Chapter 7, Problem 16PC

Among the transactions of Salem, Inc., were the following. Made payments on accounts payable to merchandise suppliers. Paid the principal amount of a note payable to First State Bank. Paid interest charges relating to a note payable to First State Bank. Issued bonds payable for cash; management plans to use this cash in the near future to expand manufacturing and warehouse capabilities. Paid salaries to employees in the finance department. Collected an account receivable from a customer. Transferred cash from the general bank account into a money market fund. Used the cash received in d, to purchase land and a building suitable for a manufacturing facility. Made a year-end adjusting entry to recognize depreciation expense. At year-end, purchased for cash an insurance policy covering the next 12 months. Paid the quarterly dividend on preferred stock. Paid the semiannual interest on bonds payable. Received a quarterly dividend from an investment in the preferred…

1. You are the auditor of a company and you came upon the inspection of a transaction concerning its receivables. The company did not transfer all the significant risks and rewards of its certain accounts receivable to a bank and the bank agreed to give a cash advance to the company less any finance charges and not yet releasing an amount for a contingency on sales return transactions. Which of the following receivable financing most likely occurred? A. Factoring with recourse B. Discounting with recourse C. Assignment with notification D. Discounting without recourse E. Factoring without recourse   2. An auditor decided to render sales cut-off as part of auditing an audit client’s accounts receivable. Entries in the Sales Journal from December 16, 2016 to the subsequent period January 15, 2017 were vouched to the supporting documents. Which of the following is correct regarding the January entries?    A. January sales journal entries vouched back to the…

Volatile liabilities in the Bank’s performance report include all of the following EXCEPT:a. checking accountsb. large CDsc. purchased depositsd. deposit sources of funds