Question 1

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 2

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 unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200

Accepted Answer

A) True 
 B)False

Question 3

At December 31 of the current year,a company reported the following:
Total sales for the current year: $980,000 includes $160,000 in cash sales
Accounts receivable balance at Dec.31,end of current year: $160,000
Allowance for Doubtful Accounts balance at January 1,beginning of current year: $7,300
Bad debts written off during the current year: $5,800.
Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal 1.5% of credit sales:

Accepted Answer

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Question 4

A company factored $30,000 of its accounts receivable and was charged a 2% factoring fee.The journal entry to record this transaction would include a debit to Cash of $30,000,a debit to Factoring Fee Expense of $600,and credit to Accounts Receivable of $30,600.

Accepted Answer

A) True 
 B)False

Question 5

The accounts receivable turnover is calculated by:

Accepted Answer

A)  Dividing net sales by average accounts receivable. 
B)  Dividing net sales by average accounts receivable and multiplying by 365. 
C)  Dividing average accounts receivable by net sales. 
D)  Dividing average accounts receivable by net sales and multiplying by 365. 
E)  Dividing net income by average accounts receivable. 
A)  Dividing net sales by average accounts receivable. 
B)  Dividing net sales by average accounts receivable and multiplying by 365. 
C)  Dividing average accounts receivable by net sales. 
D)  Dividing average accounts receivable by net sales and multiplying by 365. 
E)  Dividing net income by average accounts receivable.

Question 6

A company allows its customers to use bank credit cards to charge purchases.When customers use the credit cards,the net amount is deposited in the company's checking account,less a 2.5% service charge.Assume that on April 13,the company sold $20,000 worth of merchandise to customers who used credit cards.Prepare the company's journal entry to record the credit card sales for April 13 assuming the company deposited the receipts that same day.

Accepted Answer

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Question 7

Notes receivable are classified as current liabilities regardless of the time to maturity.

Accepted Answer

A) True 
 B)False

Question 8

If a credit card sale is made,the seller debits Cash and credits Sales for the same amount.

Accepted Answer

A) True 
 B)False

Question 9

The person who signs a note receivable and promises to pay the principal and interest is the:

Accepted Answer

A)  Maker. 
B)  Payee. 
C)  Holder. 
D)  Receiver. 
E)  Owner. 
A)  Maker. 
B)  Payee. 
C)  Holder. 
D)  Receiver. 
E)  Owner.

Question 10

Duerr company makes a $60,000,60-day,12% cash loan to Ryan Co.The maturity value of the loan is: (Use 360 days a year.)

Accepted Answer

A)  $60,000. 
B)  $1,200. 
C)  $61,200. 
D)  $58,800. 
E)  $67,200. 
A)  $60,000. 
B)  $1,200. 
C)  $61,200. 
D)  $58,800. 
E)  $67,200.

Question 11

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:
$$\begin{array} { l l } 
\text { Accounts receivable } & \$ 375,000 \text { debit } \
\text { Allowance for uncollectible accounts } & 500 \text { debit } \
\text { Net Sales } & 800,000 \text { credit }
\end{array}$$
All sales are made on credit.Based on past experience,the company estimates 0.6% of net credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  Debit Bad Debts Expense $2,130; credit Allowance for Doubtful Accounts $2,130. 
B)  Debit Bad Debts Expense $2,630; credit Allowance for Doubtful Accounts $2,630. 
C)  Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300. 
D)  Debit Bad Debts Expense $4,800; credit Allowance for Doubtful Accounts $4,800. 
E)  Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300. 
A)  Debit Bad Debts Expense $2,130; credit Allowance for Doubtful Accounts $2,130. 
B)  Debit Bad Debts Expense $2,630; credit Allowance for Doubtful Accounts $2,630. 
C)  Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300. 
D)  Debit Bad Debts Expense $4,800; credit Allowance for Doubtful Accounts $4,800. 
E)  Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300.

Question 12

The person to whom a note is payable is known as the ________.

Accepted Answer

The answer of The person to whom a note is...

Question 13

Jervis accepts all major bank credit cards,including those issued by Northern Bank (NB),which assesses a 3% charge on sales for using its card.On June 28,Jervis had $3,500 in NB Card credit sales.What entry should Jervis 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 $3,605; credit Credit Card Expense $105; credit Sales $3,500 
D)  Debit Cash $3,395; debit Credit Card Expense $105; credit Sales $3,500 
E)  Debit Accounts Receivable $3,395; debit Credit Card Expense $105; 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 $3,605; credit Credit Card Expense $105; credit Sales $3,500 
D)  Debit Cash $3,395; debit Credit Card Expense $105; credit Sales $3,500 
E)  Debit Accounts Receivable $3,395; debit Credit Card Expense $105; credit Sales $3,500

Question 14

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes)to report all relevant information?

