Question 1

A company borrowed $10,000 by signing a 180-day promissory note at 11%.The total interest due on the maturity date is.

Accepted Answer

A) $50 
B) $275 
C) $550 
D) $825 
E) $1,100 
A) $50 
B) $275 
C) $550 
D) $825 
E) $1,100

Question 2

Hasbro had net sales of $7,875 and its average accounts receivables is $1,350.Calculate Hasbro's accounts receivable turnover:

Accepted Answer

Accounts Receivable Turnover =

Question 3

After adjustment,the balance in the Allowance for Doubtful Accounts has the effect of reducing accounts receivable to its estimated realizable value.

Accepted Answer

A) True 
 B)False

Question 4

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Accepted Answer

A) True 
 B)False

Question 5

Hankco accepts all major bank credit cards,including Omni Bank's,which assesses a 4% charge on sales for using its card.On June 28,Hankco had $3,500 in Omni Card credit sales.What entry should Hankco make on June 28 to record the deposit?

Accepted Answer

A) Debit Cash $3,500; credit Sales $3,500 
B) Debit Accounts Receivable $3,500; credit Sales $3,500 
C) Debit Cash $3,640; credit Credit Card Expense $140; credit Sales $3,500 
D) Debit Cash $3,360; debit Credit Card Expense $140; credit Sales $3,500 
E) Debit Accounts Receivable $3,360; debit Credit Card Expense $140; credit Sales $3,500 
A) Debit Cash $3,500; credit Sales $3,500 
B) Debit Accounts Receivable $3,500; credit Sales $3,500 
C) Debit Cash $3,640; credit Credit Card Expense $140; credit Sales $3,500 
D) Debit Cash $3,360; debit Credit Card Expense $140; credit Sales $3,500 
E) Debit Accounts Receivable $3,360; debit Credit Card Expense $140; credit Sales $3,500

Question 6

The use of an allowance for bad debts is required under the materiality constraint.

Accepted Answer

A) True 
 B)False

Question 7

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 8

The quality of receivables refers to the likelihood of collection without loss.

Accepted Answer

A) True 
 B)False

Question 9

Cairo Co.uses the allowance method of accounting for uncollectible accounts.Cairo Co.accepted a $5,000,12%,90-day note dated May 16,from Alexandria Co.in exchange for its past-due account receivable.Make the necessary general journal entries for Cairo Co.on May 16 and the August 14 maturity date,assuming that the:
a.Note is held until maturity and collected in full at that time.
b.Note is dishonored; the amount of the note and its interest are written off as uncollectible.

Accepted Answer

The answer of Cairo Co.uses the allowance method of accounting...

Question 10

A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts:
  All sales are made on credit.Based on past experience,the company estimates 0.6% of credit sales to be uncollectible.What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

Accepted Answer

A) $1,275 
B) $1,775 
C) $4,500 
D) $4,800 
E) $5,500 
A) $1,275 
B) $1,775 
C) $4,500 
D) $4,800 
E) $5,500

Question 11

How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables?

Accepted Answer

The direct write-off method charges Bad

Question 12

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Accepted Answer

A note receivable is a promissory note,w

Question 13

Griggs Company uses the direct write-off method of accounting for uncollectible accounts receivable.On December 6,Year 1,Griggs sold $6,300 of merchandise to the Hillman Company.On August 8,Year 2,after numerous attempts to collect the account,Griggs determined that the $6,300 account of the Hillman Company was uncollectible.
a.Prepare the journal entry required to record the transactions on August 8.
b.Assuming that the $6,300 is material,explain how the direct write-off method violates the matching principle in this case.

Accepted Answer

a.
 @#IMG-DLM& b.In this case,the Bad Debts Expens

Question 14

All of the following are true regarding credit card expense except:

Accepted Answer

A) Credit card expense may be classified as a "discount" deducted from sales to get net sales. 
B) Credit card expense may be classified as a selling expense. 
C) Credit card expense may be classified as an administrative expense. 
D) Credit card expense is not recorded by the seller. 
E) Credit card expense is a fee the seller pays for services provided by the card company. 
A) Credit card expense may be classified as a "discount" deducted from sales to get net sales. 
B) Credit card expense may be classified as a selling expense. 
C) Credit card expense may be classified as an administrative expense. 
D) Credit card expense is not recorded by the seller. 
E) Credit card expense is a fee the seller pays for services provided by the card company.

