Penn Foster 06100801 Financial Accounting (Part 7) Questions 1â25: Select the one best answer to each question. Base your answers to questions 1 through 4 on the following information. An accountant for Harry Butterfield Apartments has the following data available to him. 1. The balance in the general ledger Cash account was $4,127.19 as of August 31. 2. Total cash receipts for the month of September amounted to $22,401.03. 3. Cash disbursements for the month of September amounted to $21,071.13. 4. On September 30 the company had cash receipts of $750.20. This money was placed in the bankâs night deposit box that evening and wasnât listed on the September bank statement. 5. The bank statement as of September 30 indicated a bank balance of $10,239.40. 6. A credit of $357.20 appearing on the bank statement represented a deposit made at the bank by Harry Butterfield and credited in error to Harry Butterfield. 7. The bank statement showed a deposit credit of $2,500 on September 27. This credit represented a loan from the bank which hadnât been recorded on the companyâs books as of September 30. 8. Included with the September bank statement was a debit memorandum from the bank for $14.30 representing service charges for September which hadnât been recorded by the company. 9. Examination of the cancelled checks included with the bank statement indicated that the following checks hadnât as yet been paid by the bank.#2043 129.43#2097 316.16#3012 424.15#3013 279.60#3014 222.2710. A $200.00 check of Carl Elkins, a customer, was marked NSF and returned by the bank with the September bank statement. No entry has as yet been made in the companyâs records to show the bankâs action on September 29, which was to charge the NSF check against Harry Butterfieldâs account balance. 11. By comparing the cancelled checks returned by the bank with the entries in the cash payments journal, it was discovered that check No. 2002 for $724.19, issued on September 9 in payment for office equipment, had been incorrectly entered in the cash payments journal as $742.19. 12. On September 30 the bank collected a $1,500 noninterest-bearing note for Harry Butterfield Apartments. This transaction hadnât as yet been recorded in the companyâs books. REQUIRED: Prepare a bank reconciliation as of September 30, using the format given in your study unit on the work sheet provided at the back of this unit. Then complete questions 1 through 4 on the answer sheet. DO NOT send the work sheet to us. 1. The adjusted cash balance is A. $8,510.99. B. $8,903.59. C. $9,260.79. D. $10,632.40. 2. Additions to the balance per books total A. $1,518.00. B. $4,018.00. C. $4,232.30. D. $5,389.61. 3. The total deductions from the balance per bank statement are A. $357.20. B. $1,107.40. C. $1,371.61. D. $1,728.81. 4. Based on the bank reconciliation, one of the adjusting entries needed as of September 30 is A. Accounts Receivable 200.00 Cash 200.00 B. Cash 14.30 Service Charges 14.30 C. Cash 750.20 Accounts Receivable 750.20 D. Accounts Payable 357.20 Cash 357.20 Base your answers to questions 5 through 7 on the following information. The M. T. Malinow Company maintains its petty cash on an imprest basis. The following is a list of activities relating to petty cash for the month of May. May 1 The company established a petty cash fund of $200. 28 The petty cash fund was replenished. A count of the fund before it was replenished showed the following: Cash on Hand Quantity Denomination 1 $20.00 1 $10.00 2 $5.00 9 $1.00 1 $0.50 10 $0.25 15 $0.10 9 $0.05 25 $0.01 Vouchers Charlieâs Office Supply Company 30.90 Postage due receipts 19.00 Fredâs Freight Company 41.23 Business Machine Repair Company 53.47 31 Because of the small amount of cash left at the end of the month, a check was drawn to increase the fundâs balance by $100. REQUIRED: Prepare the journal entries needed to record these three transactions on the work sheet provided at the back of this unit. Then answer questions 5 through 7 on the answer sheet. DO NOT send the work sheet to us. 5. Cash over or short on May 28 isA. short $2.20.B. over $2.20.C. short $1.20.D. over $1.20.6. The correct May 28 journal entry isA. Office Supplies 30.90 Postage 19.00 Transportation-in 41.23 Repairs Expense 53.47 Cash Over and Short 1.20 Petty Cash 145.80B. Office Supplies 30.90 Postage 19.00 Transportation-in 41.23 Repairs Expense 53.47 Cash Over and Short 1.20 Cash 145.80C. Office Supplies 30.90 Postage 19.00 Transportation-in 41.23 Repairs Expense 53.47 Cash Over and Short 2.20 Cash 146.80D. Office Supplies 30.90 Postage 19.00 Transportation-in 41.23 Repairs Expense 53.47 Cash Over and Short 2.20 Petty Cash 146.807. The ending balance in the petty cash account on May 31 isA. $54.20.B. $154.20.C. $200.00.D. $300.00.Base your answers to questions 8 and 9 on the following information.Assume that all of Thurmond Companyâs sales are credit sales. It has been the practice of Thurmond Company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. For the year 20X1 