Assume the following facts for Lowmann Company: The month-end $40,000; outstandi

Question

Assume the following facts for Lowmann Company: The month-end $40,000; outstanding checks total $2,000, a deposit of $8,000 is in transit at was erroneously charged against the account by the bank. What is the correct cash balance 26. bank statement shows a balance of at month-end; and a check for $400 at the end of the month? a $34,400 b. $46,400 c. $45,600 d. $33,600 -27. Ifthe percentage-of-completion method is used, what is the basis for determining the gross profit to be recognized in the second year of a three-year contract? a. Incremental cost for the second year only b. No gross profit would be recognized in year 2 c. Cumulative actual costs incurred only d. Cumulative actual costs and estimated costs to complete credit to Bee Company for $1,000 on July 1, with terms of 2/10, net /30. Abe Company sold merchandise on On July 6, Bee returned $200 worth of merchandise claiming the materials were defective. On July 8, Abe a payment from Bee and credited Accounts Receivable for $350. On July 24, Bee Company paid the remaining balance on its account. 28. See Abe Company information above. What was the total cash received from Bee during July? a. $800 b. $793 c. $441 d. $450 29. The following information is available for Longview Company Credit sales during 2014 Allowance for Doubtful Accounts, Dec. 31, 2013 Accounts receivable written off during 2014 $ 50,000 1,800 1,900 As a result of a review and aging of accounts receivable, it has been determined that the Allowance for Doubtful Accounts should show a balance of $2,400 at December 31, 2014. What amount should Longview record as bad debt expense for the year ended December 31,2014? a. $2,500 b. $3,700 c. $1,300 d. $2,400

Explanation / Answer

Answer 26 Calculation of correct cash balance at the end of the month Balance as per bank statement $40,000 Less : Outstanding checks $2,000 Add : Deposit in transit $8,000 Add : Check erroneously charged $400 Correct Cash Balance $46,400 The answer is Option b. Answer 27 The answer is Option d. Answer 28 Total Cash received from Bee during July Sale Value $1,000.00 Less : Goods Returned $200.00 Cash received from Bee $800.00 As Bee didn't pay the entire invoice amount within 10 days , he is not entitled to get the discount. The answer is Option a Answer 29 Calculation of bad debt expense for the year ended Dec.31,2014 Allowance for doubtful account balance as on Dec.31,2014 $2,400 Add : Accounts Receivables written off during 2014 $1,900 Less : Allowance for doubtful account balance as on Dec.31,2013 $1,800 Bad debt expense for the year ended Dec.31,2014 $2,500 The answer is Option a.

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