Question

0. 1. Khaled’s company needs to replenish a $500 petty cash fund. Its petty cash box has $70 cash and petty cash receipts of $420. The journal entry to replenish the fund includes:
1. A debit to Cash for $70.
2. A credit to Cash for $70.
3. A debit to Cash Over and Short for $10
4. A credit to Cash Over and Short for $10.
5. A credit to Petty Cash for $420

2. Fahad’s company had net sales of $50,000 and accounts receivable of $5,500. Its days’ sales uncollected is:
   1. 3.2 days.
   2. 38.4 days.
   3. 40.15 days.
   4. 29.2 days.
   5. 12.5 days.

3. Total interest to be earned on a $7,500, 9%, 120-day note is:
   1. $93.75
   2. $375.00
   3. $570.25
   4. $750.00

4. Ahmad’s receives a $14,000, 12%, 60-day note. The maturity value of the note is:
   1. $280
   2. $14,000
   3. $14,280
   4. $13,780

5. Saud’s company has net sales of $650,000 and average accounts receivable of $25,000. What is its account receivable turnover?
   1. 20.18
   2. 30.41
   3. 26.00
   4. 12.00
6. When reimbursing the petty cash fund:
   A. Cash is debited
   B. Petty Cash is credited
   C. Petty Cash is debited
   D. Appropriate expense accounts are debited
   E. No expenses are recorded

Answer 1

1. Khaled’s company needs to replenish a $500 petty cash fund. Its petty cash box has $70 cash and petty cash receipts of $420. The journal entry to replenish the fund includes:

1. A debit to Cash for $70.
2. A credit to Cash for $70.
3. A debit to Cash Over and Short for $10
4. A credit to Cash Over and Short for $10.
5. A credit to Petty Cash for $420

Debit to expenses (or assets) .......................... 420
Debit to Cash over and short ..............................10
Cash......................................................430

Hence, Option 3 is correct.

2. Fahad’s company had net sales of $50,000 and accounts receivable of $5,500. Its days’ sales uncollected is:

1. 3.2 days.
2. 38.4 days.
3. 40.15 days.
4. 29.2 days.
5. 12.5 days.

Day's sales uncollected = (Accounts Receivable * No. of days in a year) / Net sales

Day's sales uncollected = (5,500 * 365) / 50,000

Day's sales uncollected = 40.15 Days

Hence, Option 3 is correct.

3. Total interest to be earned on a $7,500, 9%, 120-day note is:

1. $93.75
2. $375.00
3. $570.25
4. $750.00

Discount Rate = Principal * (Rate of Interest / 100) * (No of Days / Total No of Days In Year)

Total Interest = 7,500 * (9 / 100) * (120 / 365)

Total Interest = 7,500 * 0.09 * 0.3288

Total Interest = 221.94

4. Ahmad’s receives a $14,000, 12%, 60-day note. The maturity value of the note is:

1. $280
2. $14,000
3. $14,280
4. $13,780

A = P (1+rt)

A = 14000 ( 1 + (0.12 * 60 /365))

A = 14,000 (1 + 0.0197)

A = 14,000 * 1.0197

A = 14,275.80

Hence, Option 3 is correct.

5. Saud’s company has net sales of $650,000 and average accounts receivable of $25,000. What is its account receivable turnover?

1. 20.18
2. 30.41
3. 26.00
4. 12.00

Accounts Receivable turnover = total sales / accounts receivable

Accounts Receivable turnover = 650,000 / 25,000

Accounts Receivable turnover = 26

Hence, option 3 is correct.

6. When reimbursing the petty cash fund:
A. Cash is debited
B. Petty Cash is credited
C. Petty Cash is debited
D. Appropriate expense accounts are debited
E. No expenses are recorded

while reimbursing the petty cash No expenses are recorded.

hence Option E is correct.