Exam 7: Receivables and Investments

The data presented below for Lynx Corp.is for the year ended December 31, 2016: Sales (100\% on credit) \ 1,000,000 Sales returns 30,000 Accounts Receivable (December 31,2016) 170,000 Allowance for Doubtful Accounts [Cr. B alance] (Before adjustment at December 31, 2016) 1,300 Estimated amount of uncollectible accounts based on aging analysis 14,000 -See the data for Lynx Corp. If Lynx Corp.estimates its bad debt to be 1% of net credit sales, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

Cash flows from purchases, sales, and maturities of investments are usually classified as operating activities.

Select the term from the list below that matches each of the following six descriptions. -Transfer a note with a contingent liability

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

The maker of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

Espat Corp.reported net sales (all on credit) of $1,600,000 and cost of goods sold of $1,100,000 for 2016.Its beginning balance of Accounts Receivable was $150,000.The accounts receivable balance decreased by $10,000 during 2016.Rounded to two decimal places, what is Espat's accounts receivable turnover rate for 2016?

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

Typically, the lower the accounts receivable turnover ratio, the better.

Match the following definitions with their appropriate terms . -Payee

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 the data for Mellon Corporation. ? If Mellon estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2016?

The accounts receivable turnover ratio is computed by dividing net income by average accounts receivable.

How will the payee of the promissory note record the note on its books?

Toppson Corp.invested cash in a 9-month certificate of deposit (CD) on October 1, 2016.If Toppson has an accounting period which ends on December 31, 2016, when would it most likely recognize interest revenue from the CD?

Which one of the following is an investing activity on the statement of cash flows?

Selling on credit protects a company from the risk that some of its receivables will never be collected.

Select the term from the list below that matches each of the following six descriptions. -The amount of cash the maker is to pay the payee on the maturity date of the note

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

Match the following definitions with their appropriate terms . -Principal

Sweetson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31, 2016, and $200,900 at December 31, 2017.Sales reported on Sweetson's 2017 income statement amounted to $2,350,000.What is the amount of cash collections that Sweetson will report in the Operating Activities category of its 2017 statement of cash flows assuming that the direct method is used? ​

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 the data for Mellon Corporation. ? If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2016?