Question 1

On September 1, 2013, Geco Co. sold $40,000 of goods and accepted a one-year, 12% note.
Required:
a. If no reversing entries were made after December 31, 2013, and adjusting entries were made, record the collection of the note on September 1, 2014.
b. Assume instead that a noninterest-bearing note for $44,800 for the same goods was issued. What balance sheet accounts and amounts would be disclosed on December 31, 2013?

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Question 2

Prepare the journal entries for the following transactions:
a. Sold $150,000 of goods to Georgia Co. on account.
b. Collected $50,000 from Georgia Co.
c. Accepted a $100,000, one-year, 10% note from Georgia Co. for the amount remaining on the account.
d. After 60 days, discounted the note from Georgia Co. at First National Bank at a 12% interest rate.
Required:
Prepare the journal entries for each transaction.

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Question 3

On November 1, 2014, Yellow Grove Co. sold $45,000 of goods and accepted a note bearing 8% interest. The note was due in one year.
Required:
a. Prepare the journal entry to accrue interest for December 31, 2014.
b. Record the collection of the note on October 31, 2015, assuming the accrual entry above was reversed on January 1, 2015

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Question 4

To be considered cash, the funds must be available to pay current obligations. Certain situations arise where cash is restricted and therefore cannot be considered as cash. Provide a brief description of two examples of this situation.

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Question 5

What is the difference between Trade Receivables and Nontrade Receivables?

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Question 6

On January 1, 2014, Jonas Company established a petty cash fund of $500. By March 31, 2014, when the fund was replenished, the following petty cash vouchers had been issued: January 26, postage, $48; February 16, postage, $52; February 6, airport limousine fares, $24; January 18, office supplies, $67; March 8, postage, $38; March 4, local express delivery charges on purchases, $65. There was $209 in coins and currency left in petty cash before replenishment.
Required:
a. Prepare the journal entries to record the transactions relating to Jonas Company's petty cash fund for the first quarter of 2014.
b. On April 1, the size of the petty cash fund was decreased to $425. What journal entry if any) is necessary to record this action?

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Question 7

How does GAAP require receivables to be recorded? What about trade receivables?

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Question 8

What are the two methods for recording a sales transaction on account when a cash discount is involved? Under what conditions is each method theoretically preferred?

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Question 9

Max Corp. sold goods for $36,000 on July 17, 2014, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate.
Required:
a. Compute the proceeds.
b. If the maker dishonored the note at maturity, prepare an entry or entries) for Max Corp. assuming $75 of bank protest fees.

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Question 10

You are in the process of preparing a bank reconciliation for Charter Boat Company as of May 31. Listed below is information necessary to prepare the reconciliation.
Required:
In the spaces provided, place the appropriate letter to indicate whether each item of information should be
a. deducted from the balance per bank statement
b. added to the balance per bank statement
c. deducted from the balance per company records
d. added to the balance per company records
e. omitted from the reconciliation

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Question 11

Park Playground, Inc. has lost some of its accounting records regarding its July cash receipts and payments. It reconciled its June 30, 2015 bank statement on July 2 and made the related adjusting entries at that time. The company has not reconciled its July 31, 2015 bank statement. It provides you with the following information on August 3:  In addition, it was found that a July check for $320 included in the July 31 bank statement) to purchase office supplies was erroneously recorded in the checkbook for $120.
Required: 
a. Prepare a bank reconciliation for the month ended July 31, 2015.
b. Prepare the correcting entry for the month ended July 31, 2015.

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Question 12

Gordon Fish Co. prepares bank reconciliations that adjust to the correct balance of cash. You are given the following information:

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Question 13

Moose, Inc. established a $250 petty cash fund three months ago. Today, April 21, the petty cash custodian has $198 in cash and receipts for the following: office supplies $12, equipment repairs $25, postage $7, and parking fees $13.
Required:
Prepare a compound journal entry to replenish the fund and reduce its size to $200.

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Question 14

What are the basic issues related to the valuation of receivables?

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Question 15

During 2015, Davidson's first year of operations, the following transactions occurred:
∙ Credit sales of $2,000,000.
∙ Collections on account of $1,700,000.
∙ Accounts receivable written off during the year, $5,000.
∙ Estimated uncollectible accounts, $8,000.
∙ Accepted a $10,000, one-year, 12% note receivable on June 30.
Required:
Prepare the receivables portion of Davidson's first year operation's balance sheet as of December 31, 2015.

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Question 16

The following information for the month of March is available from Butters Cookies, Inc.'s accounting records:

Required:
a. Prepare a March 31, 2014, bank reconciliation in good form.
b. Prepare any related adjusting entries that are necessary on March 31, 2014.

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Question 17

On April 7, Wilhelm, Inc. sold goods for $50,000 and accepted a 10%, 60-day note. On April 22, the company sold the note to a bank at a 13% discount rate.
Required:
Compute the amount of interest revenue and the loss on sale of the note.

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Question 18

The accounting records and bank statement for Walkers, Inc. revealed the following information for April 30, 2013:  Required: 
a. Prepare a bank reconciliation using good format.
b. Prepare any necessary adjusting journal entries for April 30, 2013.

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Question 19

What two types of financing agreements are available to companies who wish to obtain cash from their accounts receivables? Why is it important to note whether or not the receivables are transferred with or without recourse?

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Question 20

Describe the key elements for internal control of cash receipts and cash payments.

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Quiz 6: Cash and Receivables