Question 1

The equation for computing interest on an interest-bearing note is as follows: interest equals maturity value times interest rate times time.

Accepted Answer

A) True 
 B)False

Question 2

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit

Accepted Answer

A)  Bad Debt Expense and credit Accounts Receivable 
B)  Bad Debt Expense and credit Allowance for Doubtful Accounts 
C)  Allowance for Doubtful Accounts and credit Accounts Receivable 
D)  Accounts receivable and credit Allowance for Doubtful Accounts 
A)  Bad Debt Expense and credit Accounts Receivable 
B)  Bad Debt Expense and credit Allowance for Doubtful Accounts 
C)  Allowance for Doubtful Accounts and credit Accounts Receivable 
D)  Accounts receivable and credit Allowance for Doubtful Accounts

Question 3

The amount of the promissory note plus the interest earned on the due date is called the

Accepted Answer

A)  interest value 
B)  maturity value 
C)  face value 
D)  issuance value 
A)  interest value 
B)  maturity value 
C)  face value 
D)  issuance value

Question 4

The due date of a 60-day note dated July 10 is September 10.

Accepted Answer

A) True 
 B)False

Question 5

The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 6

At the end of the current year, Accounts Receivable has a balance of $90,000; Allowance for Doubtful Accounts has a credit balance of $850; and net sales for the year total $300,000. Bad debt expense is estimated at 2.5% of net sales.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (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 7

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each.
(a)
   (b)

Accepted Answer

The answer of The following journal entries would be used...

Question 8

Determine the due date and amount of interest due at maturity on the following notes:

Accepted Answer

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

Question 9

Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12th the company receives a $550 check from Chad Thomas in settlement of Thomas' $1,100 outstanding accounts receivable. Due to Thomas' failing health he is closing his company and is expecting to make no further payments to Discount Mart. Journalize this declaration.

Accepted Answer

The answer of Discount Mart utilizes the allowance method of...

Question 10

A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable

Accepted Answer

A)  total current assets are reduced 
B)  total expenses for the period are increased 
C)  net realizable value of accounts receivable increases 
D)  there is no effect on total current assets or total expenses 
A)  total current assets are reduced 
B)  total expenses for the period are increased 
C)  net realizable value of accounts receivable increases 
D)  there is no effect on total current assets or total expenses

Question 11

For a business that uses the allowance method of accounting for uncollectible receivables:

Accepted Answer

The answer of For a business that uses the allowance...

Question 12

An alternative name for Bad Debt Expense is

Accepted Answer

A)  Collection Expense. 
B)  Credit Loss Expense. 
C)  Uncollectible Accounts Expense. 
D)  Deadbeat Expense. 
A)  Collection Expense. 
B)  Credit Loss Expense. 
C)  Uncollectible Accounts Expense. 
D)  Deadbeat Expense.

Question 13

List at least three things that indicate a receivable may be uncollectible.

Accepted Answer

1. The receivable is past due.
2. The cu

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The balance in the Allowance for Doubtful Accounts account at the end of the year includes the total of all accounts written-off since the beginning year.

Accepted Answer

A) True 
 B)False

Question 16

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.

Accepted Answer

A) True 
 B)False

Question 17

At the end of the current year, Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts has a credit balance of $5,500; 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 18

Journalize the following transactions using the allowance 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 and received cash in full payment.

Accepted Answer

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

Question 19

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

Accepted Answer

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

Question 20

When a note is written to settle an open account, no entry is necessary.

Accepted Answer

A) True 
 B)False

Exam 8: Receivables

The equation for computing interest on an interest-bearing note is as follows: interest equals maturity value times interest rate times time.

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit

The amount of the promissory note plus the interest earned on the due date is called the

The due date of a 60-day note dated July 10 is September 10.

The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each. (a) (b)

Determine the due date and amount of interest due at maturity on the following notes:

A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable

For a business that uses the allowance method of accounting for uncollectible receivables:

An alternative name for Bad Debt Expense is

List at least three things that indicate a receivable may be uncollectible.

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

The balance in the Allowance for Doubtful Accounts account at the end of the year includes the total of all accounts written-off since the beginning year.

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

When a note is written to settle an open account, no entry is necessary.

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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