Accepted Answer

A)  Relevance. 
B)  Full disclosure. 
C)  Evaluation. 
D)  Materiality. 
E)  Expense recognition (matching). 
A)  Relevance. 
B)  Full disclosure. 
C)  Evaluation. 
D)  Materiality. 
E)  Expense recognition (matching).

Question 15

A ________ is a signed agreement to pay a specified amount of money either on demand or at a definite future date.

Accepted Answer

The answer of A ________ is a signed agreement to...

Question 16

The ________ method of computing uncollectible accounts uses income statement relationships to estimate bad debts and is based on the idea that a given percent of a company's credit sales for a period are uncollectible.

Accepted Answer

The answer of The ________ method of computing uncollectible accounts...

Question 17

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 18

On May 31,a company had a balance in its accounts receivable of $103,200.Prepare journal entries to record the following transactions for June.Assume the company uses a perpetual inventory system.
 June 2 Sold merchandise on account, $\$ 12,000$. The cost of the merchandise was $\$ 7,200$. 
June 8 Sold $15,000 worth of accounts receivable to First Bark. First Bark charged a 4% factoring fee.
June 20 Barrowed $\$ 30,000$ cash from Second National Bark, pledging $31,500 worth of accounts receivable as collateral for the loan.

Accepted Answer

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\text { June

Question 19

The realizable value refers to the expected proceeds from converting an asset into cash.

Accepted Answer

A) True 
 B)False

Question 20

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.

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 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 unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200

A company factored $30,000 of its accounts receivable and was charged a 2% factoring fee.The journal entry to record this transaction would include a debit to Cash of $30,000,a debit to Factoring Fee Expense of $600,and credit to Accounts Receivable of $30,600.

The accounts receivable turnover is calculated by:

Notes receivable are classified as current liabilities regardless of the time to maturity.

If a credit card sale is made,the seller debits Cash and credits Sales for the same amount.

The person who signs a note receivable and promises to pay the principal and interest is the:

Duerr company makes a $60,000,60-day,12% cash loan to Ryan Co.The maturity value of the loan is: (Use 360 days a year.)

The person to whom a note is payable is known as the ________.

Jervis accepts all major bank credit cards,including those issued by Northern Bank (NB),which assesses a 3% charge on sales for using its card.On June 28,Jervis had $3,500 in NB Card credit sales.What entry should Jervis make on June 28 to record the deposit?

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes)to report all relevant information?

A ________ is a signed agreement to pay a specified amount of money either on demand or at a definite future date.

The ________ method of computing uncollectible accounts uses income statement relationships to estimate bad debts and is based on the idea that a given percent of a company's credit sales for a period are uncollectible.

A promissory note:

The realizable value refers to the expected proceeds from converting an asset into cash.

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

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 7: Accounting for Receivables

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 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 unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200

A company factored $30,000 of its accounts receivable and was charged a 2% factoring fee.The journal entry to record this transaction would include a debit to Cash of $30,000,a debit to Factoring Fee Expense of $600,and credit to Accounts Receivable of $30,600.

The accounts receivable turnover is calculated by:

Notes receivable are classified as current liabilities regardless of the time to maturity.

If a credit card sale is made,the seller debits Cash and credits Sales for the same amount.

The person who signs a note receivable and promises to pay the principal and interest is the:

Duerr company makes a $60,000,60-day,12% cash loan to Ryan Co.The maturity value of the loan is: (Use 360 days a year.)

The person to whom a note is payable is known as the ________.

Jervis accepts all major bank credit cards,including those issued by Northern Bank (NB),which assesses a 3% charge on sales for using its card.On June 28,Jervis had $3,500 in NB Card credit sales.What entry should Jervis make on June 28 to record the deposit?

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes)to report all relevant information?

A ________ is a signed agreement to pay a specified amount of money either on demand or at a definite future date.

The ________ method of computing uncollectible accounts uses income statement relationships to estimate bad debts and is based on the idea that a given percent of a company's credit sales for a period are uncollectible.

A promissory note:

The realizable value refers to the expected proceeds from converting an asset into cash.

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

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters