C. $50,000. e. money market funds. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space (or rent expense). To this, we will add the $150 interest earned and subtract the $810 book error in check #1221 ($4,900 $4,090) to determine the ending balance of $25,960. D. Accounts receivable payable within 60 days cannot be factored. B. D. Restricted cash funds cannot be reported as a current asset. Restricted cash. Prepare journal entries to record the issuance of capital stock in each of the following independent cases. Restricted cash. In deciding whether financing with receivables is a secured borrowing or a sale under IFRS, the critical element is the extent to which: On February 15, when the fund balance reached $7, the petty cash custodian prepared a petty cash report that summarized receipts for postage ($140) and printing ($54). Days' sales uncollected = Ending Accounts Receivable of $125,000 / Net Sales of $850,000 365 = 53.7 days. Felicia Rashad Corporation has pretax financial income (or loss) from 2015 through 2021 as follows. location to another is called a(n): False, A company records each reconciling item used to determine the adjusted cash balance per books. However, both types of financial instruments are very similar and yield similarly low yields. C) allows companies to report dividends paid as either investing or operating cash flows. C. disclosed in the notes to the financial statements. Returns are material and reasonably predictable. In 2016 Rebound recognized an impairment of $200,000 due to a troubled debt restructuring. C. monitoring Treasury stock purchased for cash: $25 Collection of accounts receivable that previously have been written off results in an increase in cash and an increase in: Horace estimated that the building was worth$175,000 on May 1, 2017. D) $39 million. C. added to the book balance. Examples of cash equivalents include: A company can have too much cash or cash equivalents on hand, though. Barkley had acquired the building in 2013 at a price of $150,000. You may omit explanations for the journal entries. C. Cash overdrafts are not allowed. Receipts from cash sales of $1,000 were recorded incorrectly in the journal as $10,000. 4. signed by the depositor instructing the back to pay a specified amount of money to a designed recipient. Common examples of cash equivalents include all of the following except: Money market funds. 4. check. 12 Q All of the following are classified as cash except A.) False, The lack of agreement between the bank balance and the book balance is due to time lags and However, U.S. GAAP designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows. B. Cash equivalents are any short-term investment securities with maturity periods of 90 days or less. Controls that relate primarily to the safeguarding of assets are: \qquad\text{Store supplies used}&\text{\hspace{24pt}900}&\text{\hspace{20pt}400}&\text{\hspace{15pt}1,300}\\ D. All of these answer choices must occur. How has deregulation helped consumers in some industries? If a company has cash or cash equivalents, the aggregate of these assets is always shown on the top line of the balance sheet. Because of the uncertainty regarding client creditworthiness, outstanding account receivable balances are not cash equivalents even if the invoice is due or shortly to be due. cash 193 The following information is available for the Maribel Company for the month of June: The unadjusted balance of the company's Cash account was $26,620 at the end of June.The bank statement shows a balance on June 30 of $26,960.Outstanding checks totaled $4,000 at June 30.Deposit in transit totaled $3,000 on June 30.The bank statement included unrecorded interest earned in the amount of $150.Check #1221 (in payment of account payable) was written for $4,900, but recorded in the accounting records as $4,090. Step 8: Compute the adjusted book balance. Restricted cash. C. Multiplying ending accounts receivable in each age category by the expected loss ratio for each age category. A. True True C. debit Miscellaneous Expense for $3. Commercial papers held and due for repayment in 90 days c. Equity investments d. A bank overdraft. than by cash. False, Few internal control systems provide for independent internal verification. $36,000. Cash and cash equivalents also generally earn different yields as there are different risks associated with each. Restricted cash expected to be used within the next year should be A.reported as a current asset. The Cash account is debited for $1,050, the amount collected. C) custom machinery Current value plus accrued interest. Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured directly. The company's days' sales uncollected is closest to: 53.7 days Cash and cash equivalents (CCE) are the most liquid current assets found on a business's balance sheet.Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount". However, when the clerk and the supervisor count the cash in the register, the count reveals that $1,050 was actually collected from customers. D. Accounted for on the installment basis. Are big hospitals bad for you? False, Control is most effective when two people are responsible for a given task. A) allows companies to report cash inflows from interest and dividends as either operating or investing cash flows. outstanding checks, Step 1: Enter the bank statement balance from the bank statement deposits in transit $20,000. Cash interest paid to bondhodlers: $35 C. Rebound should recognize an increase in 2017 net income of $50,000. A. The Sales account is credited for $1,059, the actual amount of the sales for the day, and the Cash Over and Short account is debited for $9, which is the shortage (or difference between the two amounts). B. segregation of duties. Though risk for both is fairly low, cash equivalents may receive favorable yields. The investment must be short term, usually with a maximum investment duration of three months or less. Adjusted cash balance per books = Cash balance per books, May 31 ($3,500) + note and interest collected ($850) bank service charge ($20) NSF check ($170) = $4,160. A. addition to the balance per bank statement. The assets considered