Intermediate Accounting Chapter 6 Exam Solution Manual (Graded A+)
Petty cash fund - 175
Postage stamps - 58
Cash on hand - 4,265
Traveler's checks - 550
Checking balance, First National Bank - 30,425
Checking balance, Third National Bank - (825)
The total amount of cash that should appear on the balance sheet is ?? - Answers Petty Cash Fund +
Cash on Hand + Travelers Checks + First National Bank Checking Balance = $35,415
Cash control systems are the methods and procedures used to ensure ?? - Answers the safeguarding of
cash.
When an uncollectible account is written off under the allowance method, the effect of the write-off is
to ?? - Answers leave total assets unchanged.
Bad debt expense is normally reported on the income statement as a(n) ?? - Answers operating
expense.
Trainor Company estimates bad debt expense using a percentage of credit sales (5%). The company
began its current year with an $8,500 balance in the allowance account. During the current year,
$10,500 of accounts receivable were written off, and $1,200 of previously written off accounts were
collected. Credit sales for the year were $255,000. The bad debt expense for the year was ?? - Answers
Credit Sales x Percentage of Credit Sales
255,000 x .05 = 12,750
Under the allowance method of recording bad debts, which of the following entries, if any, would be
made to write off actual uncollectible accounts of $5,500? - Answers Allowance for Doubtful Accounts
Dr 5,500
Accounts Receivable Cr 5,500
During 2016, Blueberry, Inc. recovered and collected $4,200 from an account that had been written off
for over a year. At the end 2016, prior to the adjusting entry for bad debt expense, Blueberry, Inc.'s
balances for Accounts Receivable and Allowances for Doubtful Accounts were $750,000 (debit) and
$5,500 (credit), respectively. After the bad debt expense entry was posted, the net realizable value of
, accounts receivable was $675,000. Bad debt expense for the 2016 was?? - Answers 750,000 - 675,000 -
5,500 = 69,500
The entry to replenish the petty cash fund for $250 of various minor expenses would include a - Answers
credit to Cash for $250.
Per Books Per Bank
May 1 balance 11,600 10,000
May deposits 24,600 21,200
May checks 27,800 29,000
Note collected ---- 4,400
(includes 10% interest)
May service charge ---- 20
May 31 balance 8,400 6,580
Additionally, deposits in transit and outstanding checks from April's reconciliation were $4,400 and
$2,800, respectively.
The correct balance for Cash at May 31 should be ? - Answers May 31 Books Balance + Note Collected by
Bank - Bank Service Charge
8400 + 4400 - 20 = 12,780
When preparing a bank reconciliation, outstanding checks would be ? - Answers deducted from the
balance per bank statement
Hunter's, Inc. reported a balance of $1,410 in its cash account at the end of the month. There were
$1,200 of deposits in transit and $1,150 of checks outstanding. The bank statement showed a balance of
$1,510, service charges of $70, and the collection of a note plus interest. The note had a face value of
$170. How much interest did the bank collect for the company? - Answers Bank Balance: 1,510
Add Deposits in transit: 1,200
Deduct Checks Outstanding: 1,150
Adjusted Balance: 1,560
Books Balance: 1,410
Petty cash fund - 175
Postage stamps - 58
Cash on hand - 4,265
Traveler's checks - 550
Checking balance, First National Bank - 30,425
Checking balance, Third National Bank - (825)
The total amount of cash that should appear on the balance sheet is ?? - Answers Petty Cash Fund +
Cash on Hand + Travelers Checks + First National Bank Checking Balance = $35,415
Cash control systems are the methods and procedures used to ensure ?? - Answers the safeguarding of
cash.
When an uncollectible account is written off under the allowance method, the effect of the write-off is
to ?? - Answers leave total assets unchanged.
Bad debt expense is normally reported on the income statement as a(n) ?? - Answers operating
expense.
Trainor Company estimates bad debt expense using a percentage of credit sales (5%). The company
began its current year with an $8,500 balance in the allowance account. During the current year,
$10,500 of accounts receivable were written off, and $1,200 of previously written off accounts were
collected. Credit sales for the year were $255,000. The bad debt expense for the year was ?? - Answers
Credit Sales x Percentage of Credit Sales
255,000 x .05 = 12,750
Under the allowance method of recording bad debts, which of the following entries, if any, would be
made to write off actual uncollectible accounts of $5,500? - Answers Allowance for Doubtful Accounts
Dr 5,500
Accounts Receivable Cr 5,500
During 2016, Blueberry, Inc. recovered and collected $4,200 from an account that had been written off
for over a year. At the end 2016, prior to the adjusting entry for bad debt expense, Blueberry, Inc.'s
balances for Accounts Receivable and Allowances for Doubtful Accounts were $750,000 (debit) and
$5,500 (credit), respectively. After the bad debt expense entry was posted, the net realizable value of
, accounts receivable was $675,000. Bad debt expense for the 2016 was?? - Answers 750,000 - 675,000 -
5,500 = 69,500
The entry to replenish the petty cash fund for $250 of various minor expenses would include a - Answers
credit to Cash for $250.
Per Books Per Bank
May 1 balance 11,600 10,000
May deposits 24,600 21,200
May checks 27,800 29,000
Note collected ---- 4,400
(includes 10% interest)
May service charge ---- 20
May 31 balance 8,400 6,580
Additionally, deposits in transit and outstanding checks from April's reconciliation were $4,400 and
$2,800, respectively.
The correct balance for Cash at May 31 should be ? - Answers May 31 Books Balance + Note Collected by
Bank - Bank Service Charge
8400 + 4400 - 20 = 12,780
When preparing a bank reconciliation, outstanding checks would be ? - Answers deducted from the
balance per bank statement
Hunter's, Inc. reported a balance of $1,410 in its cash account at the end of the month. There were
$1,200 of deposits in transit and $1,150 of checks outstanding. The bank statement showed a balance of
$1,510, service charges of $70, and the collection of a note plus interest. The note had a face value of
$170. How much interest did the bank collect for the company? - Answers Bank Balance: 1,510
Add Deposits in transit: 1,200
Deduct Checks Outstanding: 1,150
Adjusted Balance: 1,560
Books Balance: 1,410
