Question 1

During 2016, Charles Inc. recorded credit sales of $2,000,000. Based on prior experience, it estimates a 1 percent bad debt loss rate on credit sales. At the beginning of the year, the balance in net accounts receivable was $150,000. At the end of the year, but before the bad debt expense adjustment was recorded and before any bad debts had been written off, the balance in net accounts receivable was $125,000.
A.Assume that on December 31, 2016, the appropriate bad debt expense adjustment was recorded for the year 2016 and accounts receivable totaling $16,000 was written off for the year.What was the accounts receivables turnover ratio for the year?
B.Assume that on December 31, 2016, the appropriate bad debt expense adjustment was recorded for the year 2016 and accounts receivable totaling $12,000 was written off for the year.What was the accounts receivables turnover ratio for the year?
C.Explain why the answers to parts A and B differ or do not differ.

Accepted Answer

The answer of During 2016, Charles Inc. recorded credit sales...

Question 2

Select the appropriate answer choice A through G (listed below) to correspond with the following numbered items on a bank reconciliation. There may be more than one letter selection for the numbered item.  Items:A. Checks written during June that had not cleared the bank by June 30.
 B. Bank service charges for June, which were not known until the June 30th bank statement arrived.
 C. Deposit made on June 30 that did not reach the bank until July 1.
 D. Upon reviewing the company's cash receipts book after June 30, it was discovered the accounting clerk had neglected to post one receipt to the cash account.
 E. The bank statement reported a "NSF check" during June.
 F. The bank incorrectly deducted the check of another company to the bank account during June.
 G. The company was paid interest on its account by the bank.

Accepted Answer

The answer of Select the appropriate answer choice A through...

Question 3

On December 31, 2016, Colonial Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries:  Required:
Prepare the necessary year-end adjusting entry related to uncollectible accounts for each of the following independent assumptions: 
A.An aging of accounts receivable is completed.It is estimated that $2,150 of the receivables outstanding at year-end will be uncollectible.
B.Assume the same information presented in part A above except that, prior to adjustment, the allowance for doubtful accounts had a debit balance of $200 rather than a credit balance of $200.
C.It is estimated that a provision for bad debts is required for 1% of credit sales for the year.

Accepted Answer

The answer of On December 31, 2016, Colonial Corporation had...

Question 4

A recent annual report for Kirova Company contained the following data:  Required: 
A.Calculate the accounts receivable turnover ratio.
B.Calculate the average days' sales in receivables for 2016 (rounded to the nearest day).
C.Explain the meaning of each number.

Accepted Answer

The answer of A recent annual report for Kirova Company...

Question 5

Which of the following is not a component of the gross profit calculation?
A)Cost of sales.
B)Sales returns and allowances.
C)Allowance for doubtful accounts.
D)Credit card discounts.

Accepted Answer

Allowance for doubtful accounts is a contra account to accounts receivable and is not directly related to the calculation of gross profit. The components of gross profit are typically sales revenue and cost of sales, which includes direct costs such as the cost of goods sold or direct labor expenses, as well as any indirect costs or overhead expenses directly related to the sale of the product or service. Sales returns and allowances and credit card discounts may also affect the calculation of gross profit.

Question 6

Why is the reconciliation of a company's cash account to the bank statement so important for effective internal control for cash?

Accepted Answer

The answer of Why is the reconciliation of a company's...

Question 7

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.
Required:
Prepare the adjusting journal entry at the end of the year to record bad debt expense.

Accepted Answer

The answer of Hickory Corporation recorded sales revenue during the...

Question 8

Which of the following transactions does not affect gross profit?
A)A customer returning merchandise that was sold for a profit.
B)The collection of cash on an account receivable, which was paid for by the customer within the discount period.
C)The journal entry to record bad debt expense.
D)Accepting a credit card for a sale and paying a service fee to the credit card company.

Accepted Answer

The answer of Which of the following transactions does not...

Question 9

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15, n/30. Which of the following is not correct?
A)Gross profit increases $300 on the date of sale.
B)Total current assets are not affected on the date of cash collection if the customer pays 30 days after the date of sale.
C)Total current assets increase $27 on the date of cash collection if the customer pays within 15 days of the date of sale.
D)Gross profit and net sales both decrease $27 on the date of cash collection if the customer pays within 15 days of the date of sale.

Accepted Answer

The answer of Sabre Company sold inventory costing $600 to...

Question 10

Prior to the year-end adjustment to record bad debt expense for 2016 the general ledger of Stickler Company included the following accounts and balances:  Cash collections on accounts receivable during 2016 amounted to $450,000. Sales revenue during 2016 amounted to $800,000, of which 75% was on credit, and it was estimated that 2% of these credit sales made in 2016 would ultimately become uncollectible.
Required: 
A.Calculate the bad debt expense for 2016.
B.Determine the adjusted 2016 year-end balance of the allowance for doubtful accounts.
C.Determine the net realizable value of accounts receivable for the December 31, 2016 balance sheet.

Accepted Answer

The answer of Prior to the year-end adjustment to record...

Question 11

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance. Record your answer to the left of each account by entering either Dr or Cr.

Accepted Answer

The answer of Indicate whether each of the accounts listed...

Question 12

On January 1, American Company's allowance for doubtful accounts had a credit balance of $3,000. The balance in the Accounts Receivable account on that date was $75,000. On January 2, prior to any credit sales, a $500 account from National Company was deemed to be uncollectible and written off.
Required:
A.Compute the net realizable value of American's receivables on January 1.
B.Prepare the journal entry American would record on January 2 related to the write-off of National's account.
C.Compute the net realizable value of American's receivables on January 2, immediately following the write-off of National's account.

