Practice Test- Exam 2

Practice Test- Exam 2 - ACCT 229 PRACTICE EXAM 2 Problem 1...

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ACCT 229 – PRACTICE EXAM 2 Problem 1 The following is the asset portion of a balance sheet for a company on December 31, 2008: Cash and Cash Equivalents $20,000 Marketable Equity Securities 10,000 Accounts Receivable, net of allowance of $4,000 40,000 Supplies 800 Total Current Assets $70,800 Land 60,000 Building 200,000 Equipment 50,000 Accumulated Depreciation (14,000) Total Plant, Property, and Equipment 296,000 Total Assets $366,800 Upon review the cash and cash equivalents contained the following items: (1) Cash in checking account, $7,000 (4) Cash in money market account, $5,000 (2) 3 month CD purchased Nov. 1, 2008, $2,000 (5) 4 month Treasury Bill purchased Dec. 1, 2008, $1,000 (3) GE stock, $4,500: purchased Dec. 15, 2008 (6) Commercial Paper, $500: purchased Nov. 15, 2008 Expect to sell March 1, 2009 matures Jan. 15, 2009. A. What is the correct balance in the cash and cash equivalents account on Dec. 31? $ ___________________ (2 pts) B. What is the Net Realizable Value of Accounts Receivable on Dec. 31? $ ___________________ (2 pts) C. What is the book value of the building and equipment on Dec. 31? $ ____________________ (2 pts) D. What is the correct amount of total assets on Dec. 31? $ ____________________ (2 pts) Problem 2 Answer the following questions about bank reconciliations as True or False (1 pt. each) 1. _________ A bank reconciliation should be prepared only at year end. 2. _________ If a bookkeeper mistakenly records a disbursement at $63 instead of the correct amount of $36 the error would be shown on a bank reconciliation as an addition to the book side. 3. _________ If the bank issues a company a debit memo, the correct journal entry to update the company’s cash would include a debit to cash. 4. _________ Deposits in transit are shown on a bank reconciliation as a reduction from the bank side. 5. _________ If a check received from a customer that has deposited by a company is returned in the bank statement marked not sufficient funds (NSF), it would appear on the company’s 1
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Problem 3 On December 31, 2008 a company’s Accounts Receivable balance was $120,000, and the balance in the Allowance for Doubtful Accounts was a credit balance of $6,400. During 2009, the company recorded total sales of $250,000 of which 75% were on credit. Cash collections during the year were 190,000. The company wrote off $2,700 of accounts receivable as uncollectible during the year. The company collected $500 on an account that had been previously written off. A. Determine the ending balance in the Accounts Receivable as of December 31, 2009: (4 pts) $ ____________________ B. Determine the balance before adjustment in the Allowance for Doubtful Accounts (2 pts) $ _____________________ C. Determine the Net Realizable Value of Accounts Receivable for the year ended December 31, 2009 assuming amounts expected to be uncollectible are 2% of credit sales.
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This note was uploaded on 11/15/2010 for the course ACCT 229 taught by Professor Strawser during the Fall '06 term at Texas A&M.

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Practice Test- Exam 2 - ACCT 229 PRACTICE EXAM 2 Problem 1...

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