Question 1

The term "receivables" refers to

Accepted Answer

A)  amounts due from individuals or companies. 
B)  merchandise to be collected from individuals or companies. 
C)  cash to be paid to creditors. 
D)  cash to be paid to debtors. 
A)  amounts due from individuals or companies. 
B)  merchandise to be collected from individuals or companies. 
C)  cash to be paid to creditors. 
D)  cash to be paid to debtors.

Question 2

Allowance for Doubtful Accounts is a _____________ account which is ______________ from Accounts Receivable on the balance sheet.

Accepted Answer

contra ass

Question 3

The allowance method of accounting for uncollectible accounts is required if

Accepted Answer

A)  the company makes any credit sales. 
B)  bad debts are significant in amount. 
C)  the company is a retailer. 
D)  the company charges interest on accounts receivable. 
A)  the company makes any credit sales. 
B)  bad debts are significant in amount. 
C)  the company is a retailer. 
D)  the company charges interest on accounts receivable.

Question 4

On March 1 2016 Mike Dials purchased a suit at Lenny's Fine Apparel Store. The suit cost $800 and Mike used his Lenny's credit card. Lenny's charges 3% per month interest if payment on credit charges is not made within 30 days. On April 30 2016 Mike had not yet made his payment. What entry should Lenny's make on April 30th? a.
$\begin{array}{lrr}
  \text {Uncollectible Account  } &800\
 \text { Accounts Receivable } &&800\
\end{array}$
 
b. 
$\begin{array}{lrr}
  \text {  Bad Debt Expense} &776\
 \text { Interest Expense } &24\
 \text {Accounts Receivable  } &&800
\end{array}$

c. 
$\begin{array}{lrr}
  \text { Accounts Receivable  } &824\
 \text {  Interest Expense} &&24\
 \text {  Sales Revenue} &&800
\end{array}$

d. 
$\begin{array}{lrr}
  \text {  Accounts Receivable} &24\
 \text {  Interest Expense} &&24\
\end{array}$

Accepted Answer

The answer of On March 1 2016 Mike Dials purchased...

Question 5

On January 6 Whitson Co. sells merchandise on account to Garcia Inc. for $7000 terms 2/10 n/30. On January 16 Garcia Inc. pays the amount due. Prepare the entries on Whitson's books to record the sale and related collection.
(b) On January 10 Jill Hoyle uses her Berkman Co. credit card to purchase merchandise from Berkman Co. for $9000. On February 10 Hoyle is billed for the amount due of $9000. On February 12 Hoyle pays $4000 on the balance due. On March 10 Hoyle is billed for the amount due including interest at 2% per month on the unpaid balance as of February 12. Prepare the entries on Berkman Co.'s books related to the transactions that occurred on January 10 February 12 and March 10.

Accepted Answer

None

Question 6

To record estimated uncollectible accounts using the allowance method the adjusting entry would be a

Accepted Answer

A)  debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts. 
B)  debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts. 
C)  debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. 
D)  debit to Loss on Credit Sales Revenue and a credit to Accounts Receivable. 
A)  debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts. 
B)  debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts. 
C)  debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. 
D)  debit to Loss on Credit Sales Revenue and a credit to Accounts Receivable.

Question 7

Under the allowance method of accounting for uncollectible accounts

Accepted Answer

A)  the cash realizable value of accounts receivable is greater before an account is written off than after it is written off. 
B)  Bad Debt Expense is debited when a specific account is written off as uncollectible. 
C)  the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off. 
D)  Allowance for Doubtful Accounts is closed each year to Income Summary. 
A)  the cash realizable value of accounts receivable is greater before an account is written off than after it is written off. 
B)  Bad Debt Expense is debited when a specific account is written off as uncollectible. 
C)  the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off. 
D)  Allowance for Doubtful Accounts is closed each year to Income Summary.

Question 8

The _________________ basis of estimating uncollectibles normally results in the best approximation of _______________ value and therefore emphasizes balance sheet relationships.

Accepted Answer

percentage

Question 9

Which one of the following is not a primary problem associated with accounts receivable?

Accepted Answer

A)  Depreciating accounts receivable 
B)  Recognizing accounts receivable 
C)  Valuing accounts receivable 
D)  Disposing of accounts receivable 
A)  Depreciating accounts receivable 
B)  Recognizing accounts receivable 
C)  Valuing accounts receivable 
D)  Disposing of accounts receivable

Question 10

A customer charges a treadmill at Sports Equipment Shop. The price is $4000 and the financing charge is 8% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. The accounts affected by the journal entry made by Sports Equipment Shop to record the finance charge are

Accepted Answer

A)  Accounts Receivable Cash 
B)  Cash Finance Receivable 
C)  Accounts Receivable Interest Payable 
D)  Accounts Receivable Interest Revenue 
A)  Accounts Receivable Cash 
B)  Cash Finance Receivable 
C)  Accounts Receivable Interest Payable 
D)  Accounts Receivable Interest Revenue

Question 11

When an account is written off using the allowance method accounts receivable

Accepted Answer

A)  is unchanged and the allowance account increases. 
B)  increases and the allowance account increases. 
C)  decreases and the allowance account decreases. 
D)  decreases and the allowance account increases. 
A)  is unchanged and the allowance account increases. 
B)  increases and the allowance account increases. 
C)  decreases and the allowance account decreases. 
D)  decreases and the allowance account increases.

