Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 07 - Financial Assets
Financial and Managerial Accounting, 17e 7-7
CHAPTER 7 NAME #_____ _
10-MINUTE QUIZ B SECTION
Shown below is a partially completed bank reconciliation for Hubbard Transport at August 31, as
well as additional data necessary to answer the questions that follow.
HUBBARD TRANSPORT
Bank Reconciliation
August 31, 20__
Balance per bank statement .................................................................................. $ 17,955
Add: (1)
Deduct: (2)
Adjusted cash balance ........................................................................................... $
Balance per depositor’s records ........................................................................... $14,249
Add: (3)
Deduct: (4)
Adjusted cash balance ........................................................................................... $________
Additional information
a Outstanding checks: no. 729, $1,253; no. 747, $245; no. 752, $781.
b Check no. 742 (for repairs) was written for $398 but erroneously recorded in Hubbard’s
records as $839.
c Deposits in transit, $2,254.
d Note collected by the bank and credited to Hubbard’s account, $4,800.
e NSF check of C. Craig, one of Hubbard’s customers, $1,525.
f Bank service charge for August, $35.
1 In Hubbard’s completed bank reconciliation at August 31, what dollar amount should be
deducted from the balance per bank statement (indicated by 2 above)?
a $2,254. b $2,279. c $1,525. d $4,800.
2 In Hubbard’s completed bank reconciliation at August 31, what dollar amount should be
added to the balance per depositor’s records (indicated by 3 above)?
a $4,800. b $2,254. c $5,241. d $6,766.
3 In Hubbard’s completed bank reconciliation at August 31, what dollar amount should be
deducted from the balance per depositor’s records (indicated by 4 above)?
a $2,254. b $2,001. c $1,525. d $1,560.
4 Hubbard Transport keeps $500 cash on hand in addition to this checking account and has
no other bank accounts or cash equivalents. What amount should appear as Cash in
Emerald’s August 31 balance sheet?
a $18,430. c $14,249.
b $17,955. d Some other amount.
5 The necessary adjustment to Hubbard Transport’s accounting records as of August 31
includes a net:
a Increase to Cash of $5,241. c Increase to Cash of $3,681.
b Increase to Cash of $3,240. d Decrease to Cash of $35.
Chapter 07 - Financial Assets
CHAPTER 7 NAME #_____ _
10-MINUTE QUIZ C SECTION
1 You are to complete the June 30 bank reconciliation for Huang, Inc. using the following information:
a Outstanding checks: c Deposit in transit ................... $3,300
No. 181 ............................. $350 d Note collected by bank as
No. 184 ............................. $300 Huang’s agent (no
No. 185 ............................. $225 interest) .................................. $2,000
b Check no. 142 (for Repair ... e NSF check of I.M. Broke ...... $250
Expense) was written for $320 f Bank service charge .............. $30
but erroneously recorded in
Huang’s records as $230.
Difference ............................ $90
HUANG, INC.
Bank Reconciliation
June 30, 2009
Balance per bank statement, June 30 ................................................................. $13,265
Add: ________
$
Less:
________
Adjusted balance ................................................................................................ $_______
Balance per depositor’s records, June 30 .......................................................... $14,060
Add:
________
$
Less:
________
Adjusted balance (as above) .............................................................................. $_______
2 Prepare the journal entry to correct Huang’s records as of June 30. (Explanations may be omitted; one
compound journal entry is acceptable.)
2009
General Journal
Debit
Credit
June 30
Chapter 07 - Financial Assets
Financial and Managerial Accounting, 17e 7-9
CHAPTER 7 NAME #
10-MINUTE QUIZ D SECTION
1 After aging its accounts receivable at December 31, Howland Company estimates that $68,000 of the
$835,000 outstanding accounts receivable will prove uncollectible. The Allowance for Doubtful
Accounts has a debit balance of $6,200 prior to adjustment. In the space provided, prepare the
adjusting entry required by Huey in this situation:
Dec. 31
2 At year-end, Atkins Company applies the income statement approach in estimating uncollectible
accounts expense and determines such expense to be 2% of net sales. At December 31 of the current
year, accounts receivable total $600,000, and Allowance for Doubtful Accounts has a credit balance
of $4,200 prior to adjustment. Net sales for the current year were $2,300,000. Compute the net
realizable value of accounts receivable to be reported in Dewey’s December 31 balance sheet.
3 During the year, Brown Corporation’s average accounts receivable were $316,000. The current-year
income statement reported net sales of $2,010,000, uncollectible accounts expense of $118,000, and
net income of $982,000. Using 365 days to a year, compute the average number of days Brown waits
to collect its accounts receivable. (Round answer to the nearest day, if necessary.)
Use the following for questions 4 and 5.
At September 30, the Cash account in the general ledger of Breen Construction shows a balance of $13,221.
However, the bank statement shows a balance of $16,720 at the same date. The only reconciling items
consist of a bank service charge of $42, outstanding checks totaling $4,744, a deposit in transit, and an error
in recording check no. 529. Check no. 529 was written in the amount of $772 but was recorded as $727 in
Gentle’s accounting records.
4 Refer to the above data. What is the adjusted cash balance in the September 30 bank reconciliation?
5 Refer to the above data. What is the amount of the deposit in transit?
Chapter 07 - Financial Assets
SOLUTIONS TO CHAPTER 7 10-MINUTE QUIZZES
Learning Objective: Learning Objective:
1, 4, 5 1, 3
QUIZ C
1
HUANG, INC.
Bank Reconciliation
June 30, 2009
Balance per bank statement, June 30 ................................................................. $13,265
Add: Deposit in transit .......................................................................... 3,300
$16,565
Less: Outstanding checks:
No. 181 ............................................................................................. $350
2
2009
General Journal
Debit
Credit
June 30
Cash
$1,630
Repair Expense
90
Accounts Receivable, I.M. Broke
250
Bank Service Charges
30
Notes Receivable
2,000
Learning Objective: 3
Chapter 07 - Financial Assets
QUIZ D
Chapter 07 - Financial Assets
Assignment Guide to Chapter 7
Brief
Exercises
Exercises
Problems
Cases
Net
1 - 11
1 - 15
1
2
3
4
5
6
7
8
1
2
3
4
Time estimate (in minutes)
<10
<15
40
40
40
25
30
60
40
20
20
40
40
30
Difficulty rating
E
E
M
M
M
S
M
S
M
E
M
S
S
M
Learning Objectives:
1, 3, 4, 6, 7, 8
2, 6, 7, 8, 10,
11, 12, 13, 15
√
√
√
√
√
√
√
√
√
1. Define financial assets and explain their
valuation in the balance sheet.
2. Describe the objectives of cash
management and internal controls over
cash.
1, 2
2, 3, 4, 6, 10
√
√
√
√
3. Prepare a bank reconciliation and explain
its purpose.
2
1, 5, 10
√
√
√
√
√
4. Describe how short-term investments are
reported in the balance sheet and account
for transactions involving marketable
securities.
3, 4
7, 10, 13, 15
√
√
√
√
5. Describe internal controls over accounts
receivable.
5
10
√
√
6. Account for uncollectible receivables using
the allowance and direct write-off
methods.
6, 7, 8, 10
8, 10, 12, 15
√
√
√
√
√
√
√
7. Explain, compute, and account for notes
receivable and interest revenue.
14
√
√
√
√
8. Evaluate the liquidity of a company’s
accounts receivable.
8, 9, 11
9, 12, 15
√
√
√
√
