1. Zane’s Auto Supply had the following items listed in its trial balance at 12/
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Question
1. Zane’s Auto Supply had the following items listed in its trial balance at 12/31/2016: Currency and coins 650 Balance in checking account 2,600 Customer checks waiting to be deposited 1,200 Treasury bills, purchased on 11/1/2016, mature on 4/30/2017 3,000 Marketable equity securities 10,200 Cash set aside to purchase a lot 25,200 What amount will Zane include in its year-end balance sheet as cash and cash equivalents?
2. On November 10 of the current year, Yatsumi Industries sold materials to a customer for 8,000 with credit terms 2/10, n/30. Yatsumi uses the net method of accounting for cash discounts. a. How much revenue will Yatsumi recognize on November 10? b. If payment is received on Nov. 21, how much cash will Yatsumi receive?
3. What is the account classification of Allowance for Uncollectible Accounts?
4. Collection of accounts receivable that previously have been written off results in an increase in cash and an increase in what other account?
5. Donut Hole Foods estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2016, Donut Hole Foods’ credit sales and collections were 125,000 and 131,000, respectively. What was the balance of accounts receivable on January 1, 2016, if 180 in accounts receivable were written off during 2016 and if the allowance account had a balance of 750 on December 31, 2016?
6. The following information relates to Meehan Agency’s accounts receivable for 2016: Accounts receivable balance, 1/1/2016 840,000 Credit sales for 2016 3,300,000 Accounts receivable written off during 2016 70,000 Collections from customers during 2016 3,100,000 Allowance for uncollectible accounts balance, 12/31/2016 210,000 What amount should Meehan report for accounts receivable, before allowances, at December 31, 2016?
7. Poppy Produce estimates bad debt expense at ½% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $471,000 and $1,650, respectively, at December 31, 2015. During 2016, Poppy's credit sales and collections were $315,000 and $319,000, respectively, and $1,720 in accounts receivable were written off. Poppy's 2016 bad debt expense is:
8. Excelsior Corporation obtained a $40,000 note receivable from a customer on June 30, 2016. The note, along with interest at 6%, is due on June 30, 2017. On September 30, 2016, Excelsior discounted the note at Clearfield bank. The bank's discount rate is 10%. What amount of cash did Excelsior receive from Clearfield Bank?
9. Hallington Enterprises prepares a bank reconciliation at the end of every month. At the end of May, the general ledger checking account showed a balance of $1,360 and the bank statement showed a bank balance of $1,445. Outstanding checks totaled $350 and deposits in transit were $150. The bank statement listed service charges of $30 and NSF checks totaling $85. The corrected cash balance is:
Explanation / Answer
1. Zane’s Auto Supply had the following items listed in its trial balance at 12/31/2016: Currency and coins 650 Balance in checking account 2,600 Customer checks waiting to be deposited 1,200 Treasury bills, purchased on 11/1/2016, mature on 4/30/2017 3,000 Marketable equity securities 10,200 Cash set aside to purchase a lot 25,200 What amount will Zane include in its year-end balance sheet as cash and cash equivalents?
Cash and cash equivalent include cash ,bank and assets which could be realised in cash within 3 months and it should be unrestricted-
Cash and Cash equivalents =650+1200+2600+10200=$14,650
*Treasury bill has more than 3 months maturity period and cash is restricted
On November 10 of the current year, Yatsumi Industries sold materials to a customer for 8,000 with credit terms 2/10, n/30. Yatsumi uses the net method of accounting for cash discounts. a. How much revenue will Yatsumi recognise on November 10? b. If payment is received on Nov. 21, how much cash will Yatsumi receive
a.)
How much revenue will Yatsumi recognise on November 10?
Net Price = Gross Price Potential Cash Discount
Net Price = $8,000 160 (2% of $8,000) = $7,840
Accounts Receivable
7,840
Sales
7,840
b. )
If payment is received on Nov. 21, how much cash will Yatsumi receive
Since payment is after 10 days there will be no discount-
Cash
8,000
Accounts Receivable
7,840
Sales Discounts Forfeited
160
3. What is the account classification of Allowance for Uncollectible Accounts
This account is classified as a contra asset account.
It will be shown in company’s balance sheet, as a deduction in the accounts receivable .
Account Receivable
Less:Allowance for Uncollectible Accounts
4.
Collection of accounts receivable that previously have been written off results in an increase in cash and an increase in what another account
1 Account Receivable
2 Cash A/c Dr.
Account Receivable
Account Receivable will get nullify
*Answer is Allowance for Doubtful accounts
Accounts Receivable
7,840
Sales
7,840
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