Question 1

Using the allowance method for bad debts expense,the Allowance for Doubtful Accounts is decreased:

Accepted Answer

A) When the estimate of bad debts is expensed. 
B) When a specific customer account is written off. 
C) When a specific customer account is collected. 
D) When a sale to a credit customer is made. 
E) When all customer accounts are considered collectible. 
A) When the estimate of bad debts is expensed. 
B) When a specific customer account is written off. 
C) When a specific customer account is collected. 
D) When a sale to a credit customer is made. 
E) When all customer accounts are considered collectible.

Question 2

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

Accepted Answer

A) 37.8. 
B) 9.7. 
C) 68.3. 
D) 7.1. 
E) 51.7. 
A) 37.8. 
B) 9.7. 
C) 68.3. 
D) 7.1. 
E) 51.7.

Question 3

A 90-day note issued on April 10 matures on:

Accepted Answer

A) July 9. 
B) July 10. 
C) July 11. 
D) July 12. 
E) July 13. 
A) July 9. 
B) July 10. 
C) July 11. 
D) July 12. 
E) July 13.

Question 4

Dishonoring a note means the maker no longer has to pay.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Lemming makes an $18,750,120-day,8% cash loan to Notions Co.on November 1.Lemming's end-of-period adjusting entry on December 31 should be:

Accepted Answer

A) Debit Cash for $250; credit Notes Receivable $250. 
B) Debit Interest Revenue $500; credit Notes Receivable $500. 
C) Debit Interest Receivable $250; credit Interest Revenue $250. 
D) Debit Interest Receivable $500; credit Interest Revenue $500. 
E) Debit Notes Receivable $500; credit Interest Revenue $500. 
A) Debit Cash for $250; credit Notes Receivable $250. 
B) Debit Interest Revenue $500; credit Notes Receivable $500. 
C) Debit Interest Receivable $250; credit Interest Revenue $250. 
D) Debit Interest Receivable $500; credit Interest Revenue $500. 
E) Debit Notes Receivable $500; credit Interest Revenue $500.

Question 7

At December 31,Yarrow Company reports the following results for its calendar year from the adjusted trial balance.
   a.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 1.1% of credit sales.
b.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be .8% of total sales.
c.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7.0% of year-end accounts receivable.

Accepted Answer

@#IMG-DLM& $2,300,000 * .011 = $25,300

Question 8

On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account.
-Compute the maturity date for the note.

Accepted Answer

A) October 8 
B) October 7 
C) November 8 
D) November 7 
E) November 6 
A) October 8 
B) October 7 
C) November 8 
D) November 7 
E) November 6

Question 9

The person that borrows money and signs a promissory note is called the maker.

Accepted Answer

A) True 
 B)False

Question 10

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The estimated amount of bad debts expense is $3,500.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A promissory note:

Accepted Answer

A) Is a short-term investment for the maker. 
B) Is a written promise to pay a specified amount of money at a certain date. 
C) Is a liability to the payee. 
D) Is another name for an installment receivable. 
E) Cannot be used in payment of an account receivable. 
A) Is a short-term investment for the maker. 
B) Is a written promise to pay a specified amount of money at a certain date. 
C) Is a liability to the payee. 
D) Is another name for an installment receivable. 
E) Cannot be used in payment of an account receivable.

Question 13

A company borrowed $10,000 by signing a six-month promissory note at 5% interest.The amount of interest to be paid at maturity is $25.

Accepted Answer

A) True 
 B)False

Question 14

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Accepted Answer

A) True 
 B)False

Question 15

Separate accounts receivable information for each customer is important because it reveals all of the following except:

Accepted Answer

A) How much each customer has purchased on credit. 
B) How much each customer has paid. 
C) How much each customer still owes. 
D) The basis for sending bills to customers. 
E) When the customer intends to pay outstanding balances. 
A) How much each customer has purchased on credit. 
B) How much each customer has paid. 
C) How much each customer still owes. 
D) The basis for sending bills to customers. 
E) When the customer intends to pay outstanding balances.

Question 16

The process of using accounts receivable as security for a loan is known as pledging accounts receivable.

Accepted Answer

A) True 
 B)False

Question 17

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.
-If the note is dishonored,but Uniform Supply intends to continue collection efforts,what entry should Uniform Supply make on January 15 of the next year? (Assume no reversing entries are made.)(Use 360 days a year.)

Accepted Answer

A) Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920. 
B) Debit Cash $4,920; credit Notes Receivable $4,920. 
C) Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20,credit Notes Receivable $4,800. 
D) Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100,credit Notes Receivable $4,800. 
E) Debit Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100,credit Notes Receivable $4,800. 
A) Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920. 
B) Debit Cash $4,920; credit Notes Receivable $4,920. 
C) Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20,credit Notes Receivable $4,800. 
D) Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100,credit Notes Receivable $4,800. 
E) Debit Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100,credit Notes Receivable $4,800.

Question 18

A company had net sales of $600,000,total sales of $750,000,and an average accounts receivable of $75,000.Its accounts receivable turnover equals:

Accepted Answer

A) 0.13 
B) 0.80 
C) 7.75 
D) 8.00 
E) 10.00 
A) 0.13 
B) 0.80 
C) 7.75 
D) 8.00 
E) 10.00

Question 19

Prudence Co.receives a $26,000,90-day,4% note receivable.What is the total principal and interest due at maturity?

Accepted Answer

The answer of Prudence Co.receives a $26,000,90-day,4% note receivable.What is...

Question 20

The maturity date of a note refers to the date the note must be repaid.

Accepted Answer

A) True 
 B)False

Exam 7: Accounting for Receivables

Using the allowance method for bad debts expense,the Allowance for Doubtful Accounts is decreased:

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

A 90-day note issued on April 10 matures on:

Dishonoring a note means the maker no longer has to pay.

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.

Lemming makes an $18,750,120-day,8% cash loan to Notions Co.on November 1.Lemming's end-of-period adjusting entry on December 31 should be:

On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account. -Compute the maturity date for the note.

The person that borrows money and signs a promissory note is called the maker.

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The estimated amount of bad debts expense is $3,500.

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.

A promissory note:

A company borrowed $10,000 by signing a six-month promissory note at 5% interest.The amount of interest to be paid at maturity is $25.

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Separate accounts receivable information for each customer is important because it reveals all of the following except:

The process of using accounts receivable as security for a loan is known as pledging accounts receivable.

A company had net sales of $600,000,total sales of $750,000,and an average accounts receivable of $75,000.Its accounts receivable turnover equals:

Prudence Co.receives a $26,000,90-day,4% note receivable.What is the total principal and interest due at maturity?

The maturity date of a note refers to the date the note must be repaid.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

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