Question 1

The number of days' sales in receivables

Accepted Answer

A)  is an estimate of the length of time the receivables have been outstanding 
B)  measures the number of times the receivables turn over each year 
C)  is Net Credit Sales divided by Average Receivables 
D)  is not meaningful and therefore is not used 
A)  is an estimate of the length of time the receivables have been outstanding 
B)  measures the number of times the receivables turn over each year 
C)  is Net Credit Sales divided by Average Receivables 
D)  is not meaningful and therefore is not used

Question 2

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

Accepted Answer

A)  Notes Receivable 6,000 Accounts Receivable-Dame Company 6,000 
B)  Notes Receivable 6,090 Accounts Receivable-Dame Company 6,090 
C)  Notes Receivable 6,090 Accounts Receivable-Dame Company 6,000
Interest Revenue 90 
D)  Notes Receivable 6,000 Interest Revenue 90
Accounts Receivable-Dame Company 6,000
Interest Receivable 90 
A)  Notes Receivable 6,000 Accounts Receivable-Dame Company 6,000 
B)  Notes Receivable 6,090 Accounts Receivable-Dame Company 6,090 
C)  Notes Receivable 6,090 Accounts Receivable-Dame Company 6,000
Interest Revenue 90 
D)  Notes Receivable 6,000 Interest Revenue 90
Accounts Receivable-Dame Company 6,000
Interest Receivable 90

Question 3

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.
April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs for and received cash in full payment.

Accepted Answer

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

Question 4

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.

Accepted Answer

A) True 
 B)False

Question 5

The balance in Allowance for Doubtful Accounts will directly impact the end of period adjustment for the bad debt expense when using which of the following methods?

Accepted Answer

A)  Allowance method 
B)  Direct write-off method 
C)  Accrual method 
D)  declining value method 
A)  Allowance method 
B)  Direct write-off method 
C)  Accrual method 
D)  declining value method

Question 6

The direct write-off method of accounting for uncollectible accounts

Accepted Answer

A)  emphasizes balance sheet relationships. 
B)  is often used by small companies and companies with few receivables. 
C)  emphasizes cash realizable value. 
D)  emphasizes the matching of expenses with revenues. 
A)  emphasizes balance sheet relationships. 
B)  is often used by small companies and companies with few receivables. 
C)  emphasizes cash realizable value. 
D)  emphasizes the matching of expenses with revenues.

Question 7

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 8

On June 30th (the end of the period) Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.
Jun 30th Bad Debt Expense 27,750
Allowance for Doubtful Accounts 27,750

Accepted Answer

$30,025 -

Question 9

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

Given the following information, compute Accounts Receivable Turnover: $\begin{array}{|ll|ll|}
\hline \text { Gross Sales: } & \$ 150,000 & \text { Accounts Receivable, Beginning of Year: } &\$ 18,000 \
\hline \text { Net Sales: } & \$ 135,000 & \text { Accounts Receivable, End of Year: }& \$ 22,000 \
\hline
\end{array}$

Accepted Answer

A)  6.75 
B)  7.5 
C)  6.13 
D)  6.82 
A)  6.75 
B)  7.5 
C)  6.13 
D)  6.82

Question 12

On October 1, Black Company receives a 9% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

Accepted Answer

A)  $0 
B)  $450 
C)  $900 
D)  $1,800 
A)  $0 
B)  $450 
C)  $900 
D)  $1,800

Question 13

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

Accepted Answer

A) True 
 B)False

Question 14

At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a debit balance of $6,200; and net sales for the year total $3,500,000. Bad debt expense is estimated at 1/2 of 1% of net sales.
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 15

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Accepted Answer

A)  a customer's account becomes past due. 
B)  an account becomes bad and is written off. 
C)  a sale is made. 
D)  management estimates the amount of uncollectibles. 
A)  a customer's account becomes past due. 
B)  an account becomes bad and is written off. 
C)  a sale is made. 
D)  management estimates the amount of uncollectibles.

Question 16

Determine the due date and the amount of interest due at maturity on the following notes:
 $\begin{array} { | l | l | l | l | l | } 
\hline & \text { Date of Note } & \text { Face Amount } & \text { Interest Rate } & \text { Term of Note } \
\hline ( 1 ) & \text { October 1 } & \$ 21,000 & 8 \% & 60 \text { days } \
\hline ( 2 ) & \text { August 30 } & 9,000 & 10 & 120 \text { days } \
\hline ( 3 ) & \text { May 30 } & 12,000 & 12 & 90 \text { days } \
\hline ( 4 ) & \text { March 6 } & 15,000 & 9 & 60 \text { days } \
\hline ( 5 ) & \text { May 23 } & 9,000 & 10 & 60 \text { days } \
\hline
\end{array}$

Accepted Answer

The answer of Determine the due date and the amount...

Question 17

When using the allowance method to estimate uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

Accepted Answer

A)  $110 
B)  $640 
C)  $530 
D)  $750 
A)  $110 
B)  $640 
C)  $530 
D)  $750

Question 18

Allowance for Doubtful Accounts is a liability account.

Accepted Answer

A) True 
 B)False

Question 19

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Accepted Answer

A)  credit to Notes Receivable for $20,300 
B)  debit to Interest Receivable for $300 
C)  credit to Interest Revenue for $300 
D)  debit to Notes Receivable for $20,000 
A)  credit to Notes Receivable for $20,300 
B)  debit to Interest Receivable for $300 
C)  credit to Interest Revenue for $300 
D)  debit to Notes Receivable for $20,000

Question 20

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

Accepted Answer

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

Exam 8: Receivables

The number of days' sales in receivables

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.

The balance in Allowance for Doubtful Accounts will directly impact the end of period adjustment for the bad debt expense when using which of the following methods?

The direct write-off method of accounting for uncollectible accounts

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

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

Given the following information, compute Accounts Receivable Turnover: Gross Sales: \ 150,000 Accounts Receivable, Beginning of Year: \ 18,000 Net Sales: \ 135,000 Accounts Receivable, End of Year: \ 22,000

On October 1, Black Company receives a 9% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Determine the due date and the amount of interest due at maturity on the following notes: Date of Note Face Amount Interest Rate Term of Note (1) October 1 \ 21,000 8\% 60 days (2) August 30 9,000 10 120 days (3) May 30 12,000 12 90 days (4) March 6 15,000 9 60 days (5) May 23 9,000 10 60 days

Allowance for Doubtful Accounts is a liability account.

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

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

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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