Question 12

Compute the missing amount for each of the following notes: $\begin{array} { c c c c c } 
& \text { Principal } & \text { Annual Interest Rate } & \text { Time } & \text { Total Interest } \
\hline \text { (a) } & \$ 40,000 & 10 \% & 2.5 \text { years } & ? \
\hline \text { (b) } & \$ 120,000 & ? & 9 \text { months } & \$ 7,200 \
\hline \text { (c) } & ? & 10 \% & 90 \text { days } & \$ 1,500 \
\hline \text { (d) } & \$ 40,000 & 9 \% & ? & \$ 1,200 \
\hline
\end{array}$

Accepted Answer

(a) @#LAT-DLM& @#LAT-DLM& year

Question 13

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A)  sales receivables. 
B)  non-trade receivables. 
C)  trade receivables. 
D)  merchandise receivables. 
A)  sales receivables. 
B)  non-trade receivables. 
C)  trade receivables. 
D)  merchandise receivables.

Question 14

Short-term receivables are reported in the current assets section before temporary investments.

Accepted Answer

A) True 
 B)False

Question 15

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

Accepted Answer

The answer of Sales resulting from the use of Visa...

Question 16

Under the allowance method Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Accepted Answer

A) True 
 B)False

Question 17

The percentage of sales basis of estimating expected uncollectibles

Accepted Answer

A)  emphasizes the matching of expenses with revenues. 
B)  emphasizes balance sheet relationships. 
C)  emphasizes cash realizable value. 
D)  is not generally accepted as a basis for estimating bad debts. 
A)  emphasizes the matching of expenses with revenues. 
B)  emphasizes balance sheet relationships. 
C)  emphasizes cash realizable value. 
D)  is not generally accepted as a basis for estimating bad debts.

Question 18

Woulk Company has a debit balance of $8000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year Woulk estimates that $60000 of its receivables are uncollectible. The amount of bad debt expense which should be reported for the year is:

Accepted Answer

A)  $8000. 
B)  $52000. 
C)  $60000. 
D)  $68000. 
A)  $8000. 
B)  $52000. 
C)  $60000. 
D)  $68000.

Question 19

Using the percentage of receivables method for recording bad debt expense estimated uncollectible accounts are $11000. If the balance of the Allowance for Doubtful Accounts is $2800 debit before adjustment what is the balance after adjustment?

Accepted Answer

A)  $2800 
B)  $8200 
C)  $11000 
D)  $13800 
A)  $2800 
B)  $8200 
C)  $11000 
D)  $13800

Question 20

Kirk Furniture factors $800000 of receivables to Sulu Factors Inc. Sulu Factors assesses a 4% service charge on the amount of receivables sold. Kirk Furniture factors its receivables regularly with Sulu Factors. What journal entry does Kirk make when factoring these receivables? a.
$\begin{array}{lrr}
  \text {  Cash} &768,000\
 \text {   Loss on Sale of Receivables} &32,000\
 \text {   Accounts Receivable} &&500,000
\end{array}$

b.
$\begin{array}{lrr}
  \text {  Cash} &768,000\
 \text {Accounts Receivable  } &&768,000\
\end{array}$

c.
$\begin{array}{lrr}
  \text { Cash } &800,000\
 \text { Accounts Receivable } &&768,000\
 \text { Gain on Sale of Recenables  } &&32,000
\end{array}$

d.
$\begin{array}{lrr}
  \text { Cash } &768,000\
 \text {  Service Charge Expens} &32,000\
 \text { Accounts Receivable } &&800,000
\end{array}$

Accepted Answer

The answer of Kirk Furniture factors $800000 of receivables to...

Exam 9: Accounting for Receivables

The term "receivables" refers to

Allowance for Doubtful Accounts is a _____________ account which is ______________ from Accounts Receivable on the balance sheet.

The allowance method of accounting for uncollectible accounts is required if

To record estimated uncollectible accounts using the allowance method the adjusting entry would be a

Under the allowance method of accounting for uncollectible accounts

The _________________ basis of estimating uncollectibles normally results in the best approximation of _______________ value and therefore emphasizes balance sheet relationships.

Which one of the following is not a primary problem associated with accounts receivable?

When an account is written off using the allowance method accounts receivable

Compute the missing amount for each of the following notes: Principal Annual Interest Rate Time Total Interest (a) \ 40,000 10\% 2.5 years ? (b) \ 120,000 ? 9 months \ 7,200 (c) ? 10\% 90 days \ 1,500 (d) \ 40,000 9\% ? \ 1,200

Notes or accounts receivables that result from sales transactions are often called

Short-term receivables are reported in the current assets section before temporary investments.

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

Under the allowance method Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

The percentage of sales basis of estimating expected uncollectibles

Using the percentage of receivables method for recording bad debt expense estimated uncollectible accounts are $11000. If the balance of the Allowance for Doubtful Accounts is $2800 debit before adjustment what is the balance after adjustment?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

Allowance for Doubtful Accounts is a _ account which is __ from Accounts Receivable on the balance sheet.

The ___ basis of estimating uncollectibles normally results in the best approximation of _ value and therefore emphasizes balance sheet relationships.