Question

Answer the following multiple choice questions

show the workings where applicable

1.) which of the following entries would be used to account for uncollectible receivables using the allowance method?

a) allowance for uncollectible accounts is debited and uncollectible accounts expense is credited

b) uncollectible accounts expense is debited and allowance for uncollectible accounts is credited

c) uncollectible accounts expense is debited and accounts receivable is credited

d) accounts receivable is debited and Uncollectible accounts expense is credited

2) which of the following are the two methods of estimating uncollectible receivables?

a) the aging-of-accounts-receivable method and the percent-of-sales method

b) the gross up method and the direct write-off method

c) the direct write-off method and the percent-of-completion method

d) the allowance method and the amortization method

3) the allowance for uncollectible accounts currently has a debit balance of $200. the company's management estimates that 2.5% of net credit sales will be uncollectible. net credit sales are $115,000. what will be the amount of uncollectible accounts expense reported on the income statement?

a) $2,675

b) $2,875

c) $3,275

d) 3,075

4) which of the following is included in the cost of a plant asset?

a) regular maintenance cost

b) amounts paid to read the asset for its intended use in the business

c) normal repair cost

d) wages of workers who use the asset

5) on january 1, 2013, zane manufacturing company purchased a machine for $40,000. the company expects tonuse the machine a total of 24,000 hours over the next 6 years. the estimated sales price of the machine at the end of 6 years is $4,000. the company used the machine 8,000 hours in 2013 and 12,000 in 2014. what is depreciation expense for 2013 if the company uses straight line method?

a) $6,6667

b) $13,333

c) $12,000

d) $6,000

6) which of the following describes the par value of stock?

a) par value is the current selling price of stock

b) par value is the highest price for which a share can sell

c) par value is the price paid if the corporation purchases its own stock back

d) par value is a nominal, or minimal, amount assigned to shares of stock by the corporation

7) the two basics sources of equity are:

a) common stock and bonds

b) common stock and preferred stock

c) paid in capital and retained earnings

d) loans from banks and gifts from donors

8) the following information is needed to reconcile the cash balance for mike right ltd.

a deposit of $5,794.62 is in transit

oustanding cheques total $1,533.25

the book balance is $5,695.62

the bookkeeper recorded a $1,524 cheque as $15,240 in payment of the current month's rent

the bank balance at february 28, 2008 was $16,500.25

a deposit of $300 was credited by the bank for $3000

a customer cheque for $1,280 was returned for nonsufficient funds

the bank service charge is $70

based on the above information, which of the following is the correct adjusted cash book balance?

a) $6,670.38

b) $20,761.62

c) 18,061.62

d) 10,140.24

9) which of the following statements is true about a bank reconciliation statement?

a) a bank reconciliation should not be prepared by an employee who handles cash transactions

b) a bank reconciliation cannot be prepared with online banking

c) a bank reconciliation is a financial statement

d) a bank reconciliation guarantees that no errors have been made

Roland Corporation presented the following information which was extracted from its financial statements for the years 2016 ad 2015

net imcome	48,000
depreciation	18,000
issuance of bonds payable	44,000
payment of dividend	18,000
purchase of equipment	140,000
sale of equipment	74,000
increase in inventory	8,000
issuance of common stock	19,000
loss on sale of equipment	10,000
purchase of treasury stock	5,000
increase in accounts payable	5,000
increase in accounts receivable	3,000
decrease in accrued liability	5,000

Required:

1) prepare a statement showing the computation of the company's net cash flow provided by operating activities for the year ended December 31, 2016

2) prepare a statement showing the computation of the company's net cash flow provided by financing activities for the year ended 31, 2016

Answer 1

HOMEWORKLIB RULES provide for answering only 4 questions, in a single question, inorder to ensure clarity. And also we can provide detailed explanation in that case. I am answering the first 4 questions. You may re upload the remaining questions.

1. b. Uncollectible accounts expense is debited and allowance for uncollectible accounts is credited. Uncollectible accounts Expense is an expense and thus treated as an expense in the income statement, whereas the allowance will show as an item in the balance sheet under Liabilities section. Entry will be as follows,

   	Debit	Credit
   Uncollectible accounts expense	xxxx
   Allowance for uncollectible accounts		xxxx

   Thus the answer is b.

2. a. Ageing of accouts receivable and percentage of sales are the two methods of allowance for uncollectible accounts. Under the ageing method, allowance for uncollectible accounts is recognised based on the time since which the accounts is being receivable (the entire accounts receivable balance will be divided as 60 to 90 days, above 90 days etc, and then a percentage from each block is calculated as allowance for accounts receivable). Under percentage of sales method, the allowance is made as a specific percentage of net sales during the year. This percentage will be based on the previous experience of uncollectible accounts.

3. b. 2,875, the amount of uncollectible accounts Expense debited to income statement will be the amount allowed as allowance during the current year, without any consideration to opening balance. The company provides for allowance as a percentage of credit sales, and the credit sales during the year are 115,000. therefore the amount of uncollectible accounts Expense that will be debited to income statement will be 115,000 x 2.5% = 2,875.

4. b. Amount paid to reach the asset for it's intended use in the business. The amount that is spent till the asset had reached its intended position of use is the cost of the asset. All other expenses given that is regular maintenance, normal repairs, wages paid are all Expenses which do not add any value to the asset, and thus are not treated as cost of the asset.