvelos Inc. reported credit sales of $1,000,000 and cash sales of $100,000 for last year. The ending balance in accounts receivable was $1,500,000. Bad debt expense is estimated at 1% of ending accounts receivable. The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year. Assuming there are no write-offs made during the year, what was the balance in the allowance for doubtful accounts at the end of the year?

A)$11,000
B)$15,000
C)$51,000
D)$55,000

Question 79

Family Fun reported credit sales of $800,000, cash collections of $550,000 and bad debt expense of $15,000 for last year. Accounts receivable had a balance of $1,000,000 at the beginning of the year. Assuming there are no write-offs made during the year, what was the ending balance in the accounts receivable account?

A)$450,000
B)$1,235,000
C)$1,250,000
D)$1,800,000

Question 80

Sabrina Inc. reported credit sales of $700,000 and cash sales of $100,000. The ending balance in accounts receivable was $1,500,000. Bad debt expense is estimated at 1% of credit sales. The allowance for doubtful accounts had a balance of $40,000 at the beginning of the year. What was the bad debt expense for the year?

A)$7,000
B)$8,000
C)$15,000
D)$47,000