Question 1

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $90,000.Its accounts receivable turnover equals:

Accepted Answer

A)  6.1 
B)  63.0 
C)  54.8 
D)  1.1 
E)  6.3 
A)  6.1 
B)  63.0 
C)  54.8 
D)  1.1 
E)  6.3

Question 2

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Accepted Answer

A) True 
 B)False

Question 3

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

Accepted Answer

A)  Debit Accounts Receivable $7,200; credit Notes Receivable $7,200. 
B)  Debit Accounts Receivable $7,200; credit Allowance for Doubtful Accounts $7,200. 
C)  Debit Bad Debt Expense $7,344; credit Notes Receivable $7,344. 
D)  Debit Accounts Receivable $7,344; credit Interest Revenue $144; credit Notes Receivable $7,200. 
E)  Debit Accounts Receivable $7,056; debit Interest Revenue $144; credit Notes Receivable $7,200. 
A)  Debit Accounts Receivable $7,200; credit Notes Receivable $7,200. 
B)  Debit Accounts Receivable $7,200; credit Allowance for Doubtful Accounts $7,200. 
C)  Debit Bad Debt Expense $7,344; credit Notes Receivable $7,344. 
D)  Debit Accounts Receivable $7,344; credit Interest Revenue $144; credit Notes Receivable $7,200. 
E)  Debit Accounts Receivable $7,056; debit Interest Revenue $144; credit Notes Receivable $7,200.

Question 4

A maker who dishonors a note is one who does not pay it at maturity.

Accepted Answer

A) True 
 B)False

Question 5

Match each of the following terms with the appropriate definitions.
-Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Accepted Answer

A) Factoring accounts receivable 
B) Allowance method 
C) Accounts receivable turnover 
D) Principal of a note 
E) Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle 
A) Factoring accounts receivable 
B) Allowance method 
C) Accounts receivable turnover 
D) Principal of a note 
E) Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle

Question 6

Sellers allow customers to use credit cards for all of the following reasons except:

Accepted Answer

A)  To be able to charge more due to fees and interest. 
B)  To lessen the risk of extending credit to customers who cannot pay. 
C)  To speed up receipt of cash from the credit sale. 
D)  To increase total sales volume. 
E)  To avoid having to evaluate a customer's credit standing for each sale. 
A)  To be able to charge more due to fees and interest. 
B)  To lessen the risk of extending credit to customers who cannot pay. 
C)  To speed up receipt of cash from the credit sale. 
D)  To increase total sales volume. 
E)  To avoid having to evaluate a customer's credit standing for each sale.

Question 7

BizCom's customer,Redding,paid off an $8,300 balance on its account receivable.BizCom should record the transaction as a debit to Accounts Receivable-Redding and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 8

Jasper makes a $25,000,90-day,7% cash loan to Clayborn Co.Jasper's entry to record the transaction should be:

Accepted Answer

A)  Debit Notes Receivable for $25,000; credit Cash $25,000. 
B)  Debit Accounts Receivable $25,000; credit Notes Receivable $25,000. 
C)  Debit Cash $25,000; credit Notes Receivable for $25,000. 
D)  Debit Notes Payable $25,000; credit Accounts Payable $25,000. 
E)  Debit Notes Receivable $25,000; credit Sales $25,000. 
A)  Debit Notes Receivable for $25,000; credit Cash $25,000. 
B)  Debit Accounts Receivable $25,000; credit Notes Receivable $25,000. 
C)  Debit Cash $25,000; credit Notes Receivable for $25,000. 
D)  Debit Notes Payable $25,000; credit Accounts Payable $25,000. 
E)  Debit Notes Receivable $25,000; credit Sales $25,000.

Question 9

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

Accepted Answer

A) True 
 B)False

Question 10

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Accepted Answer

A) True 
 B)False

Question 11

On July 31,Orwell Co.has $448,800 of accounts receivable.
Required:
1.Prepare journal entries to record the following selected August transactions.The company uses the perpetual inventory system.
2.Also prepare any footnotes to the August 31 financial statements that result from these transactions.
3.Calculate the balance in the Accounts Receivable account as of August 10.
   
security for the loan.The note is a 90-day,9% note.

