Question 1

What is the maturity date of a 120-day note receivable dated March 5?

Accepted Answer

The answer of What is the maturity date of a...

Question 2

Bonita Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
 $$\begin{array} { | l | r | r | r | r | r | r | } 
\hline & & & { \text { Days } } & { \text { Past } } & \text { Due } & \
\hline & \text { Total } & \text { Current } & 1 \text { to 30 } & \text { 31 to 60 } & 61 \text { to 90 } & \text { Over 90 } \
\hline \text { Accounts receivable } & \$ 110,000 & 68,000 & 17,000 & 10,000 & 8,000 & 7,000 \
\hline \text { Percent uncollectible } & & 1 \% & 2 \% & 5 \% & 8 \% & 13 \% \
\hline
\end{array}$$ a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method.
   b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $550 credit.
c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300 debit.

Accepted Answer

\[\begin{array} { | l | l | l | l | l |

Question 3

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

Accepted Answer

A)  $11,800 
B)  $10,075 
C)  $10,900 
D)  $10,300 
E)  $10,450 
A)  $11,800 
B)  $10,075 
C)  $10,900 
D)  $10,300 
E)  $10,450

Question 4

Owens Company uses the direct write-off method of accounting for uncollectible accounts receivable. On December 6, Year 1, Owens sold $6,300 of merchandise to the Valley Company. On August 8, Year 2, after numerous attempts to collect the account, Owens determined that the account of the Valley Company was uncollectible.
a. Prepare the journal entry required to record the transactions on August 8.
b. Assuming that the $6,300 is material, explain how the direct write-off method violates the expense recognition (matching) principle in this case.

Accepted Answer

a.
Aug. 8 Bad Debts Expense 6,300
Accoun

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A company reports the following results in its financial statements:
Year 3 Year 2 Year 1
 $$\begin{array} { l l l l } 
\text { Net Sales } & \$ 2,500,000 & \$ 2,100,000 & \$ 1,900,000 \
\text { Accounts receivable, Ending Balance } & 172,000 & 167,000 & 165,000
\end{array}$$ Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare these two results and give a possible explanation for any significant change.

Accepted Answer

Year 2: Accounts receivable turnover:
$2

Question 7

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

Accepted Answer

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

Question 8

On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off.
- Assuming the allowance method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets?

Accepted Answer

A)  Decrease in net income; decrease in total assets. 
B)  Increase in net income; no effect on total assets. 
C)  Decrease in net income; no effect on total assets. 
D)  No effect on net income; no effect on total assets. 
E)  No effect on net income; decrease in total assets. 
A)  Decrease in net income; decrease in total assets. 
B)  Increase in net income; no effect on total assets. 
C)  Decrease in net income; no effect on total assets. 
D)  No effect on net income; no effect on total assets. 
E)  No effect on net income; decrease in total assets.

Question 9

The ________ methods of computing uncollectible accounts use balance sheet relations to estimate bad debts-mainly the relation between accounts receivable and the allowance amount.

Accepted Answer

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

Question 10

On September 30, Waldon Co. has $540,250 of accounts receivable. Waldon uses the allowance method of accounting for bad debts and has an existing credit balance in the allowance for doubtful accounts of $13,750.
1. Prepare journal entries to record the following selected October transactions. The company uses the perpetual inventory system. 2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its October 31 balance sheet.
a. Sold $305,000 of merchandise (that cost $178,500) to customers on credit.
b. Received $395,100 cash in payment of accounts receivable.
c. Wrote off $15,700 of uncollectible accounts receivable.
d. In adjusting the accounts on October 31, its fiscal year-end, the company estimated that 4.0% of accounts receivable will be uncollectible.

Accepted Answer

1.
 @#IMG-DLM& * $540,250 + $305,000 - $395,100 -

Question 11

Which of the following is not true regarding a credit card expense?

