Question 1

Router Inc. lends $70,000 on a 120-day, 9% promissory note. The total interest that Router will receive at maturity is

Accepted Answer

A)  $6,300 
B)  $2,100 
C)  $525 
D)  $1,890 
A)  $6,300 
B)  $2,100 
C)  $525 
D)  $1,890

Question 2

Refer to the data for Beatrice Equipment.
Assume that Beatrice Equipment estimates bad debts at 1% of net credit sales.
A What amount will Beatrice Equipment record as bad debts expense for 2014?
B How much is the net realizable value of accounts receivable reported on Beatrice
Equipment's balance sheet at December 31, 2014?

Accepted Answer

A $2,400,000 - $60,0

Question 3

Lasiter Corp. reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2014. On January 1, 2014, accounts receivable was $250,000. Amounts owed by customers increased by $20,000 during 2014. Rounding to two decimal places, what is Lasiter's accounts receivable turnover rate for 2014?

Accepted Answer

A)  8.33 
B)  8.00 
C)  7.69 
D)  7.41 
A)  8.33 
B)  8.00 
C)  7.69 
D)  7.41

Question 4

Allowance for Doubtful Accounts represents:

Accepted Answer

A)  Cash set aside to make up for bad debt losses 
B)  The amount of uncollectible accounts written off to date 
C)  The difference between total sales made on credit and the amount collected from those credit sales 
D)  The difference between the gross amount of accounts receivable and the net realizable value of accounts receivable 
A)  Cash set aside to make up for bad debt losses 
B)  The amount of uncollectible accounts written off to date 
C)  The difference between total sales made on credit and the amount collected from those credit sales 
D)  The difference between the gross amount of accounts receivable and the net realizable value of accounts receivable

Question 5

Bad Debts expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

Accepted Answer

A) True 
 B)False

Question 6

For each item listed below, identify how it will be reported on the Statement of Cash Flows under the indirect method.
-Decrease in accounts receivable

Accepted Answer

A) Operating activity 
B) Investing activity 
C) Financing activity 
D) Not reported separately on the cash flow statement 
A) Operating activity 
B) Investing activity 
C) Financing activity 
D) Not reported separately on the cash flow statement

Question 7

If a company discounts a note at a bank, but still is contingently liable for the maturity value, then the note was discounted with ____________________.

Accepted Answer

The answer of If a company discounts a note at...

Question 8

On January 1, 2014, the Accounts Receivable and the Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550 respectively. During the year, the company reported $70,000 of credit sales. There was $400 of receivables written off as uncollectible in 2014. Cash collections of receivables amounted to $74,700. The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance.
The amount of bad debts expense recognized in the 2014 income statement will be:

Accepted Answer

A)  $545 
B)  $595 
C)  $745 
D)  $795 
A)  $545 
B)  $595 
C)  $745 
D)  $795

Question 9

Star Corp. sold merchandise for $8,000 to MegaStore on May 15, 2015, with payment due in 30 days. Subsequent to this, MegaStore experienced cash flow problems and was unable to pay its debt. On August 10, 2015, Star stopped trying to collect the outstanding receivable from MegaStore and wrote off the account as uncollectible. On December 1, 2015, MegaStore sent Star a check for $2,000 and offered to sign a two-month, 12%, $6,000 promissory note to satisfy the remaining obligation. MegaStore paid the entire amount due Star, with interest, on January 31, 2016. Star ends its accounting year on December 31 each year and uses the allowance method to account for bad debts.
REQUIRED:
1. Identify the effects on the accounting equation for Star's transactions from May 15, 2015 to January 31, 2016.
2. Why would MegaStore bother to send Star a check for $2,000 on December 1 and agree to sign a note for the balance, given that such a long period of time had passed since the original purchase?

Accepted Answer

1. Journal entries:
 @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Dec. 1,
2015

Question 10

Bad Debts Expense is a contra account that is used to reduce accounts receivable to its net realizable value.

Accepted Answer

A) True 
 B)False

Question 11

Why are increases in accounts receivable reported as an adjustment to net income in the operating activities section of a statement of cash flows?

Accepted Answer

Accounts receivable arise from the accru

Question 12

Refer to data for Sliders Company.
Determine the balance of Accounts Receivable at December 31, 2014.

Accepted Answer

$58,700
$60,600 Account Receiv

Question 13

The company that makes or gives a promissory note to another company has a liability, called an
____________________.

Accepted Answer

The answer of The company that makes or gives a...

Question 14

A company is referred to as a parent if it owns

Accepted Answer

A)  33% of the debt securities of a second company 
B)  100% of the debt securities of a second company 
C)  15% of the equity securities of a second company 
D)  More than 50% of the equity securities of a second company 
A)  33% of the debt securities of a second company 
B)  100% of the debt securities of a second company 
C)  15% of the equity securities of a second company 
D)  More than 50% of the equity securities of a second company

Question 15

On January 1, 2014, the Accounts Receivable and the Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550 respectively. During the year, the company reported $70,000 of credit sales. There was $400 of receivables written off as uncollectible in 2014. Cash collections of receivables amounted to $74,700. The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance.
The net realizable value of receivables appearing on the 2014 balance sheet will amount to:

Accepted Answer

A)  $14,105 
B)  $14,155 c .$14,900
D )$15,450 
A)  $14,105 
B)  $14,155 c .$14,900
D )$15,450

Question 16

Over the life of a note, the maker of a note recognizes on the balance sheet and on the income statement.

