Exam 7: Receivables and Investments

Identify the effects on the accounting equation for the following transactions involving notes payable for Marcus Co year ends September 30. Round all numbers to the nearest penny. Sept. 10 Received cash for a 60-day, 12 percent, $10,000 note payable. Interest is in addition to the face value. 30 Made end-of-year adjusting entry to accrue interest expense for the note. Nov. 9 Paid amount due on the note plus interest.

Which one of the approaches for the allowance method of accounting for bad debts emphasizes the net realizable value of accounts receivable on the balance sheet?

-Refer to the data for Benton Corporation. If the aging approach is used to estimate bad debts, what should the balance in the Allowance for Doubtful Accounts be after the bad debts adjustment?

An aging schedule typically categorizes the various accounts by the length of time each invoice is outstanding.

An categorizes the various accounts receivable amounts by the length of time outstanding.

The maker of a note recognizes on its income statement.

Match the following definitions with their appropriate terms in the next 14 questions. -Promissory note

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

If a company has a choice of acceptable methods to estimate bad debts, what factors should be considered in the selection?

Changes in accounts and notes receivable are reported in the Activities section of a statement of cash flows prepared using the indirect method.

The equity method of accounting is used if the investor owns at least 20% of the investee and the investor is able to secure influence over the investee.

The difference between the principal amount of a note and its maturity value is called .

Match the following definitions with their appropriate terms in the next 14 questions. -Note payable

The party that agrees to repay is the of the note.

Promissory notes are non-negotiable.

Match the following definitions with their appropriate terms in the next eight questions. -Control account

Pharma Corp. The data presented below for Pharma Corp. is for the year ended December 31, 2015: -See the data for Pharma Corp. If Pharma Corp. uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015?

When are consolidated financial statements prepared?

Espat Corp. reported net sales all on credit of $1,600,000 and cost of goods sold of $1,100,000 for 2015. Its beginning balance of Accounts Receivable was $150,000. The accounts receivable balance decreased by $10,000 during 2015. Rounded to two decimal places, what is Espat's accounts receivable turnover rate for 2015?

Davis Corp. invested cash in a 9-month certificate of deposit CD on October 1, 2015. If Davis has an accounting period which ends on December 31, 2015, when would it most likely recognize interest revenue from the CD?