By preparing a four-column bank reconciliation ("proof of cash") for the last month of the year, an auditor will generally be able to detect:
A. A cash sale which was not recorded on the books and was stolen by a bookkeeper.
B. An unrecorded check written at the beginning of the month which was cashed during the period covered by the reconciliation.
C. An embezzlement of unrecorded cash receipts on receivables before they had been deposited into the bank.
D. A credit sale which has been recorded twice in the sales journal.
Answer: B
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At the end of the current year, using the aging of receivable method, management estimated that $23,250 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $625. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
A.
| Accounts Receivable | 23,875? | |
| Allowance for Doubtful Accounts | 23,875? |
B.
| Bad Debts Expense | 23,250? | |
| Allowance for Doubtful Accounts | 23,250? |
C.
| Bad Debts Expense | 23,875? | |
| Allowance for Doubtful Accounts | 23,875? |
D.
| Accounts Receivable | 23,250? | |
| Bad Debts Expense | 625? | |
| Sales | 23,875? |
E.
| Bad Debts Expense | 22,625? | |
| Allowance for Doubtful Accounts | 22,625? |
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