Question 1

Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Accepted Answer

Under the direct write-off method, Bad D

Question 3

Trade receivables occur when two companies trade or exchange notes receivables.

Accepted Answer

A) True 
 B)False

Question 4

For the fiscal years 2009 and 2010, Apple Co. reported the following:
   a. Compute the accounts receivable turnover for 2010.
b. Compute the number of days' sales in receivable at the end of 2010.

Accepted Answer

The answer of For the fiscal years 2009 and 2010,...

Question 5

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Accepted Answer

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

Question 6

Current assets are usually listed in order

Accepted Answer

A)  of the due date 
B)  of the size 
C)  alphabetically 
D)  of liquidity 
A)  of the due date 
B)  of the size 
C)  alphabetically 
D)  of liquidity

Question 7

One of the weaknesses of the direct write-off method is that it

Accepted Answer

A)  understates accounts receivable on the balance sheet 
B)  violates the matching principle 
C)  is too difficult to use for many companies 
D)  is based on estimates 
A)  understates accounts receivable on the balance sheet 
B)  violates the matching principle 
C)  is too difficult to use for many companies 
D)  is based on estimates

Question 8

At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The net credit sales for the period total $500,000. If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.

Accepted Answer

A) True 
 B)False

Question 9

The party promising to pay a note at maturity is the maker.

Accepted Answer

A) True 
 B)False

Question 10

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

A)  will increase net income in the period it is collected. 
B)  will decrease net income in the period it is collected. 
C)  does not affect net income in the period it is collected. 
D)  requires a correcting entry for the period in which the account was written off. 
A)  will increase net income in the period it is collected. 
B)  will decrease net income in the period it is collected. 
C)  does not affect net income in the period it is collected. 
D)  requires a correcting entry for the period in which the account was written off.

Question 11

If the direct write-off 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 Receivable 
B)  Accounts Receivable 
C)  Allowance for Doubtful Accounts 
D)  Bad Debts Expense 
A)  Uncollectible Accounts Receivable 
B)  Accounts Receivable 
C)  Allowance for Doubtful Accounts 
D)  Bad Debts Expense

Question 12

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Accepted Answer

A)  $29,500 
B)  $34,500 
C)  $32,000 
D)  cannot be determined 
A)  $29,500 
B)  $34,500 
C)  $32,000 
D)  cannot be determined

Question 13

When does an account become uncollectible?

Accepted Answer

A)  when accounts receivable is converted into notes receivable 
B)  when discount is availed on notes receivable 
C)  there is no general rule for when an account becomes uncollectible 
D)  at the end of the fiscal year 
A)  when accounts receivable is converted into notes receivable 
B)  when discount is availed on notes receivable 
C)  there is no general rule for when an account becomes uncollectible 
D)  at the end of the fiscal year

Question 14

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000.

Accepted Answer

A) True 
 B)False

Question 15

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

Accepted Answer

A)  debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 
B)  debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 
C)  debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 
D)  debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800 
A)  debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 
B)  debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 
C)  debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 
D)  debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

Question 16

A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

Accepted Answer

A)  $10,000 
B)  $10,150 
C)  $10,900 
D)  $9,100 
A)  $10,000 
B)  $10,150 
C)  $10,900 
D)  $9,100

Question 17

Journalize the following transactions for Solley Company that occurred during 2011 and 2012.
November 14, 2011 Received a $4,800.00, 90-day, 9% note from Alan Hibbetts in payment of his account.
December 31, 2011 Accrued interest on the Hibbetts note.
February 12, 2012 Received the amount due from Hibbetts on his note.

Accepted Answer

The answer of Journalize the following transactions for Solley Company...

Question 18

For each of the following notes receivables held by Rogers Company determine the interest revenue to be reported on the income statements for 2011 and 2012. Round answers to nearest whole dollar.

Accepted Answer

@#IMG-DLM& *15,000 X .07 X 145

Question 19

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables:
Feb 20 Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible.
May 10 Reinstated the account of Andrew Warren and received $4,000 cash in full payment.

Accepted Answer

The answer of Journalize the following transactions using the direct...

Question 20

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

Accepted Answer

A) True 
 B)False

Exam 8: Receivables

Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Trade receivables occur when two companies trade or exchange notes receivables.

For the fiscal years 2009 and 2010, Apple Co. reported the following: a. Compute the accounts receivable turnover for 2010. b. Compute the number of days' sales in receivable at the end of 2010.

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Current assets are usually listed in order

One of the weaknesses of the direct write-off method is that it

The party promising to pay a note at maturity is the maker.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

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

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

When does an account become uncollectible?

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

For each of the following notes receivables held by Rogers Company determine the interest revenue to be reported on the income statements for 2011 and 2012. Round answers to nearest whole dollar.

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

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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