Answer the following 1-10 questions for intermediateaccounting:
1. Companies value and report short-termreceivables at net realizable value, the net amount they expect toreceive in cash
True
False
2. When should the loss on an uncollectibleaccount receivable be recorded as an expense for accrual accountingpurposes?
A. At any day there is an indication that certaincustomer will not pay
B. At the beginning of accounting period
C. The day the creditsale is recorded
D. At the end ofaccounting period
E. Never
3. Which of the following is NOT an accuratedescription of the Allowance for Doubtful Accounts?
A. an income statement account
B. a balance sheet account
C. an estimate of theamount of accounts receivable that will not be collected
D. a contra assetaccount
4. The following accounts were taken from StarrCo.'s unadjusted trial balance at December 31, 2017:
Accounts receivable, DR $880,000
Allowance for uncollectible accounts, DR 27,000
Net credit sales, CR $2,000,000
Starr estimates that 8% of the gross accounts receivable willbecome uncollectible. After adjustment at December 31, 2017, theallowance for uncollectible accounts should have acredit balance of
A. 160,000
B. 70,400
C. 27,000
D. 43,400
E. 97,400
5. The following accounts were abstracted fromStarr Co.'s unadjusted trial balance at December 31, 2017:
Accounts receivable DR $880,000
Allowance for uncollectible accounts DR 27,000
Net credit sales CR $2,000,000
Starr estimates that 8% of the gross accounts receivable willbecome uncollectible. What is a bad debt expensefor the year?
A. 97,400
B. 70,400
C. 43,400
D. 27,000
E. 160,000
6. Why would a company sell receivables toanother company?
A. To limit its legal liability
B. To improve thequality of its credit granting process
C. To comply withcustomer agreements
D. To accelerateaccess to amounts collected
7. BobCat Co. uses the GROSS method to recordsales made on credit. On Mar 1, 2017, it made sales of $80,000 withterms 3/10 n/30. On Mar 9, 2017, BobCat received full payment forthe March 1 sale. The required journal entries for BobCat Inc. onMar 9 is
A. DR Accounts Receivable 80,000
CR Sales Revenue 80,000
B. DR AccountsReceivable 77,600
CR Sales Revenue 77,600
C. DR Cash…..77,600
DR Sales Discount 2,400
CR Accounts Receivable 80,000
D. DR Cash…..77,600
CR Accounts Receivable 77,600
E. DR Cash80,000
CR Accounts Receivable 80,000
8. The following information relates to JayCo.’s accounts receivable for the year just ended:
Accounts receivable, 1/1 $ 650,000
Credit sales for the year 2,700,000
Sales returns for the year 75,000
Accounts written off during the year 40,000
Collections from customers during the year 2,150,000
Estimated uncollectible accounts at 12/31 ?R 110,000
What amount should Jay report on the Balance Sheet for netrealizable value of accounts receivable at December 31?
A. 1,085,000
B. 540,000
C. 2,700,000
D. 975,000
E. 650,000
9. The following are held by BobCat Inc.:
Cash in checking account $6,000
Cash in savings account $12,000
Postdated check from customer dated one month from balance sheetdate 2,500
Petty cash 300
Commercial paper (matures in a month, original maturity 3 months)9,000
Certificate of deposit (matures in six months) 5,000
What amount should be reported as cash and cash equivalents onSmite’s balance sheet?
A. 27,300
B. 18,000
C. 18,300
D. 27,000
10. Hilltop Co.’smonthly bank statement shows a balance of $52,200.
Reconciliation of the statement with company books reveals thefollowing information:
Bank service charge $ 10
Insufficient funds check 650
Checks outstanding 1,500
Deposits in transit 1300
Check deposited by Hilltop and cleared by the bank for $125, butimproperly recorded by Hilltop as $152.
What is the TRUE cash balance afterthe reconciliation?_______________
A. 54,200
B. 52,000
C. 52,027
D. 51,973
