Question 1

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

Accepted Answer

@#IMG-DLM&_TB2013_00 @#IMG-DLM&_TB2013_0

Question 2

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 3

When referring to a note receivable or promissory note

Accepted Answer

A)  the maker is the party to whom the money is due. 
B)  the note is not considered a formal credit instrument. 
C)  the note cannot be factored to another party. 
D)  the note may be used to settle an accounts receivable. 
A)  the maker is the party to whom the money is due. 
B)  the note is not considered a formal credit instrument. 
C)  the note cannot be factored to another party. 
D)  the note may be used to settle an accounts receivable.

Question 4

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 5

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 6

Generally accepted accounting principles do normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 7

The following are the current assets from Hanes Co. as of December 31, 2014:
   Prepare the current asset section of the balance sheet.

Accepted Answer

Hanes Co.
Balance Sh

Question 8

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 9

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

Accepted Answer

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

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

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

Question 13

Given the following information, compute Accounts Receivable Turnover:

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

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 20

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.

Exam 9: Receivables

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

When referring to a note receivable or promissory note

The number of days' sales in receivables

Generally accepted accounting principles do normally allow the use of the direct write-off method of accounting for uncollectible accounts.

The following are the current assets from Hanes Co. as of December 31, 2014: Prepare the current asset section of the balance sheet.

When does an account become uncollectible?

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

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.

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?

Given the following information, compute Accounts Receivable Turnover:

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

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

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

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

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

Current assets are usually listed in order

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

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

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

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Filters

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