CHAPTER 6 Reporting and Interpreting Sales Revenue, Receivable 13. Why should cash-handling and cash-recording activities be separated? How is this separation accomplished? 14. What are the purposes of a bank reconciliation? What balances are reconciled? 15. Briefly explain how the total amount of cash reported on the balance sheet is computed MULTIPLE-CHOICE QU 1. Sales discounts with terms 2/10, n/30 mean: a. 10 percent discount for payment within 30 days. b. 2 percent discount for payment within 10 days or the full amount (less returns) due within 30 days c. Two-tenths of a percent discount for payment within 30 days. d. None of the above. 2. Gross sales total $300,000, one-half of which were credit sales. Sales returns and allowances of $15,000 apply to the credit sales, sales discounts of 2 percent were taken on all of the net credit sales, and credit card sales of $100,000 were subject to a credit card discount of 3 percent. What is the dol lar amount of net sales? a. $227,000 b. $229,800 3. A company has been successful in reducing the amount of sales returns and allowances. At the same time, a credit card company reduced the credit card discount from 3 percent to 2 percent. What effect will these changes have on the company's net sales, all other things equal? a. Net sales will not change. b. Net sales will increase. 4. When a company using the allowance method writes off a specific customer's $100,000 account receivable from the accounting system, which of the following statements is/are true? 1. Total stockholders' equity remains the same. 2. Total assets remain the same. c. $279,300 d. $240,000 c. Net sales will decrease. d. Either (b) or (c). Total expenses remain the same. 3. c. 1 and 2 d. 1, 2, and 3 a. 2 b. 1 and 3 5. You have determined that Company X estimates bad debt expense with an aging of accounts receiv able schedule. Company X's estimate of uncollectible receivables resulting from the aging analysis equals $250. The beginning balance in Allowance for Doubtful Accounts was $220. Write-offs of bad debts during the period were $180. What amount would be recorded as bad debt expense for the cur- rent period? a. $180 b. $250 c. $210 d. $220 tha moct recent hank statement, you discover that you recently received an "nonsuf