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Exam 7: Cash and Receivables

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Question 51

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AT&T's financial statements for the 2010 and 2009 fiscal years contained the following information: In addition, the statement of cash flows disclosed bad debt expense of $1,334 million in 2010 and $1,762 million in 2009. Required: 1. Determine the amount of actual bad debt write-offs made during 2010. 2. Determine the amount of cash collected from customers during 2010. 3. Compute the receivables turnover ratio for 2010

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Question 52

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What is the correct entry for Flores on December 5, assuming the correct payment was received on that date?

A)
B)
C)
D)

E) C) and D)
F) None of the above

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Question 53

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If Winchester is using the balance sheet approach to determining loan losses and the Allowance account balance, what percentage did it use in 2013?

Rahal's accounts receivable at December 31, 2013, are:

Alliance Software began 2013 with accounts receivable of $115,000. All sales are made on credit. Sales and cash collections from customers for the year were $780,000 and $700,000, respectively. Cost of goods sold for the year was $450,000. What was Alliance's receivables turnover ratio (rounded) for 2013?

If HP is using the balance sheet approach to determining bad debt expense, what percentage of year-end receivables did it use in 2010 and 2009, respectively?

Logistics Company had the following items listed in its trial balance at 12/31/2013: Included in the checking account balance is $50,000 of restricted cash that Bank of the East requires as a compensating balance for the $300,000 note. What amount will Logistics include in its year-end balance sheet as cash and cash equivalents?

Cash equivalents would include investments in marketable equity securities as long as management intends to sell the securities in the next three months.

Using a T-account for the Allowance for Loan Losses, identify the changes in the account during 2013.

On October 1, 2013, Watergate Hotels borrowed $400,000 at 12% interest and pledged $500,000 in accounts receivables as collateral. Additionally, Watergate was charged a finance fee equal to 1% of the accounts receivable assigned. At the end of December, $300,000 of the assigned receivables were collected and remitted to the lender along with accrued interest. Required: Prepare journal entries to record the borrowing, the assignment of receivables, the collection on the receivables, and the recognition of interest expense.

In deciding whether financing with receivables is a secured borrowing or a sale under IFRS, the critical element is the extent to which:

Calistoga's accounts receivable at December 31, 2013, are:

What kind of account is the Allowance for Loan Losses in Winchester's financial statements?

Explain the transactions that typically would affect the discount on notes receivable account.

The following information pertains to Jacobsen Co.'s accounts receivable at December 31, 2013: During 2013, Jacobsen wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years. Jacobsen's December 31, 2012, allowance for uncollectible accounts was $40,000. Under the aging method, what amount of allowance for uncollectible accounts should Jacobsen report at December 31, 2013?

Explain the reason that Halliburton indicates that its receivables are generally not collateralized. What significance does this have to the reader?

The receivables turnover ratio provides a way for an analyst to assess the effectiveness of a company in managing its investment in receivables.

On December 31, 2012, Central Freight reported an allowance for uncollectible accounts of $15,300. During 2013, Central wrote off $17,000 in accounts receivable. Included in the write-off was Roskoff Corp.'s account in the amount of $750. Roskoff subsequently paid this balance. At December 31, 2013, an analysis of the accounts receivable aging schedule indicated the need for an allowance for uncollectible accounts of $14,900. Required: Prepare all implied journal entries relative to bad debt expense and the allowance for uncollectible accounts.

The O'Hara Group is owed $1,000,000 by Hilton Enterprises under an 8% note with three years remaining to maturity. The prior year of interest was unpaid. O'Hara agrees to restructure the note under terms that yield a present value of $880,000. The journal entry that O'Hara would make to record this transaction would include a loss on troubled debt restructuring of: