Question 1

When a company receives an interest-bearing note receivable, it will

Accepted Answer

A)  debit Notes Receivable for the maturity value of the note. 
B)  debit Notes Receivable for the face value of the note. 
C)  credit Notes Receivable for the maturity value of the note. 
D)  credit Notes Receivable for the face value of the note. 
A)  debit Notes Receivable for the maturity value of the note. 
B)  debit Notes Receivable for the face value of the note. 
C)  credit Notes Receivable for the maturity value of the note. 
D)  credit Notes Receivable for the face value of the note.

Question 2

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3rd to Valley Co. on account. (Assume a 360-day year when calculating interest.)
a. Determine the due date of the note.
b. Determine the interest.
c. Determine the maturity value of the note.
d. Journalize the entry to record the issuance of the note by Potts on Feb. 3.
e. Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.

Accepted Answer

The answer of Mr. Potts issued a 90-day, 7% note...

Question 3

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 the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance Allowance of Doubtful Accounts.)

Accepted Answer

A)  $550,000 
B)  $544,500 
C)  $525,000 
D)  $575,000 
A)  $550,000 
B)  $544,500 
C)  $525,000 
D)  $575,000

Question 4

At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $760. During the year, $120 of previously written-off accounts were reinstated and accounts totaling $740 are written-off as uncollectible. The end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be

Accepted Answer

A)  $760 
B)  $120 
C)  $140 
D)  $740 
A)  $760 
B)  $120 
C)  $140 
D)  $740

Question 5

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, 2010, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2010, Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no Sales Returns or Sales Discounts during the year. After the adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be

Accepted Answer

A)  $1,200 
B)  $3,000 
C)  $3,600 
D)  $7,200 
A)  $1,200 
B)  $3,000 
C)  $3,600 
D)  $7,200

Question 6

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

Accepted Answer

A)  displaced 
B)  disallowed 
C)  dishonored 
D)  discounted 
A)  displaced 
B)  disallowed 
C)  dishonored 
D)  discounted

Question 7

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?

Accepted Answer

A)  Cash 200 Interest Revenue 200 
B)  Interest Receivable 800 Interest Revenue 800 
C)  Interest Receivable 200 Interest Revenue 200 
D)  Note Receivable 40,000 Cash 40,000 
A)  Cash 200 Interest Revenue 200 
B)  Interest Receivable 800 Interest Revenue 800 
C)  Interest Receivable 200 Interest Revenue 200 
D)  Note Receivable 40,000 Cash 40,000

Question 8

When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.

Accepted Answer

A) True 
 B)False

Question 9

Fill in the blanks related to the characteristics of a promissory note:

Accepted Answer

1. maker
2

Question 10

When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account.

Accepted Answer

A) True 
 B)False

Question 11

Interest on a note can be calculated without knowledge of the

Accepted Answer

A)  fair value of the note 
B)  rate of interest 
C)  notes duration 
D)  principal amount 
A)  fair value of the note 
B)  rate of interest 
C)  notes duration 
D)  principal amount

Question 12

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

Accepted Answer

A)  at the end of each accounting period. 
B)  when a credit sale is past due. 
C)  whenever a pre-determined amount of credit sales have been made. 
D)  when an account is determined to be worthless. 
A)  at the end of each accounting period. 
B)  when a credit sale is past due. 
C)  whenever a pre-determined amount of credit sales have been made. 
D)  when an account is determined to be worthless.

Question 13

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Accepted Answer

A)  $8,500 
B)  -$8,500 
C)  $9,000 
D)  Cannot be determined 
A)  $8,500 
B)  -$8,500 
C)  $9,000 
D)  Cannot be determined

Question 14

Other receivables include non trade receivables such as loans to company officers.

Accepted Answer

A) True 
 B)False

Question 15

The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?:

Accepted Answer

A)  debit Allowance for Doubtful Accounts; credit Accounts Receivable 
B)  debit Sales Returns and Allowance, credit Accounts Receivable 
C)  debit Bad Debt Expense; credit Allowance for Doubtful Accounts 
D)  debit Bad Debt Expense; credit Accounts Receivable 
A)  debit Allowance for Doubtful Accounts; credit Accounts Receivable 
B)  debit Sales Returns and Allowance, credit Accounts Receivable 
C)  debit Bad Debt Expense; credit Allowance for Doubtful Accounts 
D)  debit Bad Debt Expense; credit Accounts Receivable

Question 16

If a promissory note is dishonored, the payee should still record interest revenue.

Accepted Answer

A) True 
 B)False

Question 17

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 18

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

Accepted Answer

A)  Uncollectible Accounts Expense 
B)  Allowance for Doubtful Accounts 
C)  Accounts Receivable 
D)  Interest Expense 
A)  Uncollectible Accounts Expense 
B)  Allowance for Doubtful Accounts 
C)  Accounts Receivable 
D)  Interest Expense

Question 19

On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the

Accepted Answer

A)  Uncollectible accounts expense for the year 
B)  total of the accounts receivables written-off during the year 
C)  total estimated uncollectible accounts as of the end of the year 
D)  sum of all accounts that are past due. 
A)  Uncollectible accounts expense for the year 
B)  total of the accounts receivables written-off during the year 
C)  total estimated uncollectible accounts as of the end of the year 
D)  sum of all accounts that are past due.

Question 20

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include:

Accepted Answer

A)  A credit to Bad Debt Expense 
B)  A debit to Bad Debt Expense 
C)  A debit to Allowance for Doubtful Accounts 
D)  A credit to Allowance for Doubtful Accounts 
A)  A credit to Bad Debt Expense 
B)  A debit to Bad Debt Expense 
C)  A debit to Allowance for Doubtful Accounts 
D)  A credit to Allowance for Doubtful Accounts

Exam 8: Receivables

When a company receives an interest-bearing note receivable, it will

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?

When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.

Fill in the blanks related to the characteristics of a promissory note:

When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account.

Interest on a note can be calculated without knowledge of the

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Other receivables include non trade receivables such as loans to company officers.

The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?:

If a promissory note is dishonored, the payee should still record interest revenue.

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include:

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

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