Question 1

The banker's rule simplifies interest computations by treating a year as having 365 days.

Accepted Answer

A) True 
 B)False

Question 2

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Accepted Answer

A) True 
 B)False

Question 3

Explain how to record the receipt (acceptance)of a note receivable.

Accepted Answer

The receipt of a note receivable is reco

Question 4

Honoring a note receivable indicates that the maker has:

Accepted Answer

A)  Signed. 
B)  Paid in full. 
C)  Guaranteed. 
D)  Notarized. 
E)  Cosigned. 
A)  Signed. 
B)  Paid in full. 
C)  Guaranteed. 
D)  Notarized. 
E)  Cosigned.

Question 5

On July 9,Mifflin Company receives an $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on July 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 6

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred:
   
Prepare the general journal entries to record these transactions.

Accepted Answer

The answer of The Branson Company uses the percent of...

Question 7

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Accepted Answer

A)  $450.00. 
B)  $37.50. 
C)  $112.50. 
D)  $11.25. 
E)  $1,800.00. 
A)  $450.00. 
B)  $37.50. 
C)  $112.50. 
D)  $11.25. 
E)  $1,800.00.

Question 8

The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

Accepted Answer

A) True 
 B)False

Question 9

Thatcher Company had a January 1,credit balance in its Allowance for Doubtful Accounts of $4,000 for the current year.The following transactions and events affected the Allowance for Doubtful Accounts during the current year:
   
What amount should appear in the allowance for doubtful accounts in the December 31,balance sheet for the current year?

Accepted Answer

$4,000 - $

Question 10

A company has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.Experience suggests that 6% of outstanding receivables are uncollectible.
-The current credit balance (before adjustments)in the allowance for doubtful accounts is $1,200.The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $4,800.

Accepted Answer

A) True 
 B)False

Question 11

A credit sale of $5,275 to a customer would result in which of the following?

Accepted Answer

A)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
B)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
C)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
E)  A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger. 
A)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
B)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
C)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
E)  A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger.

Question 12

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Accepted Answer

A) True 
 B)False

Question 13

A company ages its accounts receivables to determine its end of period adjustment for bad debts.At the end of the current year,management estimated that $15,750 of the accounts receivable balance would be uncollectible.
-Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a debit balance of $375.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debts Expense } & 15,750 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,750 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debts Expense } & 15,375 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,375 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debts Expense } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 15,750 & \
\hline \text { Bad Debts Expense } & 375 & \
\hline \text { Sales } & & 16,125 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debts Expense } & 15,750 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,750 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debts Expense } & 15,375 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,375 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debts Expense } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 15,750 & \
\hline \text { Bad Debts Expense } & 375 & \
\hline \text { Sales } & & 16,125 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$$

Question 14

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Accepted Answer

The answer of The________ method of accounting for bad debts...

Question 15

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on December 31,to record the accrued interest on the note?

Accepted Answer

A)  Debit Cash $20; credit Notes Receivable $20. 
B)  Debit Cash $100; credit Notes Receivable $100. 
C)  Debit Interest Receivable $20; credit Interest Revenue $20. 
D)  Debit Interest Receivable $100; credit Interest Revenue $100. 
E)  Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20. 
A)  Debit Cash $20; credit Notes Receivable $20. 
B)  Debit Cash $100; credit Notes Receivable $100. 
C)  Debit Interest Receivable $20; credit Interest Revenue $20. 
D)  Debit Interest Receivable $100; credit Interest Revenue $100. 
E)  Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20.

Question 16

Explain the difference between honoring and dishonoring a note receivable.

Accepted Answer

When a note is honored,the mak

Question 17

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

Accepted Answer

A)  $900 
B)  $75 
C)  $450 
D)  $300 
E)  $1,800 
A)  $900 
B)  $75 
C)  $450 
D)  $300 
E)  $1,800

Question 18

White Company allows customers to make purchases on credit.The terms of all credit sales are 2/10,n/30,and all sales are recorded at the gross price.Other customers can use a bank credit card where the bank deducts a 4% service charge for credit card sales and credits the bank account of White immediately when credit card receipts are deposited.White uses the perpetual inventory method.Prepare journal entries to record the following selected transactions and events.

Accepted Answer

The answer of White Company allows customers to make purchases...

Question 19

Companies follow both the expense recognition (matching)principle and the materiality constraint when applying the direct write-off method.

Accepted Answer

A) True 
 B)False

Question 20

The amount due on the maturity date of a $6,000,60-day 4%,note receivable is: (Use 360 days a year.)

Accepted Answer

A)  $6,000. 
B)  $6,240. 
C)  $5,760. 
D)  $6,040. 
E)  $5,960. 
A)  $6,000. 
B)  $6,240. 
C)  $5,760. 
D)  $6,040. 
E)  $5,960.

The banker's rule simplifies interest computations by treating a year as having 365 days.

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Explain how to record the receipt (acceptance)of a note receivable.

Honoring a note receivable indicates that the maker has:

On July 9,Mifflin Company receives an $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on July 9 to record receipt of the note?

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred: Prepare the general journal entries to record these transactions.

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

A credit sale of $5,275 to a customer would result in which of the following?

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on December 31,to record the accrued interest on the note?

Explain the difference between honoring and dishonoring a note receivable.

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

Companies follow both the expense recognition (matching)principle and the materiality constraint when applying the direct write-off method.

The amount due on the maturity date of a $6,000,60-day 4%,note receivable is: (Use 360 days a year.)

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

The banker's rule simplifies interest computations by treating a year as having 365 days.

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Explain how to record the receipt (acceptance)of a note receivable.

Honoring a note receivable indicates that the maker has:

On July 9,Mifflin Company receives an $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on July 9 to record receipt of the note?

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred: Prepare the general journal entries to record these transactions.

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

A credit sale of $5,275 to a customer would result in which of the following?

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on December 31,to record the accrued interest on the note?

Explain the difference between honoring and dishonoring a note receivable.

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

Companies follow both the expense recognition (matching)principle and the materiality constraint when applying the direct write-off method.

The amount due on the maturity date of a $6,000,60-day 4%,note receivable is: (Use 360 days a year.)

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