Question 1

The direct write-off method for uncollectible accounts violates the matching principle.

Accepted Answer

A) True 
 B)False  True

Question 2

An acid-test ratio of 1.0 is considered safer than a ratio of 0.50.

Accepted Answer

A) True 
 B)False  True

Question 3

Give the journal entry to record an uncollectible account receivable using the direct write-off method.

Accepted Answer

The answer of Give the journal entry to record an...

Question 4

The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. Give journal entry to record the bad debts expense at December 31, 2015.

Accepted Answer

The answer of The Allowance for Bad Debts account has...

Question 5

The following information is from the records of Armadillo Camera Shop:   Bad debts expense is estimated by the aging-of-accounts-receivables method. Management estimates that $2,850 of accounts receivable will be uncollectible. Calculate the amount of net accounts receivable after the adjustment for bad debts.

Accepted Answer

A) $17,750 
B) $17,150 
C) $16,550 
D) $13,000 
A) $17,750 
B) $17,150 
C) $16,550 
D) $13,000

Question 6

If the maker of the note fails to repay the borrowed amount on the maturity date, the note is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 7

The following information is from the 2015 records of Armand Camera Shop:   Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,000 of accounts receivable will be uncollectible. Calculate the Allowance for Bad Debts after the adjustment for bad debt expense at December 31, 2015.

Accepted Answer

A) $5,250 
B) $6,500 
C) $7,000 
D) $5,000 
A) $5,250 
B) $6,500 
C) $7,000 
D) $5,000

Question 8

The entry to write off an account receivable under the allowance method will:

Accepted Answer

A) reduce net income. 
B) have no effect on net income. 
C) increase total assets. 
D) increase net income. 
A) reduce net income. 
B) have no effect on net income. 
C) increase total assets. 
D) increase net income.

Question 9

On December 1, 2015, Parsons Inc. sold machinery to a customer for $20,000. The customer could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 9% interest. How much interest revenue was earned for the entire term of the note?

Accepted Answer

A) $1,350 
B) $1,200 
C) $150 
D) $1,800 
A) $1,350 
B) $1,200 
C) $150 
D) $1,800

Question 10

From the following details, calculate the acid-test ratio. (Round to two decimal places.)

Accepted Answer

A) 0.91 
B) 0.94 
C) 1.06 
D) 0.70 
A) 0.91 
B) 0.94 
C) 1.06 
D) 0.70

Question 11

Dividends receivable, interest receivable, and taxes receivable are commonly categorized as other receivables.

Accepted Answer

A) True 
 B)False

Question 12

A six-month note receivable for $4,000 at 12%, dated September 1, 2015, has accrued interest revenue of ________ on December 31, 2015.

Accepted Answer

A) $480 
B) $240 
C) $160 
D) $80 
A) $480 
B) $240 
C) $160 
D) $80

Question 13

Businesses must maintain a single account receivable account for all customers.

Accepted Answer

A) True 
 B)False

Question 14

The percent-of-sales method computes bad debts expense as a percentage of net cash sales.

Accepted Answer

A) True 
 B)False

Question 15

The following information is from the 2015 records of Armand Camera Shop:   Bad debts expense is estimated by the percent-of-sales method. The management estimates that 3% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for 2015.

Accepted Answer

A) $5,250 
B) $3,450 
C) $2,250 
D) $2,850 
A) $5,250 
B) $3,450 
C) $2,250 
D) $2,850

Question 16

The allowance method violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 17

The interest period extends from the original date of the note to the maturity date.

Accepted Answer

A) True 
 B)False

Question 18

Calculate the interest on a 90-day, 9% note for $36,000. (Use a 360-day year to compute interest.)

Accepted Answer

A) $720 
B) $810 
C) $880 
D) $460 
A) $720 
B) $810 
C) $880 
D) $460

Question 19

On January 1, Davidson Services has the following balances:   Davidson has the following transactions during January: Credit sales of $100,000, collections of credit sales of $85,000, and write-offs of $15,000. Davidson uses the direct write-off method. At the end of January, the balance in Accounts Receivable is:

Accepted Answer

A) $16,000. 
B) $24,000. 
C) $68,000. 
D) $28,000. 
A) $16,000. 
B) $24,000. 
C) $68,000. 
D) $28,000.

Question 20

The Allowance for Bad Debts account has a debit balance of $6,000 before the adjusting entry for bad debt expense. After analyzing the accounts in the accounts receivable subsidiary ledger, the company's management estimates that uncollectible accounts will be $10,000. What will be the amount of the adjustment in the Allowance for Bad Debts account?

Accepted Answer

A) $15,250 
B) $10,000 
C) $14,900 
D) $16,000 
A) $15,250 
B) $10,000 
C) $14,900 
D) $16,000

Exam 9: Receivables

The direct write-off method for uncollectible accounts violates the matching principle.

An acid-test ratio of 1.0 is considered safer than a ratio of 0.50.

Give the journal entry to record an uncollectible account receivable using the direct write-off method.

If the maker of the note fails to repay the borrowed amount on the maturity date, the note is said to be dishonored.

The entry to write off an account receivable under the allowance method will:

On December 1, 2015, Parsons Inc. sold machinery to a customer for $20,000. The customer could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 9% interest. How much interest revenue was earned for the entire term of the note?

From the following details, calculate the acid-test ratio. (Round to two decimal places.)

Dividends receivable, interest receivable, and taxes receivable are commonly categorized as other receivables.

A six-month note receivable for $4,000 at 12%, dated September 1, 2015, has accrued interest revenue of ________ on December 31, 2015.

Businesses must maintain a single account receivable account for all customers.

The percent-of-sales method computes bad debts expense as a percentage of net cash sales.

The following information is from the 2015 records of Armand Camera Shop: Bad debts expense is estimated by the percent-of-sales method. The management estimates that 3% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for 2015.

The allowance method violates the matching principle.

The interest period extends from the original date of the note to the maturity date.

Calculate the interest on a 90-day, 9% note for $36,000. (Use a 360-day year to compute interest.)

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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