Accepted Answer

Note payab

Question 17

Match the following definitions with their appropriate terms in the next 14 questions.
-Equity securities

Accepted Answer

A) A liability resulting from the signing of a promissory note. 
B) A measure of how long it takes to collect receivables. 
C) A written promise to repay a definite sum of money on demand or at a fixed or determinable date in the future. 
D) The length of time a note is outstanding, that is, the period of time between the date it is issued and the date it matures. 
E) The party that will receive the money from a promissory note at some future date.
F)The process of selling a promissory note.
G)The date the promissory note is due.
H)The amount of cash the maker is to pay the payee on the maturity date of the note.
I)The difference between the principal amount of the note and its maturity value.
J)An asset resulting from the acceptance of a promissory note from another company.
K)Securities issued by corporations and governmental bodies as a form of borrowing.
L)Securities issued by corporations as a form of ownership in the business.
M)The party that agrees to repay the money for a promissory note at some future date.
N)The amount of cash received, or the fair value of the products or services received, by the maker when a promissory note is issued. 
A) A liability resulting from the signing of a promissory note. 
B) A measure of how long it takes to collect receivables. 
C) A written promise to repay a definite sum of money on demand or at a fixed or determinable date in the future. 
D) The length of time a note is outstanding, that is, the period of time between the date it is issued and the date it matures. 
E) The party that will receive the money from a promissory note at some future date.
F)The process of selling a promissory note.
G)The date the promissory note is due.
H)The amount of cash the maker is to pay the payee on the maturity date of the note.
I)The difference between the principal amount of the note and its maturity value.
J)An asset resulting from the acceptance of a promissory note from another company.
K)Securities issued by corporations and governmental bodies as a form of borrowing.
L)Securities issued by corporations as a form of ownership in the business.
M)The party that agrees to repay the money for a promissory note at some future date.
N)The amount of cash received, or the fair value of the products or services received, by the maker when a promissory note is issued.

Question 18

On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of $10,000; the collection charge is 4%.
Required: Identify the effects on the accounting equation for Mendes' books on September 20, the date of deposit.

Accepted Answer

Sep 20 To record credit card s

Question 19

The percentage of net credit sales approach for recognizing bad debts considers any existing balance in Allowance for Doubtful Accounts.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following statements is true?

Accepted Answer

A)  When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. 
B)  An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. 
C)  The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. 
D)  A subsidiary ledger takes the place of the control account for some companies. 
A)  When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. 
B)  An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. 
C)  The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. 
D)  A subsidiary ledger takes the place of the control account for some companies.

Router Inc. lends $70,000 on a 120-day, 9% promissory note. The total interest that Router will receive at maturity is

Allowance for Doubtful Accounts represents:

Bad Debts expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

For each item listed below, identify how it will be reported on the Statement of Cash Flows under the indirect method. -Decrease in accounts receivable

If a company discounts a note at a bank, but still is contingently liable for the maturity value, then the note was discounted with ____________________.

Bad Debts Expense is a contra account that is used to reduce accounts receivable to its net realizable value.

Why are increases in accounts receivable reported as an adjustment to net income in the operating activities section of a statement of cash flows?

Refer to data for Sliders Company. Determine the balance of Accounts Receivable at December 31, 2014.

The company that makes or gives a promissory note to another company has a liability, called an ____________________.

A company is referred to as a parent if it owns

Over the life of a note, the maker of a note recognizes on the balance sheet and on the income statement.

Match the following definitions with their appropriate terms in the next 14 questions. -Equity securities

On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of $10,000; the collection charge is 4%. Required: Identify the effects on the accounting equation for Mendes' books on September 20, the date of deposit.

The percentage of net credit sales approach for recognizing bad debts considers any existing balance in Allowance for Doubtful Accounts.

Which one of the following statements is true?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

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Exam 7: Receivables and Investments

Router Inc. lends $70,000 on a 120-day, 9% promissory note. The total interest that Router will receive at maturity is

Allowance for Doubtful Accounts represents:

Bad Debts expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

For each item listed below, identify how it will be reported on the Statement of Cash Flows under the indirect method. -Decrease in accounts receivable

If a company discounts a note at a bank, but still is contingently liable for the maturity value, then the note was discounted with ____________________.

Bad Debts Expense is a contra account that is used to reduce accounts receivable to its net realizable value.

Why are increases in accounts receivable reported as an adjustment to net income in the operating activities section of a statement of cash flows?

Refer to data for Sliders Company. Determine the balance of Accounts Receivable at December 31, 2014.

The company that makes or gives a promissory note to another company has a liability, called an ____________________.

A company is referred to as a parent if it owns

Over the life of a note, the maker of a note recognizes on the balance sheet and on the income statement.

Match the following definitions with their appropriate terms in the next 14 questions. -Equity securities

On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of $10,000; the collection charge is 4%. Required: Identify the effects on the accounting equation for Mendes' books on September 20, the date of deposit.

The percentage of net credit sales approach for recognizing bad debts considers any existing balance in Allowance for Doubtful Accounts.

Which one of the following statements is true?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

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