Which of the following would be included in cash and cash equivalents

| March 31, 2017

Question
Nombre:______________________________

Asignación#5

Contabilidad Intermedia 201

Fecha:_____________
Chapter 7—Cash and Receivables

MULTIPLE CHOICE

1. Which of the following would be included in cash and cash equivalents on the balance sheet?
a. certificates of deposit
b. bank overdrafts
c. commercial paper
d. postage stamps

2. Which of the following would not be considered as a cash equivalent?
a. certificates of deposit
b. commercial paper
c. treasury bills
d. money market fund securities

3. Items classified as "cash" on the balance sheet
a. are limited to coins, currency, or bank drafts
b. must be available to pay current obligations
c. may be subject to contractual restrictions
d. do not include negotiable checks or bank drafts

4.

Which of the following would not be reported on the financial statements?
a. sales discount taken
b. trade receivables
c. trade discounts
d. sales discounts not taken

5.

When a company decides to sell its goods on credit, it should evaluate the effect on profit of
Additional
Revenues
a.
b.
c.
d.

Yes
Yes
No
No

Additional
Expenses
Yes
No
Yes
No

Asignación #5 (ACCO 201 Prof. Carlos Álvarez)
5-1

6.

In accounting for sales discounts, most companies use the
a. allowance method
b. gross price method
c. discounted price method
d. net price method

7. The Sales Returns and Allowances account is reported as a
a. contra-revenue account on the income statement
b. current liability on the balance sheet
c. deduction from accounts receivable on the balance sheet
d. selling expense on the income statement

8. In order to be classified as a cash equivalent, an investment must have a maturity date of
a. less than six months
b. three to six months
c. six to twelve months
d. three months or less

9.

Which of the following methods may not be appropriate for estimating bad debt expense?
a. percentage of net credit sales
b. percentage of outstanding accounts receivable
c. aging of accounts receivable
d. percentage of sales

10. Bad debt expense is normally reported on the income statement as a(n)
a. operating expense
b. offset against gross sales
c. financial expense in the other items section
d. contra-revenue amount

5-2

11. The estimate of bad debt expense may be based on the historical relationships between actual bad
debts incurred and
Sales
a.
b.
c.
d.

Yes
Yes
No
No

Accounts Receivable
No
Yes
Yes
No

12. During 2014, a company wrote off $6,000 in uncollectible accounts receivable. At the end of the year,
they estimated bad debt expense using a percent of gross sales. In 2015, the company recovered a
$1,000 account that was written off in 2014. The recording of this recovery would include a
a. debit to retained earnings
b. credit to accounts receivable
c. debit to allowance for doubtful accounts
d. credit to prior period adjustments

13. If a company usually sells its accounts receivable, it records any factoring commissions as a(n)
a. Loss
b. Expense
c. Receivable
d. Liability

14. Melody, Inc., accepts a national credit card. The collection fee is 6%. If credit card sales are $500, the
correct journal entry is
470
a. Accounts Receivable
Sales
Accounts Receivable
b.
Credit Card Expense
Sales
c. Accounts Receivable
Sales
d. Accounts Receivable
Credit Card Discount
Sales

470

470
30
500
500
500
500
30
470

Asignación #5 (ACCO 201 Prof. Carlos Álvarez)
5-3

15. What entry format is appropriate if sales returns and allowances occur on factored accounts?
XX
a. Sales Returns and Allowances
Receivable from Factor

b. Receivable from Factor

Factoring Expense
Sales Returns and Allowances
c.
Factoring Expense
d. Receivable from Factor
Accounts Receivable

XX

XX
XX
XX
XX
XX
XX

16. Short-term non-interest-bearing notes receivable are usually recorded at their
a. present value
b. net realizable value
c. principal value
d. maturity value

BONO’s
17. On June 3, Trade Bank loaned a customer $30,000 on a 60-day, 10% note, remitting the face value less
the interest to the customer. Which of the following journal entries would Trade Bank use to record the
receipt of the note?
30,000
a. Notes Receivable
Interest Revenue
Cash
b. Notes Receivable
Cash
Notes Receivable
c.
Cash
d. Notes Receivable
Interest Revenue
Cash

3,000
27,000

30,000
30,000
29,500
29,500
30,000
500
29,500

18. Mesa Tables Co. uses a four-column bank reconciliation. The bank statement reports May payments of
$1,315, including service charges of $20. At the beginning of May, there were $90 of checks
outstanding. At the end of May, there were $120 of checks outstanding. Before recording the bank
service charges, Mesa Tables must have recorded May payments of
a. $1,325.
b. $1,265.
c. $1,305.
d. $1,365.

5-4

19. Marlon, Inc., reported a balance of $143 in its cash account at the end of the month. There were $120
of deposits in transit and $115 of checks outstanding. The bank statement showed a balance of $150,
service charges of $6, and the collection of a note plus interest. The note had a face value of $15. How
much interest did the bank collect for the company?
a. $18
b. $ 3
c. $24
d. $12

PROBLEM

1. The accounting records for Ortiz, Inc. revealed the following information on April 30, 2015:
Bank statement balance, April 30, 2015
Credit memo with bank statement for interest
earned during April on bank account
Debit memo with bank statement for April’s
service charge
Deposits in transit on April 30
Cash on hand
NSF customer check on April 30
A $175 deposit made on April 3 was recorded
incorrectly by the bank as
The bank collected a customer’s note receivable
(including 10% interest)
Outstanding checks on April 30
Cash account balance, April 30, 2015

$51,000
15
27
2,000
500
1,000
125
1,100
3,900
50,000

Required:
a.
b.

Prepare a bank reconciliation using good format.
Prepare any necessary adjusting journal entries for April 30, 2015.

Asignación #5 (ACCO 201 Prof. Carlos Álvarez)
5-5

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