Exam 8: Receivables,Bad Debt Expense,and Interest Revenue

On January 1,Portillo,Inc.lends a corporate customer $240,000 at 6% interest.The amount of interest revenue that should be recorded for the quarter ending March 31 equals:

Grandview Grinding,Inc.had net accounts receivable of $135,800 at the beginning of the year and $144,800 at the end of the year.If the company's net sales revenue during the year was $1,753,750,what is the receivables turnover ratio?

Best,Inc.loaned $100,000 for three months on November 1 to one of its customers at the rate of 6%.The principal amount of the loan plus interest is due on the following February 1.The related adjusting entry was recorded on December 31.What is the amount of interest revenue that should be included in the entry dated February 1?

On December 1,2018,a company lends a new employee $20,000 to assist with her relocation expenses.The employee signs a 6-month note,with interest of 9%.The company prepares year-end financial statements at December 31.What is the required adjusting entry at December 31 as a result of this note transaction?

The decision to sell to extend credit to customers will decrease wage costs.

Match the term and its definition.There are more definitions than terms. -Maturity Date

Assume the Hart Company uses the allowance method.When the company writes off a customer's account balance that has no chance of collection:

An arrangement where receivables are sold to another company for immediate cash is called:

The financial statements of Pomegranate Produce contained the following information: The average length of time it takes for Pomegranate Produce to collect accounts receivable is approximately:

Although there are some clear disadvantages associated with extending credit to customers,such as bad debt costs,most managers believe a particular advantage outweighs the costs.To which primary advantage do they refer?

Under the allowance method for uncollectible accounts,the write-off of a specific account will not affect total assets.

Your company uses the aging of accounts receivable method.Net credit sales are unchanged from last year,the year-end balance in Accounts Receivable is unchanged from the previous year's ending balance,and there were no write-offs during the current year.The company previously averaged about 20% of its total accounts receivable in the "over 90 days past due" category and now has 35% in this category at the end of the current year.The dollar amount of the adjustment to record Bad Debt Expense in the current year:

If the Allowance for Doubtful Accounts has a $1,000 debit balance prior to making the end-of-period adjusting entry for bad debts using the aging of accounts receivable method,then it must mean that the:

The aging of accounts receivable method focuses on estimating the ending balance to be reported in the Allowance for Doubtful Accounts,whereas the percentage of credit sales method focuses on estimating Bad Debt Expense for the period.

Best,Inc.loaned $100,000 for three months on November 1 to one of its customers at the rate of 6%.The principal amount of the loan plus interest is due on the following February 1.Which of the following is the adjusting journal entry that will be recorded on December 31?

On March 1,Cents,Inc.lent $1,000 to an employee at a rate of 6% for 3 months.The entry to record the loan of $1,000 to its employee includes a:

Katy Company uses the allowance method.Katy writes off a customer account balance when it becomes clear that the particular customer will never pay.How will this write-off affect the company's net income and accounts receivable turnover ratio?

The days to collect receivables increased from 32 days last year to 48 days this year.Which of the following statements is correct?

When interest is calculated for periods shorter than a year,the formula to calculate interest is:

Knoll Manufacturing lends its supplier $300,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for: