Question

A bank statement shows a balance of $5,630 at June 30. A bank reconciliation is prepared and includes outstanding checks of $1,860, deposits in transit of $900, and a bank service charge of $20. Among the paid checks returned by the bank was check no. 900 in the amount of $400, which the company had erroneously recorded in the accounting records as $40. The "adjusted cash balance" at June 30 is: 26. A) $4,310. B) $4,290 C) $4,670. D) $5,090. Juliet Inc. had accounts receivable of $300,000 and an allowance for doubtful accounts of $18,500 just before writing off as worthless an account receivable from Arrow Company of $1,200. The net realizable values of the accounts receivable before and after the write-off were: A) $281,500 before and $280,300 after. B) $281,500 before and $281,500 after C) $300,000 before and $298,800 after D) $318,500 before and $317,300 after 28. At December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Marshall Corporation showed a debit balance of $3,200. An aging of the accounts receivable indicated the amount probably uncollectible to be $2,100. Under these circumstances, a year-end adjusting entry for uncollectible accounts expense would include a: A) Debit to the Allowance for Doubtful Accounts for $1,100. B) Credit to the Allowance for Doubtful Accounts for $1,100. C) Debit to Uncollectible Accounts Expense of $2,100. D) Debit to Uncollectible Accounts Expense of $5,300. The lower of cost or market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on: 29. A) Individual inventory items. B) Major inventory categories. C) The entire inventory D) All of the above. 30. When prices are increasing which inventory method will produce the highest cost of goods sold? A) FIFO B) LIFO C) Average D) Cost of goods sold will not change.

Answer 1

Solution The "adjusted cash balance" at June 30 is: C) $4,670. Ans. $5,630 Balance as per Bank Statement Adjustment Outstanding checks Depositin transit ($1,860) 900 $4,670 Adjusted Balance as per Bank/Cash book Note: Please note that adjusted cash balance as per Cash book andas per Bank, figure out the same when a bank reconciliation is prepared The net realizable values of the accounts receivable before uestion and after the write-off were: B) 281,500 before and 281,500 after Ans. Before write After write off off Accounts receivable balance Allowance for doubtful accounts Net realizable value 300,000 298,800 17,300 281,500 18,500 281,500 Question 28 Under these circumstances, a year end adjusting entry for uncollectible accounts receivable expense would include a D) Debit to uncollectible Accounts Expense of $5,300. Ans.

Calculation $2,100 (C.) S3,2001 (Dr.) $5,300 (Dr.] Post-adjustment bal. of Allowance for doubtful accounts Pre-adjustment bal. of Allowance for doubtful accounts Uncollectible accounts expenses Question 29 The lower of cost or market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on: D) All of the above. Ans The rule is normally applied on individual inventory items, however it is permitted to apply this produce the highest cost of goods sold? B) LIFO Ans. Explanation: Under LIFO method, inventories purchased last are issued first, hence the inventories under LIFO, will be issued at most current price. Hence cost of goods sold under LIFO shall be the highest.