Accepted Answer

1.
 @#IMG-DLM& 2.Orwell should include t

Question 12

Match each of the following terms with the appropriate definitions.
-Selling all or a portion of accounts receivable to a finance company or bank.

Accepted Answer

A) Factoring accounts receivable 
B) Allowance method 
C) Accounts receivable turnover 
D) Principal of a note 
E) Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle 
A) Factoring accounts receivable 
B) Allowance method 
C) Accounts receivable turnover 
D) Principal of a note 
E) Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle

Question 13

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction would be:

Accepted Answer

A)  Debit Cash of $625 and credit Sales $625. 
B)  Debit Cash of $625 and credit Accounts Receivable $625. 
C)  Debit Accounts Receivable $625 and credit Sales $625. 
D)  Debit Accounts Receivable $625 and credit Cash $625. 
E)  Debit Sales $625 and credit Accounts Receivable $625. 
A)  Debit Cash of $625 and credit Sales $625. 
B)  Debit Cash of $625 and credit Accounts Receivable $625. 
C)  Debit Accounts Receivable $625 and credit Sales $625. 
D)  Debit Accounts Receivable $625 and credit Cash $625. 
E)  Debit Sales $625 and credit Accounts Receivable $625.

Question 14

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Accepted Answer

A) True 
 B)False

Question 15

Match each of the following terms with the appropriate definitions.
-The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.

Accepted Answer

A) Factoring accounts receivable 
B) Allowance method 
C) Accounts receivable turnover 
D) Principal of a note 
E) Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle 
A) Factoring accounts receivable 
B) Allowance method 
C) Accounts receivable turnover 
D) Principal of a note 
E) Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle

Question 16

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
 $$\begin{array} { l l l } 
&\text { Debit } & \text { Credit } \
\text { Cash sales } & & \$ 188,000\
\text { Credit sales } & & 275,000  \
\text { Accounts receivable } & \$ 76,000 &\
\text { Allowance for doubtful accounts } & &1,000 \

\end{array}$$ 
Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

Accepted Answer

None

Question 17

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

Accepted Answer

A) True 
 B)False

Question 18

Prudence Co.receives a $26,000,90-day,4% note receivable.What is maturity value of the note?

Accepted Answer

$26,000 * .04 * 90/3

Question 19

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 20

A company received a $15,000,90-day,10% note receivable.The journal entry to record receipt of the note includes a debit to Notes Receivable.

Accepted Answer

A) True 
 B)False

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $90,000.Its accounts receivable turnover equals:

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

A maker who dishonors a note is one who does not pay it at maturity.

Match each of the following terms with the appropriate definitions. -Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Sellers allow customers to use credit cards for all of the following reasons except:

BizCom's customer,Redding,paid off an $8,300 balance on its account receivable.BizCom should record the transaction as a debit to Accounts Receivable-Redding and a credit to Cash.

Jasper makes a $25,000,90-day,7% cash loan to Clayborn Co.Jasper's entry to record the transaction should be:

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Match each of the following terms with the appropriate definitions. -Selling all or a portion of accounts receivable to a finance company or bank.

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction would be:

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Match each of the following terms with the appropriate definitions. -The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

Prudence Co.receives a $26,000,90-day,4% note receivable.What is maturity value of the note?

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.

A company received a $15,000,90-day,10% note receivable.The journal entry to record receipt of the note includes a debit to Notes Receivable.

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

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $90,000.Its accounts receivable turnover equals:

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

A maker who dishonors a note is one who does not pay it at maturity.

Match each of the following terms with the appropriate definitions. -Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Sellers allow customers to use credit cards for all of the following reasons except:

BizCom's customer,Redding,paid off an $8,300 balance on its account receivable.BizCom should record the transaction as a debit to Accounts Receivable-Redding and a credit to Cash.

Jasper makes a $25,000,90-day,7% cash loan to Clayborn Co.Jasper's entry to record the transaction should be:

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Match each of the following terms with the appropriate definitions. -Selling all or a portion of accounts receivable to a finance company or bank.

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction would be:

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Match each of the following terms with the appropriate definitions. -The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

Prudence Co.receives a $26,000,90-day,4% note receivable.What is maturity value of the note?

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.

A company received a $15,000,90-day,10% note receivable.The journal entry to record receipt of the note includes a debit to Notes Receivable.

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