Question 1

Explain how to record the receipt of a note receivable.

Accepted Answer

A note is recorded by entering

Question 2

When a maker of a note honours a note:

Accepted Answer

A) The note is written. 
B) The note is notarized. 
C) The note is cosigned. 
D) The note is paid off. 
E) The note is signed. 
A) The note is written. 
B) The note is notarized. 
C) The note is cosigned. 
D) The note is paid off. 
E) The note is signed.

Question 3

TechCom receives a 10%, 90-day note for $2,500. The interest on the note is:

Accepted Answer

A) $36.99. 
B) $58.79. 
C) $61.64. 
D) $50.00. 
E) $87.50. 
A) $36.99. 
B) $58.79. 
C) $61.64. 
D) $50.00. 
E) $87.50.

Question 4

Phuong Vo borrowed $5,000 and signed a 3-month promissory note at 10%. The total interest on the note is $125.

Accepted Answer

A) True 
 B)False

Question 5

TechCom has sales of $350,000 and estimates that 0.5% of its sales are uncollectible.The amount of bad debt expense is $17,500.

Accepted Answer

A) True 
 B)False

Question 6

TechCom received a $1,000, 90-day, 10% note receivable from Danny Outlaw. The journal entry to record the note includes a debit to notes receivable.

Accepted Answer

A) True 
 B)False

Question 7

Define a note receivable and describe how to calculate the interest due on a notereceivable.

Accepted Answer

A note receivable is a promissory note.

Question 8

All of the following are characteristics of notes receivable except, notes receivable:

Accepted Answer

A) are generally for a longer period than a regular accounts receivable. 
B) are usually evidenced by a more formal agreement called a promissory note. 
C) generally require the maker to pay interest on the receivable. 
D) are used by most businesses for very large amounts and are therefore almost always shown separately on the financial statements. 
E) the maker is the person who promises to pay the note at maturity. 
A) are generally for a longer period than a regular accounts receivable. 
B) are usually evidenced by a more formal agreement called a promissory note. 
C) generally require the maker to pay interest on the receivable. 
D) are used by most businesses for very large amounts and are therefore almost always shown separately on the financial statements. 
E) the maker is the person who promises to pay the note at maturity.

Question 9

Which of the following entries would be made to write off an uncollectible account receivable using the direct write-off method?

Accepted Answer

A) Dr. Allowance for doubtful accounts |Cr. Accounts receivable 
B) Dr. Accounts receivable | Cr. Bad debt expense 
C) Dr. Sales | Cr. Allowance for doubtful accounts 
D) Dr. Sales | Cr. Accounts receivable 
E) Dr. Bad debt expense | Cr. Accounts receivable 
A) Dr. Allowance for doubtful accounts |Cr. Accounts receivable 
B) Dr. Accounts receivable | Cr. Bad debt expense 
C) Dr. Sales | Cr. Allowance for doubtful accounts 
D) Dr. Sales | Cr. Accounts receivable 
E) Dr. Bad debt expense | Cr. Accounts receivable

Question 10

The accounting principle that requires financial statements to report all contingent liabilities is called:

Accepted Answer

A) Relevance. 
B) Matching. 
C) Materiality. 
D) Full disclosure. 
E) Evaluation. 
A) Relevance. 
B) Matching. 
C) Materiality. 
D) Full disclosure. 
E) Evaluation.

Question 11

The following series of transactions occurred during 2015 and 2016 when Flip Company sold merchandise to Mara Natha. Flip Company's fiscal year end is December 31, and they use the perpetual inventory system. Assume 28 days in the month of February.   Prepare Flip Company's journal entries for the above transactions. Round to 2 decimals.

Accepted Answer

The answer of The following series of transactions occurred during...

Question 12

Hasbro had $750 million in accounts receivable and $2,900 million in net sales for the period. Its days' sales uncollected was 29.8.

Accepted Answer

A) True 
 B)False

Question 13

The maturity date of a note receivable:

Accepted Answer

A) Is the day the note is due to be paid. 
B) Is the date of the first payment. 
C) Is the day the note was signed. 
D) Is the last day of the month. 
E) Is the day of the credit sale. 
A) Is the day the note is due to be paid. 
B) Is the date of the first payment. 
C) Is the day the note was signed. 
D) Is the last day of the month. 
E) Is the day of the credit sale.

Question 14

The allowance method complies with the generally accepted accounting principle of matching.

Accepted Answer

A) True 
 B)False

Question 15

When is it acceptable to use the direct write-off method to account for uncollectible accounts?

Accepted Answer

A) When the expected bad debts are significant. 
B) When the company pledges its accounts receivables. 
C) It is never acceptable use the direct write-off method under GAAP 
D) When the expected bad debts are not significant. 
E) When the company sells its accounts receivables. 
A) When the expected bad debts are significant. 
B) When the company pledges its accounts receivables. 
C) It is never acceptable use the direct write-off method under GAAP 
D) When the expected bad debts are not significant. 
E) When the company sells its accounts receivables.

Question 16

The practice of placing dishonoured notes receivable into Accounts Receivable keeps only current notes receivable in the Notes Receivable account.

Accepted Answer

A) True 
 B)False

Question 17

During the current year, TechCom concluded that a customer's $4,400 accountreceivable was uncollectible and that the account should be written off. What effect will this write-off have on TechCom's current year net income and balance sheet assumingthe allowance method is used to account for bad debts?

Accepted Answer

A) Decrease in net income; decrease in total assets. 
B) No effect on net income or on total assets. 
C) Decrease in net income; no effect on total assets. 
D) Increase in net income; no effect on total assets. 
E) No effect on net income; decrease in total assets. 
A) Decrease in net income; decrease in total assets. 
B) No effect on net income or on total assets. 
C) Decrease in net income; no effect on total assets. 
D) Increase in net income; no effect on total assets. 
E) No effect on net income; decrease in total assets.

Question 18

Firms maintain their own credit cards:

Accepted Answer

A) In order to speed up receipt of cash from the sale. 
B) To earn interest on any balances not paid within a specified period. 
C) To grant credit to approved customers. 
D) To avoid the fees charged by credit card companies such as VISA. 
E) All of these answers are correct. 
A) In order to speed up receipt of cash from the sale. 
B) To earn interest on any balances not paid within a specified period. 
C) To grant credit to approved customers. 
D) To avoid the fees charged by credit card companies such as VISA. 
E) All of these answers are correct.

Question 19

Capilano Company has a July 31 year-end. You have been provided with the following information for the year just ended:- Total sales revenue for the year was $930,000.- Cash sales represent 20% of total sales.- The accounts receivable balance at the beginning of the year was $102,000.- The accounts receivable balance at the end of the year was $162,000.- A review of the outstanding accounts receivable at the end of the year indicates that $8,100 should be written off.- The industry uses the allowance approach based on 4% of accounts receivable or 1% of credit sales.Prepare the necessary adjusting entry to record the bad debts expense assumingthat Capilano Company uses the direct write-off approach.

Accepted Answer

The answer of Capilano Company has a July 31 year-end....

Question 20

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Accepted Answer

A) True 
 B)False

Explain how to record the receipt of a note receivable.

When a maker of a note honours a note:

TechCom receives a 10%, 90-day note for $2,500. The interest on the note is:

Phuong Vo borrowed $5,000 and signed a 3-month promissory note at 10%. The total interest on the note is $125.

TechCom has sales of $350,000 and estimates that 0.5% of its sales are uncollectible.The amount of bad debt expense is $17,500.

TechCom received a $1,000, 90-day, 10% note receivable from Danny Outlaw. The journal entry to record the note includes a debit to notes receivable.

Define a note receivable and describe how to calculate the interest due on a notereceivable.

All of the following are characteristics of notes receivable except, notes receivable:

Which of the following entries would be made to write off an uncollectible account receivable using the direct write-off method?

The accounting principle that requires financial statements to report all contingent liabilities is called:

Hasbro had $750 million in accounts receivable and $2,900 million in net sales for the period. Its days' sales uncollected was 29.8.

The maturity date of a note receivable:

The allowance method complies with the generally accepted accounting principle of matching.

When is it acceptable to use the direct write-off method to account for uncollectible accounts?

The practice of placing dishonoured notes receivable into Accounts Receivable keeps only current notes receivable in the Notes Receivable account.

Firms maintain their own credit cards:

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Appendix

Filters

Exam 8: Receivables

Explain how to record the receipt of a note receivable.

When a maker of a note honours a note:

TechCom receives a 10%, 90-day note for $2,500. The interest on the note is:

Phuong Vo borrowed $5,000 and signed a 3-month promissory note at 10%. The total interest on the note is $125.

TechCom has sales of $350,000 and estimates that 0.5% of its sales are uncollectible.The amount of bad debt expense is $17,500.

TechCom received a $1,000, 90-day, 10% note receivable from Danny Outlaw. The journal entry to record the note includes a debit to notes receivable.

Define a note receivable and describe how to calculate the interest due on a notereceivable.

All of the following are characteristics of notes receivable except, notes receivable:

Which of the following entries would be made to write off an uncollectible account receivable using the direct write-off method?

The accounting principle that requires financial statements to report all contingent liabilities is called:

Hasbro had $750 million in accounts receivable and $2,900 million in net sales for the period. Its days' sales uncollected was 29.8.

The maturity date of a note receivable:

The allowance method complies with the generally accepted accounting principle of matching.

When is it acceptable to use the direct write-off method to account for uncollectible accounts?

The practice of placing dishonoured notes receivable into Accounts Receivable keeps only current notes receivable in the Notes Receivable account.

Firms maintain their own credit cards:

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Appendix

Filters