Accepted Answer

The answer of On January 1, American Company's allowance for...

Question 13

A portion of the income statement for Lone Star Company is shown below. Provide the missing account titles and amounts.
A._______________________
$380,000
Sales discounts
20,000
Net sales
B.________
Cost of sales
$100,000
C._______________________
D.________

Accepted Answer

The answer of A portion of the income statement for...

Question 14

One of Hawk Company's customers returned products that cost Hawk $300, which was sold on account for $450. Which of the following does not correctly describe the effect of the return on the financial statements?
A)Gross profit decreases $150.
B)Total current assets decrease $150.
C)Sales returns and allowances increase $150.
D)Operating expenses increase $150.

Accepted Answer

The return of the product does not affect operating expenses. It only affects gross profit, total current assets, and sales returns and allowances.

Question 15

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017:  Describe how the change in accounts receivable will affect the calculation of cash flow from operating activities for 2017 and 2016.

Accepted Answer

The answer of Cyclone Inc. reported the following figures from...

Question 16

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017:  Required: 
A.Calculate the accounts receivable turnover for 2017 and 2016.
B.Calculate the average collection period for 2017 and 2016.

Accepted Answer

The answer of Cyclone Inc. reported the following figures from...

Question 17

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._______________________

Accepted Answer

The answer of A portion of the income statement for...

Question 18

The following data were taken from the records of Lilo Corporation for the year ended December 31, 2016 before any adjustment for bad debt expense:  The following items have not been included in above amounts:
Estimated bad debt expense is 1% of credit sales.
The income tax rate is 35%.
10,000 of shares of common stock are outstanding.
Required: 
A.Calculate the bad debt expense.
B.Prepare a multiple-step income statement (including gross profit, income before income taxes, and earnings per share).

Accepted Answer

The answer of The following data were taken from the...

Question 19

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.

Accepted Answer

The answer of One of Trent Company's customers returned products...

Question 20

Matrix Corp. reported the following figures from its financial statements for the years 2015 through 2017.  Required: 
A.Calculate for 2017:
1.Accounts receivable turnover
2.Average collection period
B.Calculate for 2016:
1.Accounts receivable turnover
2.Average collection period
C.Interpret the receivables turnover and the average collection period, in general.Comment on the change in the ratio results from 2016 to 2017.Then discuss how the trend in sales from 2015 to 2016 and 2017 may have affected the change in the ratios from 2016 to 2017.

Accepted Answer

The answer of Matrix Corp. reported the following figures from...

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

A recent annual report for Kirova Company contained the following data: Required: A.Calculate the accounts receivable turnover ratio. B.Calculate the average days' sales in receivables for 2016 (rounded to the nearest day). C.Explain the meaning of each number.

Which of the following is not a component of the gross profit calculation?

Why is the reconciliation of a company's cash account to the bank statement so important for effective internal control for cash?

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. Required: Prepare the adjusting journal entry at the end of the year to record bad debt expense.

Which of the following transactions does not affect gross profit?

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15, n/30. Which of the following is not correct?

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance. Record your answer to the left of each account by entering either Dr or Cr.

A portion of the income statement for Lone Star Company is shown below. Provide the missing account titles and amounts. A._________ $380,000 Sales discounts 20,000 Net sales B. Cost of sales $100,000 C._ D.

One of Hawk Company's customers returned products that cost Hawk $300, which was sold on account for $450. Which of the following does not correctly describe the effect of the return on the financial statements?

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017: Describe how the change in accounts receivable will affect the calculation of cash flow from operating activities for 2017 and 2016.

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017: Required: A.Calculate the accounts receivable turnover for 2017 and 2016. B.Calculate the average collection period for 2017 and 2016.

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._____________

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?

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

A recent annual report for Kirova Company contained the following data: Required: A.Calculate the accounts receivable turnover ratio. B.Calculate the average days' sales in receivables for 2016 (rounded to the nearest day). C.Explain the meaning of each number.

Which of the following is not a component of the gross profit calculation?

Why is the reconciliation of a company's cash account to the bank statement so important for effective internal control for cash?

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. Required: Prepare the adjusting journal entry at the end of the year to record bad debt expense.

Which of the following transactions does not affect gross profit?

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15, n/30. Which of the following is not correct?

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance. Record your answer to the left of each account by entering either Dr or Cr.

A portion of the income statement for Lone Star Company is shown below. Provide the missing account titles and amounts. A._______________________ $380,000 Sales discounts 20,000 Net sales B.________ Cost of sales $100,000 C._______________________ D.________

One of Hawk Company's customers returned products that cost Hawk $300, which was sold on account for $450. Which of the following does not correctly describe the effect of the return on the financial statements?

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017: Describe how the change in accounts receivable will affect the calculation of cash flow from operating activities for 2017 and 2016.

Cyclone Inc. reported the following figures from its financial statements for the years 2015 through 2017: Required: A.Calculate the accounts receivable turnover for 2017 and 2016. B.Calculate the average collection period for 2017 and 2016.

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._______________________

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 portion of the income statement for Lone Star Company is shown below. Provide the missing account titles and amounts. A._________ $380,000 Sales discounts 20,000 Net sales B. Cost of sales $100,000 C._ D.

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._____________