Question

1)

The bank statement that a depositor receives from the bank includes

            a.   notification of amounts deducted by the bank to cover such things as the cost of a supply of new checks ordered by the depositor.

            b.   a designation of which checks are still outstanding at the end of the month.

            c.   a designation of which deposits are in transit at the end of the month.

            d.   notification of errors made by the depositor in recording checks written during the month in the depositor's accounts.

2)

Which of the following receivables would not be classified as an "other receivable"?

a.   Advance to an employee

b.   Refundable income tax

c.   Notes receivable

                                    d.         Interest receivable

3)

An aging of a company's accounts receivable indicates that $7,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

a.   debit to Bad Debts Expense for $7,000.

b.   debit to Allowance for Doubtful Accounts for $5,900.

c.   debit to Bad Debts Expense for $5,900.

d.   credit to Allowance for Doubtful Accounts for $7,000.

4)

Watson Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Watson Retailers will include a credit to Sales of $75,000 and a debit(s) to

a.   Cash $72,000 and Service Charge Expense $3,000.

b.   Accounts Receivable $72,000 and Service Charge Expense $3,000.

c.   Cash $72,000 and Interest Expense $3,000.

                  d.   Accounts Receivable $75,000.

Answer 1

21) 3 The bank statement that a depositor receives from the bank includes 4 Answer 6 a. notification of amounts deducted by the bank to cover such things as the cost of a supply of new checks ordered by the depositor. 5 7 00 9 10 11 The bank statement which has been received from the bank shows the expenses which has been deducted such as cost of supplying new checks service charges, dishonour of checks, any error which has been done by bank etc. Bank statement did not show the amount of checks outstanding or deposit in transit and errors committed by depositor in recording checks. 12 13 14 15 2) 16 Which of the following receivables would not be classified as an "other receivable"? 17 18 Answer C. Notes receivable 19 20 21 22 Notes receivable will not be shown under the heading of "other receivable" Advance paid to an employee , Refundable Income Tax and Interest Receivable will be shown under the heading of Other Receivables. 23 24

25 3) 26 Uncollectible Debts Less Allowance for Doubtful Accounts Adjustment to Bad Debts 7000 -1100 5900 27 28 29 Following journal entry has to be passed 30 31 5900 32 Bad Debts Expense Allowance for Doubtful Accounts (To record bad debts expense) 5900 33 34 35 Answer C) debit to Bad Debts Expense for $5,900. 36 374) Following Journal entry has to be passed 38 39 72,000 3,000 40 Cash Service Charges expense (75000*4%) Sales Revenue (To record sales) 41 75,000 42 43 44 Answer a) Cash $72,000 and Service Charge Expense $3,000.