Question 1

What is a compensating balance? By whom is it required?

Accepted Answer

The answer of What is a compensating balance? By whom...

Question 2

Interest on a 90-day,10 percent,$30,000 note receivable is

Accepted Answer

The interest on a note is calculated using the formula: Interest = Principal x Rate x Time. For a 90-day note, the time is 90/365. So, Interest = $30,000 x 10% x (90/365) = $739.73.

Question 3

How is the account Allowance for Uncollectible Accounts presented in the financial statements,and what purpose does this presentation serve?

Accepted Answer

The answer of How is the account Allowance for Uncollectible...

Question 4

A promissory note is executed in June.When the note is paid the following January,the payee's entry includes (assuming a calendar-year accounting period and no reversing entries)a

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The answer of A promissory note is executed in June.When...

Question 5

At year end,Erwin Graphics has a $350 debit balance in Allowance for Uncollectible Accounts.It estimates that 5 percent of the $20,000 in sales are uncollectible.Give the amount that should be used in the adjusting entry using percentage of net sales method to record uncollectible accounts.(Show your calculations.)

Accepted Answer

The answer of At year end,Erwin Graphics has a $350...

Question 6

Use the following T account to answer the questions below (assume a calendar-year accounting period).
  What apparently occurred on the following dates? 
a.January 10
b.January 15
c.May 12
d.December 31

Accepted Answer

The answer of Use the following T account to answer...

Question 7

In the journal provided,prepare entries for the following (assume a calendar-year accounting period): Omit explanations.

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The answer of In the journal provided,prepare entries for the...

Question 8

On a balance sheet,what items normally are included in Cash?

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The answer of On a balance sheet,what items normally are...

Question 9

What purpose is served by a factoring arrangement? What does it mean to factor accounts receivable with recourse?

Accepted Answer

The answer of What purpose is served by a factoring...

Question 10

What is a contingent liability,and how does it relate to the discounting of a note receivable at the bank?

Accepted Answer

The answer of What is a contingent liability,and how does...

Question 11

On December 31,Becker Products has a $600 credit balance in Allowance for Uncollectible Accounts.It estimates that 4 percent of the $120,000 in sales are uncollectible.After the appropriate adjusting entry for uncollectible accounts has been made using percentage of net sales method,what will be the balance in Allowance for Uncollectible Accounts? Indicate if the balance is a debit or credit.(Show your work.)

Accepted Answer

The answer of On December 31,Becker Products has a $600...

Question 12

Using the following transactions for the year,show how the T-account below would appear after all appropriate postings have been made.Assume an opening balance of $1,800.

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The answer of Using the following transactions for the year,show...

Question 13

Assume that the $2,000,90-day,8 percent note was received on August 31 and that the fiscal year ended on September 30.The adjusting entry that would be made to record the interest receivable is (amounts rounded to nearest dollar):

Accepted Answer

The interest for one month (August 31 to September 30) on a $2,000 note at 8% annual interest is calculated as: $2,000 * 8% * (30/360) = $13. The adjusting entry records this interest as receivable and income.

Question 14

On December 31,Skinner Enterprises has a $400 debit balance in Allowance for Uncollectible Accounts.If an accounts receivable aging method analysis indicated that an estimated $3,200 of December 31 receivables are uncollectible,for what amount would the adjusting entry for uncollectible accounts be recorded? (Show your work.)

Accepted Answer

The answer of On December 31,Skinner Enterprises has a $400...

Question 15

At year end,Blue Earth Company has a $3,600 credit balance in Allowance for Uncollectible Accounts.If an accounts receiving aging method analysis indicates that an estimated $22,800 of year-end receivables are uncollectible,what will be the balance in Allowance for Uncollectible Accounts after the appropriate adjusting entry for uncollectible accounts has been made? Indicate if the balance is a debit or credit.

Accepted Answer

The answer of At year end,Blue Earth Company has a...

Question 16

Assume that on December 1,a note which has a face value of $18,000,bears interest at 10 percent for 90 days,received from a customer as an extension of his past-due account is dishonored.The entry that would be made to record the dishonor (ignoring interest)is:

Accepted Answer

When a note is dishonored, the amount is transferred back to accounts receivable from notes receivable.

Question 17

Assume that on December 1,a note which has a face value of $1,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his of past-due account is honored on due date.The entry that would be made to record the receipt on due date (ignoring interest)is:

Accepted Answer

The note is being honored, meaning the customer is paying the amount due. Therefore, cash is received, and the notes receivable account is reduced.

Question 18

Sally's Dress Shop has $5,200 in Accounts Receivable at December 31.The company's accountant estimates that $300 of the $5,200 will never be collected.Complete the current asset section of the balance sheet below.

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The answer of Sally's Dress Shop has $5,200 in Accounts...

Question 19

Assume that on August 1,a $6,000,90-day,12 percent note receivable was received from a customer as an extension of his of past - due account.The entry that would be made to record the note is:

Accepted Answer

The note receivable replaces the past-due account, so the entry is to debit Notes Receivable and credit Accounts Receivable.

Question 20

Compute the correct amount for each letter in the following table:

Accepted Answer

The answer of Compute the correct amount for each letter...

Quiz 8: Cash and Receivables

What is a compensating balance? By whom is it required?

Interest on a 90-day,10 percent,$30,000 note receivable is

How is the account Allowance for Uncollectible Accounts presented in the financial statements,and what purpose does this presentation serve?

A promissory note is executed in June.When the note is paid the following January,the payee's entry includes (assuming a calendar-year accounting period and no reversing entries) a

Use the following T account to answer the questions below (assume a calendar-year accounting period). What apparently occurred on the following dates? a.January 10 b.January 15 c.May 12 d.December 31