Author: Anonymous

Principles of internal control include all of the following except:

Pelcher Co. maintains a $400 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $110 for office supplies, $140 for merchandise inventory, and $70 for miscellaneous expenses. There is a cash overage of $4. The journal entry to replenish the fund on January 31 is:

A company received a $15,000, 90-day, 10% note receivable. The journal entry to record receipt of the note includes a debit to Notes Receivable.

The expense recognition (matching) principle requires use of the allowance method of accounting for bad debts.

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is: (Use 360 days a year.)

Franklin Company’s bank reconciliation as of August 31 is shown below.           Bank balance   $14,237 Book balance   $13,162 + Deposit in transit   4,500 Bank service fees   -50 – Outstanding checks   -3,900 Note collected   1,725 Adjusted bank balance   $14,837 Adjusted book balance   $14,837 The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

The aging of accounts receivable involves classifying each account receivable by how long it is past its due date and estimating the percent of each uncollectible class.

If a customer owes interest on accounts receivable, Interest Receivable is debited and Accounts Receivable is credited.

On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is: