Exam 7: Receivables and Investments

On January 1,2014,the Accounts Receivable and the Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550 respectively.During the year,the company reported $70,000 of credit sales.There were $400 of receivables written off as uncollectible in 2014.Cash collections of receivables amounted to $74,700.The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance. The amount of bad debts expense recognized in the 2014 income statement will be:

Sliders Company Sliders Company sells its merchandise only on credit.The following data is available at December 31,2014: Refer to the data for Sliders Company. The firm estimates that bad debts could be 1% of their net sales.

The party that receives the payment due from a note is called the ____________________.

Hedron Corp.invested cash in a 6-month certificate of deposit (CD)on November 1,2014.If Hedron Corp.has an accounting period that ends on December 31,2014,when should Hedron recognize interest revenue from the CD?

Idaho.com accepts VISA for payments of purchases made by students.The credit card drafts are deposited directly in a bank account.VISA charges a 2% collection fee.Credit card drafts totaling $12,000 are deposited during September.The effect on the accounting equation to record the sales and deposits will include

Corrigan Corp.purchased 1,000 shares of Microsoft common stock.What will determine whether the shares are classified as current assets or noncurrent assets?

Slammer Sports The following information is for Slammer Sports at the end of 2014: Refer to the data for Slammer Sports. If bad debts are estimated at 1% of net sales,how much will Slammer Sports report as bad debts expense for 2014?

Americana Corporation The data below is for Americana Corporation for 2014. Refer to the data for Americana Corporation. If the aging approach is used to estimate bad debts,what amount should be recorded as bad debt expense for 2014?

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

A(n)_________________________ is a written promise to repay a definite sum of money either upon demand,or at a fixed or determinable date in the future.

Under the allowance method of accounting for bad debts,the company estimates the amount of bad debts before those debts actually occur.

Both stock and bond investments have maturity dates.

Utah Co.sold merchandise to Big Sky Corp.on December 1,2014,for $9,000,and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31. What is the actual maturity date of the note?

The total amount of interest calculated annually on a $7,000 promissory note payable for 3 years at 12% that is not compounded is

Selling on credit protects a company from the risk that some of its receivables will never be collected.

Utah Co.sold merchandise to Big Sky Corp.on December 1,2014,for $9,000,and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31. What amount should Utah recognize as interest revenue on the maturity date of the note?

Hui Corporation The data below is for Hui Corporation for 2014. Refer to the data for Hui Corporation. If the aging approach is used to estimate bad debts,what amount should be recorded as bad debt expense for 2014?

Earl's Company reported its accounts receivable turnover ratio at 10 times.Its credit terms are 2/10,n/20.What does this ratio tell you about Earl's Company?

If a company uses the allowance method of accounting for bad debts,which one of the following statements is true?

Cash flows from purchases,sales,and maturities of investments are usually classified as _________________ activities.