Question

QUESTION 1

When the net price method is used to record credit sales, the sales discounts not taken account is reported as a(n)

		addition to sales returns and allowances on the income statement
		deduction from gross sales on the income statement
		deduction from selling expenses on the income statement
		addition to other revenue on the income statement

QUESTION 2

After the company completes the bank reconciliation, it makes journal entries for adjustments

		it made to the bank statement balance
		it made to its records
		it made to both the bank statement and its records
		made on the statement of cash flows

QUESTION 3

Which of the following conditions must be met by a company (the transferor) to record the transfer of accounts receivable for which it surrenders control to another company as a sale?

		The transferred assets have been isolated from the transferor (i.e., put beyond the reach of the transferor).
		The transferee obtains the right to exchange (e.g., sell) the transferred assets.
		The transferor does not maintain effective control over the transferred assets through an agreement that entitles and obligates the transferor to repurchase the transferred assets before their maturity.
		All of these conditions must be met.

QUESTION 4

Companies should use petty cash funds to

		pay for employee parties and small gifts
		reimburse for all taxi usage or rental cars
		pay for minor business expenses
		keep track of corporate postage stamp usage

QUESTION 5

Brad’s Market's accountant is preparing its May bank reconciliation and has collected the following data:

	Per Books	Per Bank
May 1 balance	$11,600	$10,000
May deposits	24,600	21,200
May checks	27,800	29,000
Note collected (includes 10% interest)	--	4,400
May service charge	--	20
May 31 balance	8,400	6,580

Additionally, deposits in transit and outstanding checks from April's reconciliation were $4,400 and $2,800, respectively.

The correct balance for cash at May 31 should be

		$10,960
		$12,780
		$11,180
		$13,980

Answer 1

Solution 1:

When the net price method is used to record credit sales, the sales discounts not taken account is reported as an addition to other revenue on the income statement.

Hence last option is correct.

Solution 2:

After the company completes the bank reconciliation, it makes journal entries for adjustments "It made to its records"

Hence 2nd option is correct.

Solution 3:

following conditions must be met by a company (the transferor) to record the transfer of accounts receivable for which it surrenders control to another company as a sale:

1. the transferred assets have been isolated from the transferor (i.e., put beyond the reach of the transferor).

2. The transferee obtains the right to exchange (e.g., sell) the transferred assets.

3. The transferor does not maintain effective control over the transferred assets through an agreement that entitles and obligates the transferor to repurchase the transferred assets before their maturity.

Hence last option "All of these conditions must be met" is correct.

solution 4:

Companies should use petty cash funds to "pay for minor business expenses"

Hence 3rd option is correct.

Note: As multiple questions are posted, i have answer more than required questions. Kindly post separate question for answer of remaining questions.