the company had net credit sales of $2,021,000 and the Allowance for Doubtful Accounts account had a credit balance, before adjustments, of $630 as of December 31, 20X1. During 20X2, the following selected transactions occurred:Jan. 20 The account of H. Scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off.Mar. 16 Informed that A. Nettles, a customer, had been declared bankrupt. His account for $898 was written off.Apr. 23 The $906 account of J. Kenney & Sons was written off as uncollectible.Aug. 3 Wrote off as uncollectible the $750 account of Clarke Company.Oct. 20 Wrote off as uncollectible the $1,130 account of G. Michael Associates.Oct. 27 Received a check for $325 from the estate of H. Scott. This amount had been written off on January 20 of the current year.Dec. 20 Cater Company paid $7,000 of the $7,500 it owed Thurmond Company. Since Cater Company was going out of business, the $500 balance it still owed was deemed uncollectible and written off.REQUIRED: Prepare journal entries for the December 31, 20X1, and the seven 20X2 transactions on the work sheets provided at the back of this unit. Then answer questions 8 and 9 on the answer sheet. T-accounts are also provided for your use in answering these questions.8. Which one of the following entries should have been made on December 31, 20X1? A. Uncollectible Accounts Expense 9,475 Allowance for Doubtful Accounts 9,475 B. Uncollectible Accounts Expense 10,105 Allowance for Doubtful Accounts 10,105 C. Allowance for Doubtful Accounts 9,475 Uncollectible Accounts Expense 9,475 D. Allowance for Doubtful Accounts 10,105 Uncollectible Accounts Expense 10,105 9. The balance in the Allowance for Doubtful Accounts account after all 20X2 transactions have been posted but prior to final adjustment is A. $5,921. B. $6,226. C. $6,551. D. $7,051. 10. On March 1, Alexander and Company discounted at its bank a $3,000, one-year, 14% interest-bearing note due on August 31. The discount rate was 16%. The journal entry that is made to record the discounting of the note is A. Cash 3,146.40 Interest Income 146.40 Notes Receivable 3,000.00 B. Cash 2,853.60 Interest Expense 146.40 Notes Receivable 3,000.00 C. Cash 3,000.00 Interest Expense 146.40 Notes Receivable 3,146.40 D. Cash 3,000.00 Interest Income 146.40 Notes Receivable 2,853.60 11. Youâre the accountant in charge of the collection of receivables for the Dunstone Company. An analysis of the year-end receivables shows the following: Time Interval Age Group Amount Estimated Percentage Uncollectible Not yet due 18,000 3% 1â30 days past due 21,000 5% 31â60 days past due 8,000 10% 61â90 days past due 3,000 20% Over 90 days past due 2,500 40% 52,500 Youâre to prepare an entry to adjust the Allowance for Doubtful Accounts to the proper balance using the aging of accounts receivable method. The credit balance in the Allowance for Doubtful Accounts account before adjustment is $500. The correct journal entry is The correct journal entry is: A. Uncollectible Accounts Expense 4,490 Allowance for Doubtful Accounts 4,490 B. Uncollectible Accounts Expense 4,240 Allowance for Doubtful Accounts 4,240 C. Uncollectible Accounts Expense 3,990 Allowance for Doubtful Accounts 3,990 D. Uncollectible Accounts Expense 3,490 Allowance for Doubtful Accounts 3,490 12. The Fancy Staple Company wants to increase its imprest petty cash fund from $100 to $300. The correct entry to reflect this increase is A. Petty Cash 300 Cash 300 B. Petty Cash 200 Cash 200 C. Miscellaneous Expense 200 Cash 200 D. Cash 300 Petty Cash 300 13. On January 18, Billings Company received a $1,200, 6%, 60-day note from the Zero Company in settlement of a $1,200 account receivable balance. When the note came due on March 19, it was dishonored by the Zero Company. What entry was made by Billings Company on March 19? A. Interest Expense 12 Accounts Receivable 12B. Notes ReceivableâDishonored 1,212 Notes Receivable 1,200 Interest Income 12 C. Accounts Receivable 1,212 Notes Receivable 1,200 Interest Income 12 D. Accounts Receivable 1,188 Interest Expense 12 Notes Receivable 1,200 14. The direct write-off of uncollectible accounts method is not preferred because it A. accelerates the recording of the uncollectible accounts expense. B. doesnât match the sales revenue with the proper amount of expense. C. overstates the Allowance for Uncollectible Accounts account. D. understates accounts receivable for the current period. 