Acctg 5110 CPA #6
At October 31, Dingo, Inc., had cash accounts at three different banks. One account balance is
segregated solely for a November 15 payment into a bond sinking fund. A second account, used
for branch operations, is overdrawn. The third account, used for regular corporate operations,
has a positive balance. How should these accounts be reported in Dingo's October 31 classified
balance sheet? ✔✔The segregated account should be reported as a noncurrent asset, the
regular account should be reported as a current asset, and the overdraft should be reported as
a current liability.
The underlying Bond sinking fund is long term in nature thus the segregated account should be
reported as a noncurrent asset, the regular account is the cash balance available for daily use
and thus it is current asset and last account is overdrawn thus a bank overdraft.
ECG Company recorded two sales on March 1 of $20,000 and $30,000 under credit terms
of3/10, n/30. Payment for the $20,000 sale was received March 10. Payment for the $30,000
sale was received on March 25.
Under the gross method and the net method, net sales in the March income statement should
appear as which of the following amounts? ✔✔Gross Method:
$49,400
Net Method:
$48,500
When the allowance method of recognizing uncollectible accounts is used, the entries at the
time of collection of a small account previously written off: ✔✔Increase the allowance for
uncollectible accounts
When an account receivable is written off, both accounts receivable and the allowance for
uncollectible accounts are decreased. When an account previously written off is collected,
the account must be reinstated by increasing both accounts receivable and the allowance.
Accounts receivable is then decreased by the amount of cash collected
William Co. determined that the net realizable value (NRV) of its accounts receivable at
December 31, based on an aging of the receivables, was $650,000. Additional information is
as follows:
Allowance for uncollectible accounts --
At October 31, Dingo, Inc., had cash accounts at three different banks. One account balance is
segregated solely for a November 15 payment into a bond sinking fund. A second account, used
for branch operations, is overdrawn. The third account, used for regular corporate operations,
has a positive balance. How should these accounts be reported in Dingo's October 31 classified
balance sheet? ✔✔The segregated account should be reported as a noncurrent asset, the
regular account should be reported as a current asset, and the overdraft should be reported as
a current liability.
The underlying Bond sinking fund is long term in nature thus the segregated account should be
reported as a noncurrent asset, the regular account is the cash balance available for daily use
and thus it is current asset and last account is overdrawn thus a bank overdraft.
ECG Company recorded two sales on March 1 of $20,000 and $30,000 under credit terms
of3/10, n/30. Payment for the $20,000 sale was received March 10. Payment for the $30,000
sale was received on March 25.
Under the gross method and the net method, net sales in the March income statement should
appear as which of the following amounts? ✔✔Gross Method:
$49,400
Net Method:
$48,500
When the allowance method of recognizing uncollectible accounts is used, the entries at the
time of collection of a small account previously written off: ✔✔Increase the allowance for
uncollectible accounts
When an account receivable is written off, both accounts receivable and the allowance for
uncollectible accounts are decreased. When an account previously written off is collected,
the account must be reinstated by increasing both accounts receivable and the allowance.
Accounts receivable is then decreased by the amount of cash collected
William Co. determined that the net realizable value (NRV) of its accounts receivable at
December 31, based on an aging of the receivables, was $650,000. Additional information is
as follows:
Allowance for uncollectible accounts --
