Question 1

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A)  non-trade receivables. 
B)  trade receivables. 
C)  merchandise receivables. 
D)  sales receivables. 
A)  non-trade receivables. 
B)  trade receivables. 
C)  merchandise receivables. 
D)  sales receivables.

Question 2

At the end of the current year, Accounts Receivable has a balance of $675,000; Allowance for Doubtful Accounts has a debit balance of $5,400; and net sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000.
Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Accepted Answer

The answer of At the end of the current year,...

Question 3

Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& b. $40,800 [$40,00

Question 4

The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 5

When using the direct write-off method off accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 6

The balance of the Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Accepted Answer

A)  Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 
B)  Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 
C)  Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22,000 
D)  Bad Debt Expense 65,000 Allowance for Doubtful Accounts 65,000 
A)  Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 
B)  Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 
C)  Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22,000 
D)  Bad Debt Expense 65,000 Allowance for Doubtful Accounts 65,000

Question 8

When companies sell their receivables to other companies, the transaction is called factoring.

Accepted Answer

A) True 
 B)False

Question 9

The two methods of accounting for uncollectible receivables are the allowance method and the

Accepted Answer

A)  equity method 
B)  direct write-off method 
C)  interest method 
D)  cost method 
A)  equity method 
B)  direct write-off method 
C)  interest method 
D)  cost method

Question 10

Allowance for Doubtful Accounts is classified as a(n) ______ and has a normal ______ balance.

Accepted Answer

A)  owners' equity, credit 
B)  contra-asset, debit 
C)  owners' equity, debit 
D)  contra-asset, credit 
A)  owners' equity, credit 
B)  contra-asset, debit 
C)  owners' equity, debit 
D)  contra-asset, credit

Question 11

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

Accepted Answer

A) True 
 B)False

Question 12

The receivable that is usually evidenced by a formal instrument of credit is a(n)

Accepted Answer

A)  trade receivable. 
B)  note receivable. 
C)  accounts receivable. 
D)  income tax receivable. 
A)  trade receivable. 
B)  note receivable. 
C)  accounts receivable. 
D)  income tax receivable.

Question 13

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000.
Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Accepted Answer

The answer of At the end of the current year,...

Question 14

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A)  is the normal balance for that account. 
B)  indicates that actual bad debt write-offs have been less than what was estimated. 
C)  cannot occur if the percentage of receivables method of estimating bad debts is used. 
D)  indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. 
A)  is the normal balance for that account. 
B)  indicates that actual bad debt write-offs have been less than what was estimated. 
C)  cannot occur if the percentage of receivables method of estimating bad debts is used. 
D)  indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.

Question 15

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?

Accepted Answer

A)  $51,000 
B)  $289,000 
C)  $340,000 
D)  $391,000 
A)  $51,000 
B)  $289,000 
C)  $340,000 
D)  $391,000

Question 16

For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded in 2014, the balance in Allowance for Doubtful Accounts after adjustment at December 31, 2014, and the net realizable value of Accounts Receivable at December 31, 2014:
a) Based on an analysis of Simmon's Company's $380,000 balance in Accounts Receivable at December 31, 2014, is was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment.
b) Blake Company had net credit sales of $900,000 during 2014, and has an Accounts Receivable balance of $425,000 at December 31, 2014, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates Bad Debt Expense as 3/4 of 1% of net credit sales.
c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31, 2014. An analysis of those receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, the Allowance for Doubtful Accounts has a debit balance of $750.

Accepted Answer

a) Bad Debt Expense for 2014 $14,300
All

Question 17

What is the type of account and normal balance of Allowance for Doubtful Accounts?

Accepted Answer

A)  Contra asset, credit 
B)  Asset, debit 
C)  Asset, credit 
D)  Contra asset, debit 
A)  Contra asset, credit 
B)  Asset, debit 
C)  Asset, credit 
D)  Contra asset, debit

Question 18

Financial Statement data for the years ended December 31 for Parker Corporation is as follows:
2012 2011
Net Sales $2,595,600 $2,409,500
Accounts Receivable
Beginning of the year $ 390,000 $400,000
End of the year 434,000 390,000
a) Determine the accounts receivable turnover for 2012 and 2011.
b) Determine the number of days' sales in receivables for 2012 and 2011.
c) Does the change in accounts receivable turnover and number of days' sales in receivables from 2011 to 2012 indicate a favorable or unfavorable trend.?

Accepted Answer

a) Accounts receivable turnover:
@#IMG-DLM&
b) Num

Question 19

Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?

Accepted Answer

A)  debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200 
B)  debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200 
C)  debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600 
D)  debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600 
A)  debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200 
B)  debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200 
C)  debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600 
D)  debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600

Question 20

The amount of a promissory note is called the

Accepted Answer

A)  realizable value 
B)  maturity value 
C)  face value 
D)  proceeds 
A)  realizable value 
B)  maturity value 
C)  face value 
D)  proceeds

Exam 8: Receivables

Notes or accounts receivables that result from sales transactions are often called

Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.

The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible.

When using the direct write-off method off accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

The balance of the Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.

When companies sell their receivables to other companies, the transaction is called factoring.

The two methods of accounting for uncollectible receivables are the allowance method and the

Allowance for Doubtful Accounts is classified as a(n) ______ and has a normal ______ balance.

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

The receivable that is usually evidenced by a formal instrument of credit is a(n)

A debit balance in the Allowance for Doubtful Accounts

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?

What is the type of account and normal balance of Allowance for Doubtful Accounts?

The amount of a promissory note is called the

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

Filters

Allowance for Doubtful Accounts is classified as a(n) and has a normal balance.