as cash equivalents are those that can generally be liquidated in less than 90 days, or 3 months, under U.S. GAAP and IFRS.. B) $55 million. D) pencils and erasers \text{2018}&30,000&20\\ C. Recognizing bad debts expense. Currency and coins on hand of $12,500 + Customer checks on hand (not yet deposited) of $37,000 + Investment in 3-month U.S. Treasury bills of $10,000 = Total cash and cash equivalents of $59,500. ___ A code that protects private information. Money market funds. Accounts Receivable, 12/31/19: 125,000 A. Proceeds from sale of land and buildings: $45 True D) $105 million. These instruments can easily be converted to cash but are classified differently because they are not actual claims of ownership of cash. Apple classifies its broad assortment of financial instruments as cash, Level 1 instruments, or Level 2 instruments (based on how the item is valued). The Sarbanes Oxley Act (SOX) internal control standards apply only to companies listed on the U.S. exchanges. Cash is the asset most susceptible to fraudulent activities. C) Differences between net income and net operating cash flow D. $36,820. D) $245,000. 130 Reporting Comprehensive Income, Accounting for Digital Assets: Key Considerations. Effect of Parents' Education on Student SAT Scores. B. each time monies are paid from petty cash, the custodian requests reimbursement. D) $405,000. Galaxy should: B. C) $171 million. High grade marketable equity securities. Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. A. On September 30, 2016, Ireland discounted the note at Cloverdale bank. False, Internal control over cash disbursements is more effective when companies pay by check, rather This ratio helps determine how fast a company can pay its short-term debt. A statement of cash flows for the period Notes, comprising a summary of significant accounting policies and other explanatory notes Comparative information prescribed by the standard. each time monies are paid from petty cash, the custodian requests reimbursement. Cash equivalents are securities maturing within 90 days or less and include commercial paper, money market funds, and U.S. Treasury bills. This year, Jason was very busy due to a shortage of personnel at the company, so he decided to just estimate the amount of ending inventory instead of doing an accurate count. See Answer "Statement of Financial Accounting Standards No. In July, Jukebox Company issued checks totaling $38.900. The United Nations Development Programme regularly releases its Human Development Report. B. providing a double record of all bank transactions. Cash flows from operating activities during 2016 should be reported as: The entry to replenish the fund would, [The correct journal entry would be to debit the related expense accounts for the receipts, $190, debit Cash Over and Short, $5 ($195 - $190) and credit cash, $195], Making payments from a petty cash fund requires. A. a bank service charge. Priscilla's Exotic Pets discounted a note receivable without recourse and the sales criteria were met. Money market funds. D. Credit sales in the period of the return. f. How should the income tax expense section of the income statement for 2020 appear? Financial Accounting Standards Board. The second sample shows the SAT math test scores for students whose parents are high school graduates but do not have a college degree. A disbursement system that uses wire, telephone, or computers to transfer cash balances from one The dollar amounts of cash equivalents must be known. The work of one person acts as a check on another person to prevent fraud and errors. D. establishment of responsibility. What Is a Liquid Asset, and What Are Some Examples? IFRS defines cash equivalents as short-term, highly liquid investments that are readily convertible to known amounts of cash. The age of the receivables transferred differs from the average age of the receivables. In other words, there is very little risk of collecting the full amount being reported. \end{array} B. Transfers of receivables sometimes are treated as a secured borrowing. The transferor is considered to have surrendered control over its receivables if: \qquad\text{Advertising}&\text{\hspace{15pt}1,200}&\text{\hspace{20pt}500}&\text{\hspace{15pt}1,700}\\ Which of the following control activities is relevant when a company uses a computerized (rather than manual) accounting system? A. B) Source of cash used for plant expansion Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus. IFRS allows companies to report cash inflows from interest and dividends as operating, investing, or financing cash flows. A. automated system. O commercial paper. A. A. bookkeeper. \text{Cost of goods sold}&\underline{\text{\hspace{10pt}63,700}}&\underline{\text{\hspace{5pt}34,100}}&\underline{\text{\hspace{10pt}97,800}}\\ B. Assigning receivables. D. bank service charges. B.) The receipts, which totaled $194 (or $140 + $54), and the amount of cash on hand of $7 exceed the fund balance by $1 (or $194 + 7 = $201). \end{array} They are used for meeting short-term expenses of investing. Discounted at an imputed interest rate. Commercial paper is a short-term, unsecured debt instrument issued by corporations typically for the financing of short-term liabilities. D. Was motivated by the Enron scandal. A bank reconciliation contains all of the following items EXCEPT: D. correction of bank errors. A. an addition to the balance per depositor's records. On February 1, Derrick Company establishes a $200 petty cash fund. IFRS allows interest and dividends received to be reported as either operating or investing. All of the following can be classified as cash and cash equivalents, except * a. Consider the following macroeconomic model: C=0.7Y+100G=50I=30X=80M=0.1Y+50\begin{aligned} A. A. C. adjusted balance at the end of the month. B. 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Examples of cash equivalents also generally earn different yields as there are different risks associated with each Ending! $ 1,050, the amount collected: a Company can have too cash! A double record of all bank transactions, Derrick Company establishes a $ 200 petty cash, the custodian reimbursement.