Accepted Answer

A)  Credit card expense is not recorded by the seller. 
B)  Credit card expense may be classified as a selling expense. 
C)  Credit card expense is a fee the seller pays for services provided by the card company. 
D)  Credit card expense may be classified as a "discount" deducted from sales to get net sales. 
E)  Credit card expense may be classified as an administrative expense. 
A)  Credit card expense is not recorded by the seller. 
B)  Credit card expense may be classified as a selling expense. 
C)  Credit card expense is a fee the seller pays for services provided by the card company. 
D)  Credit card expense may be classified as a "discount" deducted from sales to get net sales. 
E)  Credit card expense may be classified as an administrative expense.

Question 12

Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. 
-Music World's journal entry to record the collection on the maturity date is:

Accepted Answer

A)  Debit Notes Receivable $8,008; credit Cash $7,904; credit Interest Revenue $104 
B)  Debit Cash $7,904; credit Notes Receivable $7,904 
C)  Debit Accounts Receivable $7,904; credit Notes Receivable $7,800; credit Interest Receivable $104 
D)  Debit Cash $7,800; credit Accounts Receivable $7,800 
E)  Debit Cash $7,904; credit Notes Receivable $7,800; credit Interest Revenue $104 
A)  Debit Notes Receivable $8,008; credit Cash $7,904; credit Interest Revenue $104 
B)  Debit Cash $7,904; credit Notes Receivable $7,904 
C)  Debit Accounts Receivable $7,904; credit Notes Receivable $7,800; credit Interest Receivable $104 
D)  Debit Cash $7,800; credit Accounts Receivable $7,800 
E)  Debit Cash $7,904; credit Notes Receivable $7,800; credit Interest Revenue $104

Question 13

The accounts receivable turnover is calculated by:

Accepted Answer

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

Question 14

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Accepted Answer

A) True 
 B)False

Question 15

Credit sales are recorded by crediting Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 16

Explain the difference between honoring and dishonoring a note receivable.

Accepted Answer

When a note is honored, the ma

Question 17

Calculate the amount of interest that would be owed on a $18,000, 60-day, 8% note receivable at maturity.

Accepted Answer

$18,000 *

Question 18

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. $$\begin{array} { | l | r | l | } 
\hline \text { Accounts receivable } & \$ 435,000 & \text { Debit } \
\hline \text { Allowance for Doubtful Accounts } & 1,250 & \text { Debit } \
\hline \text { Net Sales } & 2,100,000 & \text { Credit } \
\hline
\end{array}$$ All sales are made on credit. Based on past experience, the company estimates 1% of 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 $22,250; credit Allowance for Doubtful Accounts $22,250. 
B)  Debit Bad Debts Expense $19,750; credit Allowance for Doubtful Accounts $19,750. 
C)  Debit Bad Debts Expense $21,000; credit Allowance for Doubtful Accounts $21,000. 
D)  Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225. 
E)  Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350. 
A)  Debit Bad Debts Expense $22,250; credit Allowance for Doubtful Accounts $22,250. 
B)  Debit Bad Debts Expense $19,750; credit Allowance for Doubtful Accounts $19,750. 
C)  Debit Bad Debts Expense $21,000; credit Allowance for Doubtful Accounts $21,000. 
D)  Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225. 
E)  Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350.

Question 19

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

Accepted Answer

$26,000 *

Question 20

A Company had net sales of $23,000, and its average account receivables were $5,700. Its accounts receivable turnover is 0.24.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Receivables

What is the maturity date of a 120-day note receivable dated March 5?

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

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

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

The ________ methods of computing uncollectible accounts use balance sheet relations to estimate bad debts-mainly the relation between accounts receivable and the allowance amount.

Which of the following is not true regarding a credit card expense?

Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. -Music World's journal entry to record the collection on the maturity date is:

The accounts receivable turnover is calculated by:

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Credit sales are recorded by crediting Accounts Receivable.

Explain the difference between honoring and dishonoring a note receivable.

Calculate the amount of interest that would be owed on a $18,000, 60-day, 8% note receivable at maturity.

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

A Company had net sales of $23,000, and its average account receivables were $5,700. Its accounts receivable turnover is 0.24.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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