15. Hereâs the Notes Receivable general ledger account of the Jane Miller Cosmetics Company. Notes Receivable Diagram DATE P.R. DEBIT DATE P.R. CREDIT20XX 20XX Jan. 2 P. Manville, 60-day 5,000 Feb. 2 P. Manville, Disc. 5,000Feb. 16 J. Thomas, 90-day 9,000 Apr. 8 C. Miller, Disc. 6,000Apr. 6 C. Miller,120-day 6,000 May 17 J. Thomas, Paid 9,000June 8 F. Dark, 30-day 4,500 July 8 F. Dark, Paid 4,500July 28 T. French, 120-day 8,000 July 29 T. French, Disc. 8,000Aug. 15 J. Jones, 90-day 3,000 Aug. 28 J. Jones, Disc. 3,000Oct. 10 B. Merrill, 30-day 2,000 All notes due on or before October 31 were paid when due. The October 31, 20X1, balance sheet of the Jane Miller Cosmetics Company must carry a notation that, at October 31, 20X1, the company was contingently liable for notes receivable discounted in the amount ofA. $2,000.B. $11,000.C. $13,000.D. $22,000.16. On January 1, 20X1, Bauman Corporation established a petty cash fund of $300. On December 31, 20X1, the petty cash fund was examined and found to have receipts and documents for miscellaneous expenses amounting to $212. In addition, there was cash amounting to $80. What entry would be required to record replenishment of the petty cash fund on December 31, 20X1? A. Miscellaneous Expense 212 Cash Short and Over 8 Petty Cash 220 B. Miscellaneous Expense 220 Cash Short and Over 8 Cash 212 C. Petty Cash 212 Cash Short and Over 8 Cash 220 D. Miscellaneous Expense 212 Cash Short and Over 8 Cash 220 17. In preparing its bank reconciliation for the month of June, Whittaker Corporation has available the following information: Balance per bank statement, June 30 $60,000 Deposit in transit, June 30 3,750 Outstanding checks, June 30 2,875 Credit erroneously recorded by bank inWhittakerâs account, June 18 200 Bank service charges for June 25 What should be the correct balance of cash at June 30?A. $58,925 B. $60,650 C. $60,675 D. $70,075 18. A method of estimating uncollectible accounts that focuses on the income statement rather than the balance sheet is theA. direct write-off method.B. aging of trade receivable accounts.C. percentage of net credit sales.D. percentage of gross accounts receivable.19. The following information relates to doubtful accounts expense for Monroe Corporation at December 31, 20X1 and for the year ended December 31, 20X1.Allowance for Doubtful Accounts $3,000 (debit balance)Credit sales $2,240,000Credit sales returns and allowances $50,000The basis for estimating doubtful accounts expense is 3% of net credit sales.At December 31, 20X1, the correct amount of doubtful accounts expense for Monroe Corporation should beA. $62,700.B. $65,700.C. $67,200.D. $68,700.20. The following information relates to accounts receivable of the Windsong Corporation for the year ended December 31, 20X1. Windsong doesnât estimate its uncollectible accounts expense as a percentage of net credit sales. Accounts receivable at December 31, 20X1 1,500,000Allowance for doubtful accounts at December 30, 20X1 80,000Credit sales for 20X1 4,500,000Collections from customers for 20X1 4,200,000Accounts written off during 20X1 95,000Estimated uncollectible receivables per aging of receivables at December 31, 20X1 120,000All of the accounts which were written off during 20X1 were written off before December 30, 20X1. At December 31, 20X1, Windsongâs allowance for doubtful accounts should beA. $40,000.B. $80,000.C. $120,000.D. $135,000.21. Herring Company accepted a $20,000 face value, six-month, 12% note dated April 15 from a customer. On the same date, Herring discounted the note at First National Bank at a 15% discount rate. How much cash should Herring receive from the bank on April 15?A. $19,610B. $20,000C. $21,200D. $21,79022. A check drawn by a depositor for $149 was recorded in the journal as $194. This item would be included in the bank reconciliation as a(n)A. addition to the balance per the depositorâs records.B. deduction from the balance per the depositorâs records.C. addition to the balance per the bank statement.D. deduction from the balance per the bank statement.23. Based on the data in question 22, what entry is required in the depositorâs accounts?A. Debit Cash, credit Accounts ReceivableB. Debit Cash, credit Accounts PayableC. Debit Accounts Receivable, credit CashD. Debit Accounts Payable, credit Cash24. Determine the amount of uncollectible accounts expense to be recorded for the following information. Thereâs a debit balance of $700 in the allowance account just prior to adjustment. Analysis of accounts receivable indicates doubtful accounts of $6,500. The amount of uncollectible accounts expense that will be recorded for the period isA. $5,800.B. $6,500.C. $6,800.D. $7,200.25. The Carlyle Company began operations on January 1, 20X0. During January the company had net credit sales of $800,000. The company estimates that 4% of the net credit sales will become uncollectible and sets up an allowance account based on this assumption. Cash of $600,000 was collected from customers in payment of their accounts. Specific accounts totaling $14,000 were written off during the month. What would be the balances in the Allowance for Doubtful Accounts and the Uncollectible Accounts Expense at the end of January after the necessary adjusting entry?A. Allowance for Doubtful Accounts $32,000 and $18,000 Uncollectible Accounts ExpenseB. Allowance for Doubtful Accounts $32,000 and $14,000 Uncollectible Accounts ExpenseC. Allowance for Doubtful Accounts $18,000 and Uncollectible Accounts Expense $32,000D. Allowance for Doubtful Accounts $14,000 and Uncollectible Accounts Expense $32,000
