Exam 7: Receivables and Investments

The payee of a note recognizes ____________________ on its income statement.

On January 15, 2016, the accounts receivable balance was $7,000 and the balance in the allowance for doubtful accounts was $700.On January 16, 2016, a $200 uncollectible account was written-off.The net realizable value of accounts receivable on January 16 immediately after the write-off is:

The data presented below is for Mellon Corporation for the year ended December 31, 2016: Sales (100\% on credit) \ 1,500,000 Sales returns 60,000 Accounts Receivable (December 31, 2016) 250,000 Allowance for Doubtful Accounts [Credit B al ance] (Before adjustment at December 31,2016 3,000 Estimated amount of uncollectible accounts based on an aging analysis 31,000 -Refer to information for Mellon Corporation. If Mellon uses 2% of net credit sales to estimate its bad debts, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

The data presented below is for Falconi, Inc.for 2016. Credit sales during the year \ 2,100,000 Accounts receivable-December 31, 2016 395,000 Allowance for doubtful accounts-December 31,2016 20,000 Bad debt expense for the year 17,000 ? What amount will Falconi show on its year-end balance sheet for the net realizable value of its accounts receivable?

The accounts receivable turnover ratio is computed by dividing ____________ by average accounts receivable.

Discounting a note receivable

The equity method of accounting for an investment is used when a company purchases

When one company purchases less than 50% of equity securities in a second company, which of the following statements is true?

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

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.

Select the term from the list below that matches each of the following six descriptions. -The sale of a note

Samsing Inc.pays $18,000 to buy stock in another company and an additional $350 in commissions.Three months later, Samsing sells the stock for $19,000.At the time of sale, Samsing will recognize a:

Securities issued by corporations as a form of ownership in the business, such as common and preferred stock, are called equity securities.

The data presented below is for Falconi, Inc.for 2016. Credit sales during the year \ 2,100,000 Accounts receivable-December 31, 2016 395,000 Allowance for doubtful accounts-December 31,2016 20,000 Bad debt expense for the year 17,000 ? What is the effect on liquidity when Falconi records its estimate for bad debt expense using the allowance method?

Match the following definitions with their appropriate terms . -Allowance method

Lewisburg Corp.had sales during the year of $15,000,000 and an average accounts receivable of $5,000,000.Its accounts receivable turnover ratio is 0.33 times.

When using the allowance method, what are the effects on the accounting equation when a company writes off a bad debt?

A company that holds a promissory note from another company has an asset, called a(n) ____________________.

Which of the following statements is true regarding dividend income?

Bonds issued by corporations or governmental bodies as a form of borrowing are called ____________________.