Mini Test 2 Form A Solutions - Mini test 2 SP 2010 A Key 1....

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Mini test 2 SP 2010 A Key 1. A company made an after-hours bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should: A. Deduct the deposit from the bank statement balance. B. Send the bank a debit memorandum. C. Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. D. Add the deposit to the book balance of cash. E. Add the deposit to the bank statement balance. Rahal's Auto Parts reported accounts receivable and an allowance for uncollectible accounts of $85,000 and $3,000, respectively, at December 31, 2005. For 2006, Rahal estimates bad debt expense to be 1% of credit sales. During 2006, Rahal's credit sales and collections were $400,000 and $410,000, respectively, and $2,000 in bad accounts was written off. 2. Rahal's 2006 bad debt expense is: A. $2,000. B. $3,000 C. $4,000 D. $5,000 E. $6,000 3. Rahal's accounts receivable at December 31, 2006, are: A. $75,000 B. $93,000 C. $71,000 D. $73,000 E. None of the above 4. Which of the following do not change the balance in Accounts Receivable? A. Customer returns on credit sales B. Collections from customer accounts C. Bad debts expense accrual D. Write-offs of uncollectible accounts E. All of the above would change the balance in Accounts Receivable.
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5. Please consider the model Sales/Collection cycle discussed in lecture and contained in your assigned readings. Which of the following situations would be inconsistent with the ideal format? A. A clerk in the mailroom prepares a daily cash collection summary or "control total" using the customer's remittance advice. B. A clerk in the accounting department compares the deposit ticket to the control total. C. A clerk in the mailroom updates the accounts receivable subsidiary ledger for customer payments (using information obtained from the customer remittance advice). D. A clerk in the mailroom restrictively endorses the checks before providing them (along with a copy of the control total) to the individual who is making the bank deposit. E. All of the above statements are consistent with the model Sales/Collection cycle. 6. 8/26th : Hawthorne Manufacturing (the "buyer") places an order to purchase materials from High Quality Vendor ("HQV" i.e. the "seller"). The materials have an original cost to HQV of $12,000. The materials normally list for $20,000 but due to Hawthorne's buying history HQV gave them a 10% trade discount and the standard payment terms of 2/10, n/30 Hawthorne anticipates selling the items for $25,000. 8/28th: The materials are shipped FOB Shipping point from HQV's warehouse in California with $1,000 of freight prepaid. 9/2nd:
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Mini Test 2 Form A Solutions - Mini test 2 SP 2010 A Key 1....

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