Question 1

The net amount expected to be received in cash from receivables is termed the

Accepted Answer

A)  cash realizable value. 
B)  cash-good value. 
C)  gross cash value. 
D)  cash-equivalent value. 
A)  cash realizable value. 
B)  cash-good value. 
C)  gross cash value. 
D)  cash-equivalent value.

Question 2

The December 31, 2009 balance sheet of Sauder Company had Accounts Receivable of $500,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2010, the following transactions occurred: sales on account $1,400,000; sales returns and allowances, $50,000; collections from customers, $1,150,000; accounts written off $35,000; previously written off accounts of $5,000 were collected.
Instructions
(a) Journalize the 2010 transactions.
(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of net sales to be uncollectible, what is the adjusting entry at December 31, 2010?
(c) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 4% of accounts receivable, what is the adjusting entry at December 31, 2010?
(d) Which basis would produce a higher net income for 2010 and by how much?

Accepted Answer

The answer of The December 31, 2009 balance sheet of...

Question 3

Accounts receivable are the result of cash and credit sales.

Accepted Answer

A) True 
 B)False

Question 4

A 30-day note dated May 18 has a maturity date of

Accepted Answer

A)  June 18. 
B)  June 17. 
C)  June 19. 
D)  June 16. 
A)  June 18. 
B)  June 17. 
C)  June 19. 
D)  June 16.

Question 5

Allowance for Doubtful Accounts is a contra asset account.

Accepted Answer

A) True 
 B)False

Question 6

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Accepted Answer

A)  a sale is made. 
B)  an account becomes bad and is written off. 
C)  management estimates the amount of uncollectibles. 
D)  a customer's account becomes past-due. 
A)  a sale is made. 
B)  an account becomes bad and is written off. 
C)  management estimates the amount of uncollectibles. 
D)  a customer's account becomes past-due.

Question 7

The financial statements of Hudson Manufacturing Company report net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning and end of the year, respectively. What is the receivables turnover ratio for Hudson?

Accepted Answer

A)  7 times 
B)  10 times 
C)  16.7 times 
D)  12.5 times 
A)  7 times 
B)  10 times 
C)  16.7 times 
D)  12.5 times

Question 8

The interest rate specified on any note is for a

Accepted Answer

A)  day. 
B)  month. 
C)  week. 
D)  year. 
A)  day. 
B)  month. 
C)  week. 
D)  year.

Question 9

The interest on a $4,000, 6%, 60-day note receivable is

Accepted Answer

A)  $240. 
B)  $40. 
C)  $80. 
D)  $120. 
A)  $240. 
B)  $40. 
C)  $80. 
D)  $120.

Question 10

The financial statements of Hudson Manufacturing Company report net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

Accepted Answer

A)  52.1 
B)  29.2 
C)  21.9 
D)  36.5 
A)  52.1 
B)  29.2 
C)  21.9 
D)  36.5

Question 11

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 12

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Accepted Answer

A) True 
 B)False

Question 13

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

Accepted Answer

A) True 
 B)False

Question 14

Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debts expense for the period?

Accepted Answer

A)  $7,000 
B)  $21,000 
C)  $28,000 
D)  $35,000 
A)  $7,000 
B)  $21,000 
C)  $28,000 
D)  $35,000

Question 15

A note which is not paid on the maturity date is said to be ______________.

Accepted Answer

The answer of A note which is not paid on...

Question 16

Two bases for estimating uncollectible accounts are:

Accepted Answer

A)  percentage of assets and percentage of sales. 
B)  percentage of receivables and percentage of total revenue. 
C)  percentage of current assets and percentage of sales. 
D)  percentage of receivables and percentage of sales. 
A)  percentage of assets and percentage of sales. 
B)  percentage of receivables and percentage of total revenue. 
C)  percentage of current assets and percentage of sales. 
D)  percentage of receivables and percentage of sales.

Question 17

A 75-day note receivable dated June 10 would mature on ______________.

Accepted Answer

The answer of A 75-day note receivable dated June 10...

Question 18

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A)  is the normal balance for that account. 
B)  indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. 
C)  indicates that actual bad debt write-offs have been less than what was estimated. 
D)  cannot occur if the percentage of sales method of estimating bad debts is used. 
A)  is the normal balance for that account. 
B)  indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. 
C)  indicates that actual bad debt write-offs have been less than what was estimated. 
D)  cannot occur if the percentage of sales method of estimating bad debts is used.

Question 19

Compute the maturity date and interest for the following notes.

Accepted Answer

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

Question 20

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Accepted Answer

A)  The card company states interest as a monthly percentage rather than an annual percentage. 
B)  The card company allows a grace period before interest is accrued. 
C)  The card company allows cardholders to skip payments on their cards. 
D)  The card company calculates finance charges from the date of purchase to the date the amount is paid. 
A)  The card company states interest as a monthly percentage rather than an annual percentage. 
B)  The card company allows a grace period before interest is accrued. 
C)  The card company allows cardholders to skip payments on their cards. 
D)  The card company calculates finance charges from the date of purchase to the date the amount is paid.

Exam 9: Accounting for Receivables

The net amount expected to be received in cash from receivables is termed the

Accounts receivable are the result of cash and credit sales.

A 30-day note dated May 18 has a maturity date of

Allowance for Doubtful Accounts is a contra asset account.

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

The financial statements of Hudson Manufacturing Company report net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning and end of the year, respectively. What is the receivables turnover ratio for Hudson?

The interest rate specified on any note is for a

The interest on a $4,000, 6%, 60-day note receivable is

The financial statements of Hudson Manufacturing Company report net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

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

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debts expense for the period?

A note which is not paid on the maturity date is said to be ______________.

Two bases for estimating uncollectible accounts are:

A 75-day note receivable dated June 10 would mature on ______________.

A debit balance in the Allowance for Doubtful Accounts

Compute the maturity date and interest for the following notes.

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

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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

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Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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