Question 15

Installment accounts receivable is another name for aging of accounts receivable.

Accepted Answer

A) True 
 B)False

Question 16

For legal reasons,it is always a good business practice to accept a note receivable in exchange for an overdue account receivable.

Accepted Answer

A) True 
 B)False

Question 17

To write off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit _______________________ and credit accounts receivable.

Accepted Answer

allowance

Question 18

On August 9,Pierce Company receives a $8,500,90-day,8% note from customer Eric Simms as payment on his account.What entry should be made on August 9 to record receipt of the note?

Accepted Answer

A) Debit Accounts Receivable $8,500; credit Sales $8,500. 
B) Debit Notes Receivable $8,670; credit Sales $8,670. 
C) Debit Notes Receivable $8,500; credit Accounts Receivable $8,500. 
D) Debit Notes Receivable $8,500; credit Sales $8,500. 
E) Debit Notes Receivable $8,725; credit Interest Revenue $225; credit Accounts Receivable $8,500. 
A) Debit Accounts Receivable $8,500; credit Sales $8,500. 
B) Debit Notes Receivable $8,670; credit Sales $8,670. 
C) Debit Notes Receivable $8,500; credit Accounts Receivable $8,500. 
D) Debit Notes Receivable $8,500; credit Sales $8,500. 
E) Debit Notes Receivable $8,725; credit Interest Revenue $225; credit Accounts Receivable $8,500.

Question 19

The Allowance for Doubtful Accounts:

Accepted Answer

A) Is a contra asset account. 
B) Is used instead of reducing accounts receivable directly. 
C) Is debited when uncollectible accounts are written off. 
D) All of the options are correct. 
E) Is credited when bad debts expense is estimated and recorded. 
A) Is a contra asset account. 
B) Is used instead of reducing accounts receivable directly. 
C) Is debited when uncollectible accounts are written off. 
D) All of the options are correct. 
E) Is credited when bad debts expense is estimated and recorded.

Question 20

The accounting principle that requires financial statements (including notes)to report all relevant information about the operations and financial condition of a company is called:

Accepted Answer

A) Relevance. 
B) Full disclosure. 
C) Evaluation. 
D) Materiality. 
E) Matching. 
A) Relevance. 
B) Full disclosure. 
C) Evaluation. 
D) Materiality. 
E) Matching.

Exam 9: Accounting for Receivables

A company borrowed $10,000 by signing a 180-day promissory note at 11%.The total interest due on the maturity date is.

Hasbro had net sales of $7,875 and its average accounts receivables is $1,350.Calculate Hasbro's accounts receivable turnover:

After adjustment,the balance in the Allowance for Doubtful Accounts has the effect of reducing accounts receivable to its estimated realizable value.

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Hankco accepts all major bank credit cards,including Omni Bank's,which assesses a 4% charge on sales for using its card.On June 28,Hankco had $3,500 in Omni Card credit sales.What entry should Hankco make on June 28 to record the deposit?

The use of an allowance for bad debts is required under the materiality constraint.

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

The quality of receivables refers to the likelihood of collection without loss.

How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables?

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

All of the following are true regarding credit card expense except:

Installment accounts receivable is another name for aging of accounts receivable.

For legal reasons,it is always a good business practice to accept a note receivable in exchange for an overdue account receivable.

To write off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit _______________________ and credit accounts receivable.

On August 9,Pierce Company receives a $8,500,90-day,8% note from customer Eric Simms as payment on his account.What entry should be made on August 9 to record receipt of the note?

The Allowance for Doubtful Accounts:

The accounting principle that requires financial statements (including notes)to report all relevant information about the operations and financial condition of a company is called:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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