Question 1

When customers make purchases with a national credit card, the retailer

Accepted Answer

A)  is responsible for maintaining customer accounts. 
B)  is not involved in the collection process. 
C)  absorbs any losses from uncollectible accounts. 
D)  receives cash equal to the full price of the merchandise sold from the credit card company. 
A)  is responsible for maintaining customer accounts. 
B)  is not involved in the collection process. 
C)  absorbs any losses from uncollectible accounts. 
D)  receives cash equal to the full price of the merchandise sold from the credit card company.

Question 2

Flint Distributors has the following transactions related to notes receivable during the last two months of the year.
Dec. 1 Loaned $12,000 cash to G. Kingsley on a 1-year, 6% note.
16 Sold goods to D. Jones, receiving a $2,400, 60-day, 7% note.
31 Accrued interest revenue on all notes receivable.
Instructions
Journalize the transactions for Flint Distributors.

Accepted Answer

The answer of Flint Distributors has the following transactions related...

Question 3

A customer charges a treadmill at Mike's Sport Shop. The price is $2,000 and the financing charge is 9% 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.
What is the amount of the finance charge?

Accepted Answer

A)  $60 
B)  $15 
C)  $180 
D)  $6 
A)  $60 
B)  $15 
C)  $180 
D)  $6

Question 4

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

Accepted Answer

A) True 
 B)False

Question 5

Compute the maturity date and the maturity value associated with each of the following notes receivables.
1. A $15,000, 6%, 3-month note dated April 20.
Maturity date ___________, Maturity value $____________.
2. A $25,000, 8%, 72-day note dated June 10.
Maturity date ___________, Maturity value $____________.
3. An $8,000, 9%, 30-day note dated September 20.
Maturity date ___________, Maturity value $____________.

Accepted Answer

The answer of Compute the maturity date and the maturity...

Question 6

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

Accepted Answer

A) True 
 B)False

Question 7

A cash discount is usually granted to all of the following except

Accepted Answer

A)  retail customers. 
B)  retailers. 
C)  wholesalers. 
D)  All of these are granted discounts. 
A)  retail customers. 
B)  retailers. 
C)  wholesalers. 
D)  All of these are granted discounts.

Question 8

Record the following transactions for Turnbull Company.
1. On August 4, Turnbull sold merchandise on account to Tabor Company for $450, terms 2/10, n/30.
2. On August 7, Turnbull granted Tabor a sales allowance and reduced the cost of the merchandise by $50 because some of the goods were slightly damaged.
3. On August 12, Tabor paid the account in full.

Accepted Answer

The answer of Record the following transactions for Turnbull Company.
1....

Question 9

The direct write-off method of accounting for bad debts

Accepted Answer

A)  uses an allowance account. 
B)  uses a contra-asset account. 
C)  does not require estimates of bad debt losses. 
D)  is the preferred method under generally accepted accounting principles. 
A)  uses an allowance account. 
B)  uses a contra-asset account. 
C)  does not require estimates of bad debt losses. 
D)  is the preferred method under generally accepted accounting principles.

Question 10

Receivables might be sold to

Accepted Answer

A)  lengthen the cash-to-cash operating cycle. 
B)  take advantage of deep discounts on the cash realizable value of receivables. 
C)  generate cash quickly. 
D)  finance companies at an amount greater than cash realizable value. 
A)  lengthen the cash-to-cash operating cycle. 
B)  take advantage of deep discounts on the cash realizable value of receivables. 
C)  generate cash quickly. 
D)  finance companies at an amount greater than cash realizable value.

Question 11

The following data exists for Gilkey Company.   
Calculate the receivables turnover ratio and the average collection period for accounts receivable in days for 2010.

Accepted Answer

The answer of The following data exists for Gilkey Company....

Question 12

Record the following transactions for Yockey Company.
1. On April 12, sold $12,000 of merchandise to Hauser Inc., terms 2/10, n/30.
2. On April 15, Hauser returned $2,000 of merchandise.
3. On April 22, Hauser paid for the merchandise.

Accepted Answer

The answer of Record the following transactions for Yockey Company.
1....

Question 13

Franks Company has a debit balance of $3,000 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, Franks estimates that $50,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is:

Accepted Answer

A)  $3,000 
B)  $47,000 
C)  $50,000 
D)  $53,000 
A)  $3,000 
B)  $47,000 
C)  $50,000 
D)  $53,000

Question 14

Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.

Accepted Answer

A) True 
 B)False

Question 15

The average collection period is computed by dividing

Accepted Answer

A)  net credit sales by average gross accounts receivable. 
B)  net credit sales by ending gross accounts receivable. 
C)  the accounts receivable turnover ratio by 365 days. 
D)  365 days by the accounts receivable turnover ratio. 
A)  net credit sales by average gross accounts receivable. 
B)  net credit sales by ending gross accounts receivable. 
C)  the accounts receivable turnover ratio by 365 days. 
D)  365 days by the accounts receivable turnover ratio.

Question 16

An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debts Expense for $4,000. 
B)  debit to Allowance for Doubtful Accounts for $2,800. 
C)  debit to Bad Debts Expense for $2,800. 
D)  credit to Allowance for Doubtful Accounts for $4,000. 
A)  debit to Bad Debts Expense for $4,000. 
B)  debit to Allowance for Doubtful Accounts for $2,800. 
C)  debit to Bad Debts Expense for $2,800. 
D)  credit to Allowance for Doubtful Accounts for $4,000.

Question 17

During 2010, Hitchcock Inc. had sales on account of $132,000, cash sales of $54,000, and collections on account of $84,000. In addition, they collected $1,450 which had been written off as uncollectible in 2009. As a result of these transactions, the change in the accounts receivable balance indicates a

Accepted Answer

A)  $100,550 increase. 
B)  $48,000 increase. 
C)  $46,550 increase. 
D)  $102,000 increase. 
A)  $100,550 increase. 
B)  $48,000 increase. 
C)  $46,550 increase. 
D)  $102,000 increase.

Question 18

In order to encourage prompt payment of a trade receivable, companies often offer ______________ to customers.

Accepted Answer

The answer of In order to encourage prompt payment of...

Question 19

When an account becomes uncollectible and must be written off,

Accepted Answer

A)  Allowance for Doubtful Accounts should be credited. 
B)  Accounts Receivable should be credited. 
C)  Bad Debts Expense should be credited. 
D)  Sales should be debited. 
A)  Allowance for Doubtful Accounts should be credited. 
B)  Accounts Receivable should be credited. 
C)  Bad Debts Expense should be credited. 
D)  Sales should be debited.

Question 20

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Receivables

When customers make purchases with a national credit card, the retailer

A customer charges a treadmill at Mike's Sport Shop. The price is $2,000 and the financing charge is 9% 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. What is the amount of the finance charge?

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

A cash discount is usually granted to all of the following except

The direct write-off method of accounting for bad debts

Receivables might be sold to

The following data exists for Gilkey Company. Calculate the receivables turnover ratio and the average collection period for accounts receivable in days for 2010.

Record the following transactions for Yockey Company. 1. On April 12, sold $12,000 of merchandise to Hauser Inc., terms 2/10, n/30. 2. On April 15, Hauser returned $2,000 of merchandise. 3. On April 22, Hauser paid for the merchandise.

Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.

The average collection period is computed by dividing

An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

In order to encourage prompt payment of a trade receivable, companies often offer ______________ to customers.

When an account becomes uncollectible and must be written off,

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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