60.
A company purchased goods on credit with credit terms of 3/15, n/45. Although the company
does not have cash available to pay within the discount period, the manager of the company
is considering borrowing money to take advantage of the discount. In order to make the
appropriate decision, the manager computed the annual interest rate associated with the
sales discount. Which of the following is the annual interest rate (rounded)?
61.
When credit terms for a sale are 2/15, n/40, the customer saves by paying early. What percent
(rounded) would this savings amount to on an annual basis?
62.
Which of the following accounts is not a contra-revenue account?
63.
Dillon Company uses the allowance method to account for bad debts. The entry to write off a
bad account (one that will never be collected) should be:
64.
When using the allowance method for accounting for bad debts, accounts receivable is
reported on the balance sheet at the expected net realizable value. When a particular
receivable from a customer ultimately is determined to be uncollectible and is written off, the
recording of this event will:
65.
Oakwood Company had accounts receivable of $750,000 and an allowance for doubtful
accounts of $21,500 just prior to writing off as worthless a customer’s $5,000 account
receivable. The net realizable value of Oakwood’s accounts receivable as shown by the
accounting records before and after the write off was as follows:
66.
Woodland Company uses the allowance method to account for bad debts. During 2016, a
customer declared bankruptcy and a receivable of $10,000 was deemed uncollectible. Which
of the following journal entries records Woodland’s uncollectible account write–off?
67.
At year-end, Chief Company has a balance of $10,000 in accounts receivable of which $1,000
is more than 30 days overdue. Chief has a credit balance of $100 in the allowance for doubtful
accounts before any year-end adjustments. Using the aging of accounts receivable method,
Chief estimates that 1% of current accounts and 10% of accounts over thirty days are
uncollectible. What is the amount of bad debt expense?
68.
Upon completing an aging analysis of accounts receivable, the accountant for Rosco Works
prepared and aging of accounts receivable and estimated that $5,000 of the $98,000 accounts
receivable balance would be uncollectible. The allowance for doubtful accounts had a $400
debit balance at year-end prior to adjustment. What is the amount of bad debt expense?
69.
Which of the following statements does not correctly describe the allowance for doubtful
accounts balance?
70.
The Roscoe Company’s March 31, 2016 bank statement balance was $70,000. As of March 31,
2016, outstanding checks total $22,000 and deposits in transit total $15,000. What was the
March 31, 2016 cash balance on Roscoe’s books?
71.
The Tanner Company’s April 30, 2016 pre-reconciliation cash balance on its books was
$35,000. While preparing the April 30 bank reconciliation, Tanner determined that outstanding
checks total $11,000, deposits in transit total $7,000, and bank service charges are $50. What
was Tanner’s April 30, 2016 cash balance per the bank statement?
72.
The Conner Company’s August 31, 2016 cash balance on its books was $90,000. As of August
31, outstanding checks total $44,000 and deposits in transit total $30,000. What was the
August 31, 2016 cash balance on Conner’s bank statement?
73.
Which of the following statements pertaining to bank reconciliations is false?
74.
When a depositor receives a bank statement indicating that there was a “NSF check,” the
depositor should do which of the following?
75.
A deposit in transit in a bank reconciliation should be:
76.
CHS Company has just finished preparing its bank reconciliation. If CHS did everything
correctly, which items would have been included as an addition to the company’s cash
account?
77.
Dally Company has just finished preparing its bank reconciliation. If everything was done
correctly, which of the following items would be reported as a deduction from the company’s
ending balance per the bank?
78.
Linetech Company’s bank statement showed an ending balance of $8,000. Items appearing in
the bank reconciliation included: outstanding checks, $500; deposits in transit, $1,000; bank
service charges, $50; and Driver Company’s $250 check erroneously deducted from Linetech’s
bank account by the bank. What is the correct cash balance at the end of the month?
79.
Which of the following demonstrates a poor internal control procedure?
80.
The cash records and the bank statement of Frankel Company showed the following at the
end of February 2016: Outstanding checks as of the beginning of February 2016, $8,000;
checks written by Frankel Company according to its books during February 2016, $50,000; and
checks cleared by the bank during February 2016, $54,000. What was the amount of the
outstanding checks at the end of February 2016?
81.
The cash account and the December bank statement of Gomez Company showed the
following: deposits made by Gomez Company during December $90,000; deposits reflected on
the December bank statement, $88,000; and deposits in transit on November 30, $5,000. What
was the amount of deposits in transit at the end of December?
82.
When preparing the monthly bank reconciliation, the accountant for Farris Corporation
discovered that a check correctly written to one of Farris’ suppliers for $159 had been
incorrectly recorded in the books as $195. Which of the following statements is correct with
respect to the bank reconciliation process?
83.
When preparing a bank reconciliation, which of the following would be deducted from the
company’s cash balance?
84.
Merchandise was sold on credit for $10,000, terms 2/10, n/30. Which of the following journal
entry descriptions correctly describes the cash collection?
85.
Merchandise was sold on credit for $30,000, terms 3/15, n/30. Which of the following journal
entry descriptions correctly describes the cash collection?
86.
Which of the following does not correctly describe the following journal entry?
Cash
xxx
Credit card discount
xxx
Accounts receivable
xxx