Partial preview of the text
Download Cash & Receivables Exercises (KIESO) and more Exercises Accounting in PDF only on Docsity!
Review and Practice 7-31 To record interest on Sequoia Co. bonds, collected by bank ‘| Cash 600 Interest Revenue 600 To correct error in recording amount of check #7322 ‘| Cash 180 Accounts Payable 180 To record bank service charges for November ] Office Expense (bank charges) 18 Cash 18 To record customer's check returned NSF ] Accounts Receivable 220 Cash 220 After posting the entries, Nugget’s cash account will have a balance of $21,044. Nugget should return the Nugent Oil Co. check to Denver National Bank, informing the bank of the error. Review and Practice Key Terms Review accounts receivable 7-6 accounts receivable turnover 7-24 aging schedule 7-13 Allowance for Doubtful Accounts 7-12 allowance method 7-11 “bank charges 7-29 “bank credits 7-29 “bank or depositor errors 7-29 bank overdrafts 7-4 “bank reconciliation 7-29 cash 7-2 cash (sales) discounts 7-8 cash equivalents 7-3 cash realizable value 7-11 compensating balances 7-4 “deposits in transit 7-29 derecognition | 7-23 direct write-off method’ 7-1 factoring receivables 7-20 failed sale 7-21 ‘imprest system for petty cash 7-27 imputed interest rate 7-19 non-trade receivables 7-6 notes receivable 7-6 percentage-of-receivables approach 7-13 promissory note 7-15 receivables 7-6 restricted cash 7-4 u sale with guarantee (with recourse) 7-21 sale without guarantee (without recourse) 7-21 trade discounts 7-8 trade receivables 7-6 transaction price 7-8 zero-interest-bearing notes 7-15 *not-sufficient-funds (NSF) checks 7-29 “outstanding checks 7-29 Learning Objectives Review 1 Indicate how to report cash and related items. To be reported as “cash,” an asset must be readily available for the payment of current obligations and free from contractual restrictions that limit its use in satisfying debts. Cash consists of coin, cur- rency, and available funds on deposit at the bank. Negotiable instruments such as money orders, certified checks, cashier's checks, personal checks, and bank drafts are also viewed as cash. Savings accounts are usually classified as cash. Companies report cash as a current asset in the statement of financial position. The reporting of other related items are as follows. 1. Restricted cash: Companies should state separately legally restricted deposits held as compensating balances against short-term borrowing among the “Cash and cash equivalent items” in current assets. Restricted deposits held against long- term borrowing arrangements should be separately classified as non-current assets in either the investments or other assets sections. 351 Scanned with CamScanner’: 
