Chapter 7 Cash and Cash equivalents – Flashcards

Important elements of an internal control system for cash disbursements include each of the following except 1.Only authorized personnel should sign checks. 2.All expenditures should be authorized before a check is prepared. 3. All disbursements, other than very small disbursements, should be made by check. 4 The same person that prepares the check should also record it in the proper journal.

Cash equivalents do not include: Money market funds. High grade marketable equity securities. U.S. treasury bills. Commercial paper.

Cash may not include: Foreign currency. Money orders. Restricted cash. Undeposited customer checks.

Cash that is restricted and not available for current operations is reported in the balance sheet as:

On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. Flores uses the gross method of accounting for cash discounts. What journal entry should be recorded ?

Oswego Clay Pipe Company sold $46,000 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts. what journal entries should be recorded

Accounts receivable are normally reported at the

When you use an aging schedule approach for estimating uncollectible accounts

Priscilla's Exotic Pets discounted a note receivable without recourse and the sales criteria were met. The discounting is recorded as:

The transferor is considered to have surrendered control over its receivables if The transferred assets have been isolated from the transferor. Each transferee has the right to pledge or exchange the assets it received. The transferor does not maintain effective control over the transferred assets through either repurchase or redemption agreements before maturity or the ability to cause the transferee to return the assets. All of the above must occur.

The controller of the Red Wing Corporation is in the process of preparing the company's 2013 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered: a. Balances in the company's accounts at the First National Bank; checking $15,300, savings $23,900. b. Undeposited customer checks of $7,000. c. Currency and coins on hand of $760. d. Savings account at the East Bay Bank with a balance of $580,000. This account is being used to accumulate cash for future plant expansion (in 2015). e. $56,000 in a checking account at the East Bay Bank. The balance in the account represents a 20% compensating balance for a $280,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in 2016. f. U.S. Treasury bills; 2-month maturity bills totaling $33,000, and 7-month bills totaling $38,000. 1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2013 balance sheet.

Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2013, net credit sales totaled $5,100,000, and the estimated bad debt percentage is 1.20%. The allowance for uncollectible accounts had a credit balance of $48,000 at the beginning of 2013 and $43,000, after adjusting entries, at the end of 2013. 1.What is bad debt expense for 2013? 2.Determine the amount of accounts receivable written off during 2013. 3.If the company uses the direct write-off method, what would bad debt expense be for 2013?