Question 1

At the beginning of the year, accounts receivable were $39,000 and the allowance for bad debts was $2,400. During the year, sales (all on account) were $120,000, cash collections were $114,000, bad debts expense totaled $1,700, and $2,000 of accounts receivable were written off as bad debts.Required:
Calculate the balances at the end of the year for the Accounts Receivable and Allowance for Bad Debts accounts. (Hint: Use T-accounts to analyze each of these accounts, plug in the amounts that you know, and solve for the ending balances.)

Accepted Answer

Ending balance = $39,000 + $120,000 - $1...

Question 2

A cash equivalent is a current asset that:

Accepted Answer

A)   will be converted to cash within one year.
B)   will be converted to cash within one month.
C)   is readily convertible into cash with a minimal risk.
D)  is readily convertible into cash with a substantial risk.
E)   none of the above.

Question 3

The current assets of most companies are usually made up of:

Accepted Answer

A)   assets that are currently used in the operations of the company.
B)   cash and assets expected to be converted to cash within a year.
C)   a very small proportion (less than 10%)  of the total assets of the entity.
D)  cash, marketable securities, and accounts and notes receivable.

Question 4

Prepare a bank reconciliation for Show Me, Inc., as of June 30 from the following information:
(a.) The June 30 balance shown on the bank statement is $5,796.(b.) Outstanding checks at June 30 totaled $330.(c.) A deposit of $424 made on June 30 was not included in the balance shown on the bank statement.(d.) The bank statement contained an adjustment of $410 for a note receivable collected by the bank on behalf of Show Me, Inc. ($382 principal and $28 interest).(e.) A bank charge of $34 was made to the account during June. Although the company was expecting a charge, the amount was not known until the bank statement arrived.(f.) The bank erroneously charged a $340 check of Shirt, Inc., against the Show Me, Inc., bank account.(g.) The June 30 balance in the general ledger Cash account, before reconciliation, is $6,026.(h.) The bank statement included a notice that a customer's check for $172 that had been deposited on June 14 had been returned NSF.Required:
(1.) Prepare the bank reconciliation for Show Me, Inc., as of June 30.(2.) Prepare the appropriate adjusting entry(ies) or show the reconciling items in a horizontal model, for Show Me, Inc., related to the bank reconciliation.

Accepted Answer

The answer of Prepare a bank reconciliation for Show Me,...

Question 5

The accrual of interest on short-term marketable securities results in:

Accepted Answer

A)   an increase in current assets and a decrease in net income.
B)   an increase in current assets and an increase in net income.
C)   an increase in noncurrent assets and an increase in liabilities.
D)  an increase in current liabilities and an increase in net income.

Question 6

Trading and Available-for-Sale securities are reported on the balance sheet at:

Accepted Answer

A)   net realizable value.
B)   historical cost.
C)   weighted average cost.
D)  market value.

Question 7

In an inflationary economic environment, the selling price set for a firm's products will:

Accepted Answer

A)   not be affected by the cost flow assumption used.
B)   be higher if LIFO is used than if FIFO is used.
C)   be higher if FIFO is used than if LIFO is used.
D)  be derived from the weighted average cost of inventory.

Question 8

Agrico, Inc., accepted a 6-month, 9% (annual rate), $8,000 note from one of its customers on November 1, 2016; interest is payable with the principal at maturity.Required:
a. Use the horizontal model or write the journal entry to record the interest earned by Agrico during its year ended December 31, 2016.b. Use the horizontal model or write the journal entry to record collection of the note and interest at maturity.

Accepted Answer

a. Interest earned =...

Question 9

With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require:

Accepted Answer

A)   the write-off be approved by two employees.
B)   an investigation of why credit was extended to this customer in the first place.
C)   a lawsuit to be initiated to recover the uncollectible amount.
D)  the write-off to be made within six months after the date of sale.

