Question

1. Company X performed a bank reconciliation on December 31 using the following information: December 31...

1. Company X performed a bank reconciliation on December 31 using the following information:

  • December 31 book balance: $6,780
  • Service charge: $30
  • Deposits outstanding: $1,450
  • Outstanding checks: $750
  • Nonsufficient funds (NSF) check: $500

What is Company X’s corrected cash balance on December 31?

$5,500

$6,250

$7,480

$8,230

2. Use the following information regarding Company X to answer this question.

2015 2016
Accounts Receivable $350 $450
Net Sales (only 2016) $1400

What is Company X’s average collection period and how does it compare to the industry average of 100 days?

104.28 days; slower

104.28 days; quicker

117.36 days; quicker

117.36 days; slower

3.

Company X performed a bank reconciliation on December 31 using the following information:

  • December 31 book balance: $6,780
  • Service charge: $30
  • Deposits outstanding: $1,450
  • Outstanding checks: $750
  • Nonsufficient funds (NSF) check: $500

What was the bank balance on December 31 before adjustments?

$5,500

$6,780

$6,950

$8,180

4.

Which of the following is not true regarding the Statement of Cash Flows?

Selected Answer: d.

Paying dividends to owners is considered a financing activity on the Statement of Cash Flows.
Answers: a.

Cash also includes cash equivalents on the Statement of Cash Flows.
b.

Purchasing inventory is considered an investing activity on the Statement of Cash Flows.
c.

Operating activities can be reported using either the direct or indirect method.
d.

Paying dividends to owners is considered a financing activity on the Statement of Cash Flows.

Answer was given, but I need to know how the solution was found.

Business   Accounting   
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Homework Answers

Answer #1

Solution 1=>

Corrected Cash Balances = Book balance -Service charge - NSF checks

= $6780 - $30-$500

= $6250 (Answer)

Solution 2=>

Accounts receivable turnover ratio = Sales / Average accounts receivable

= $1400/[($350+$450)/2] =$1400/$400= 3.5 times

Average Collection period = 365 days / 3.5 times

= 104.28 (Slower) (Answer)

Solution 3=

Bank balance on December 31 before adjustment = Book balance - Service charge -NSF check + Outstanding check - Deposit outstanding (transit)

=$6780- $30 -$500-$750+$1450

=$6980 (Answer)

Solution 4:- Selected option by you is wrong . Option B should be selected.

Purchases of inventory considered as Operating activities not an investing activities in cash flow statement . The option's statement is not true in regarding the statement of cash flows.

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