Question 10

If an organization purchases $2,100 of supplies on account, with terms of 2/15, n50:

Accepted Answer

A)   $1,950 must be paid within 15 days of the invoice date.
B)   $2,094 must be paid within 50 days of the invoice date.
C)   $2,058 can be paid within 15 days of the invoice date, or $2,100 must be paid within 50 days of the invoice date.
D)  $2,058 can be paid within 15 days of the invoice date, or $2,142 must be paid within 50 days of the invoice date.

Question 11

Bad debt expense is recognized in the same accounting period as the revenue that is related to the receivable because:

Accepted Answer

A)   the accounts receivable asset should be stated at original cost.
B)   the exact amount of the losses from bad debts is known.
C)   revenues should be stated at realizable value.
D)  all costs incurred in the current period should be subtracted from current period revenues.

Question 12

Which of the following is(are)  a category for securities?

Accepted Answer

A)   Trading.
B)   Held-to-maturity.
C)   Available-for-sale.
D)  All of the above.

Question 13

Accounts receivable are reported at:

Accepted Answer

A)   net realizable value.
B)   historical cost.
C)   weighted average cost.
D)  market value.

Question 14

A firm has used LIFO for several years during which costs have trended higher. The effect on 2017 net income using LIFO, relative to FIFO, will be:

Accepted Answer

A)   net income for 2017 will be greater under LIFO than FIFO.
B)   net income for 2017 will be less under LIFO than FIFO.
C)   net income for 2017 will be the same under LIFO as under FIFO.
D)  can't tell from the information given.

Exam 5: Accounting for and Presentation of Current Assets

Correct Answer
verified
Ending balance = $39,000 + $120,000 - $1...
View Answer

The accrual of interest on short-term marketable securities results in:

Correct Answer
verified

In an inflationary economic environment, the selling price set for a firm's products will:

Correct Answer
verified

The current assets of most companies are usually made up of:

Correct Answer
verified

A cash equivalent is a current asset that:

Correct Answer
verified

A firm has used LIFO for several years during which costs have trended higher. The effect on 2017 net income using LIFO, relative to FIFO, will be:

Correct Answer
verified

Accounts receivable are reported at:

Correct Answer
verified

Bad debt expense is recognized in the same accounting period as the revenue that is related to the receivable because:

Correct Answer
verified

Which of the following is(are) a category for securities?

Correct Answer
verified

Correct Answer
verified

If an organization purchases $2,100 of supplies on account, with terms of 2/15, n50:

Correct Answer
verified

Correct Answer
verified
a. Interest earned =...
View Answer

With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require:

Correct Answer
verified

Trading and Available-for-Sale securities are reported on the balance sheet at:

Correct Answer
verified

Exam 5: Accounting for and Presentation of Current Assets

Correct AnswerverifiedEnding balance = $39,000 + $120,000 - $1...View AnswerShow Answer

The accrual of interest on short-term marketable securities results in:

Correct AnswerverifiedShow Answer

In an inflationary economic environment, the selling price set for a firm's products will:

Correct AnswerverifiedShow Answer

The current assets of most companies are usually made up of:

Correct AnswerverifiedShow Answer

A cash equivalent is a current asset that:

Correct AnswerverifiedShow Answer

A firm has used LIFO for several years during which costs have trended higher. The effect on 2017 net income using LIFO, relative to FIFO, will be:

Correct AnswerverifiedShow Answer

Accounts receivable are reported at:

Correct AnswerverifiedShow Answer

Bad debt expense is recognized in the same accounting period as the revenue that is related to the receivable because:

Correct AnswerverifiedShow Answer

Which of the following is(are) a category for securities?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If an organization purchases $2,100 of supplies on account, with terms of 2/15, n50:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Interest earned =...View AnswerShow Answer

With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require:

Correct AnswerverifiedShow Answer

Trading and Available-for-Sale securities are reported on the balance sheet at:

Correct AnswerverifiedShow Answer

Correct Answer
verified
Ending balance = $39,000 + $120,000 - $1...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
a. Interest earned =...
View Answer

Correct Answer
verified

Correct Answer
verified