Question 1

A maker who dishonors a note is one who does not pay it at maturity.

Accepted Answer

A) True 
 B)False

Question 2

A credit sale of $3,275 to a customer would result in:

Accepted Answer

A)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
B)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
C)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
E)  A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger. 
A)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
B)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
C)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger. 
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger. 
E)  A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger.

Question 3

Match each of the following terms with the appropriate definitions.

Accepted Answer

The answer of Match each of the following terms with...

Question 4

A company borrowed $10,000 by signing a 180-day promissory note at 11%. The maturity value of the note is:

Accepted Answer

A)  $12,050 
B)  $12,275 
C)  $10,550 
D)  $12,825 
E)  $13,100 
A)  $12,050 
B)  $12,275 
C)  $10,550 
D)  $12,825 
E)  $13,100

Question 5

On December 31 of the current year, a company's unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts, credit balance of $951. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?

Accepted Answer

A)  $951. 
B)  $3,992. 
C)  $4,884. 
D)  $5,835. 
E)  $6,786. 
A)  $951. 
B)  $3,992. 
C)  $4,884. 
D)  $5,835. 
E)  $6,786.

Question 6

A promissory note received from a customer in exchange for an account receivable:

Accepted Answer

A)  Is a cash equivalent for the recipient. 
B)  Is an account receivable for the recipient. 
C)  Is a note receivable for the recipient. 
D)  Is a short-term investment for the recipient. 
E)  Is a note payable for the recipient. 
A)  Is a cash equivalent for the recipient. 
B)  Is an account receivable for the recipient. 
C)  Is a note receivable for the recipient. 
D)  Is a short-term investment for the recipient. 
E)  Is a note payable for the recipient.

Question 7

The quality of receivables refers to:

Accepted Answer

A)  The creditworthiness of sellers. 
B)  The speed of collection. 
C)  The likelihood of collection without loss. 
D)  Sales turnover. 
E)  The interest rate. 
A)  The creditworthiness of sellers. 
B)  The speed of collection. 
C)  The likelihood of collection without loss. 
D)  Sales turnover. 
E)  The interest rate.

Question 8

Credit sales are recorded by crediting an Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 9

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Accepted Answer

A) True 
 B)False

Question 10

Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $4,800, 90-day, 10% note. What entry should TechCom make on January 15 of the next year when the note is paid?

Accepted Answer

A)  Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920. 
B)  Debit Cash $4,920; credit Notes Receivable $4,920. 
C)  Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800. 
D)  Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100; credit Notes Receivable $4,800. 
E)  Debit Cash $4,920; credit Interest Revenue $120; credit Notes Receivable $4,800. 
A)  Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920. 
B)  Debit Cash $4,920; credit Notes Receivable $4,920. 
C)  Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800. 
D)  Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100; credit Notes Receivable $4,800. 
E)  Debit Cash $4,920; credit Interest Revenue $120; credit Notes Receivable $4,800.

Question 11

Cairo Co. uses the allowance method of accounting for uncollectible accounts. Cairo Co. accepted a $5,000, 12%, 90-day note dated May 16, from Alexandria Co. in exchange for its past-due account receivable. Make the necessary general journal entries for Cairo Co. on May 16 and the August 14 maturity date, assuming that the:
a. Note is held until maturity and collected in full at that time.
b. Note is dishonored; the amount of the note and its interest are written off as uncollectible.

Accepted Answer

The answer of Cairo Co. uses the allowance method of...

Question 12

The maturity date of a note refers to the date the note must be repaid.

Accepted Answer

A) True 
 B)False

Question 13

Prepare general journal entries for the following transactions of this company for the current year:

Accepted Answer

The answer of Prepare general journal entries for the following...

Question 14

A company has the following unadjusted account balances at December 31, of the current year; Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance). The company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year-end:
1. Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet.
2. Prepare the adjusting journal entry to record bad debts expense for the current year.

Accepted Answer

The answer of A company has the following unadjusted account...

Question 15

All of the following are regarding credit card expense except:

Accepted Answer

A)  Credit card expense may be classified as a "discount" deducted from sales to get net sales. 
B)  Credit card expense may be classified as a selling expense. 
C)  Credit card expense may be classified as an administrative expense. 
D)  Credit card expense is not recorded by the seller. 
E)  Credit card expense is a fee the seller pays for services provided by the card company. 
A)  Credit card expense may be classified as a "discount" deducted from sales to get net sales. 
B)  Credit card expense may be classified as a selling expense. 
C)  Credit card expense may be classified as an administrative expense. 
D)  Credit card expense is not recorded by the seller. 
E)  Credit card expense is a fee the seller pays for services provided by the card company.

Question 16

The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Accepted Answer

The answer of The ________________ method of accounting for bad...

Question 17

A company borrowed $6,000 by signing a 4-month promissory note at 12%. The total interest on the note is $720.

Accepted Answer

A) True 
 B)False

Question 18

At December 31 of the current year, a company reported the following:
Total sales for the current year: $780,000 includes $160,000 in cash sales
Accounts receivable balance at Dec. 31, end of current year: $190,000
Allowance for Doubtful Accounts balance at January 1, beginning of current year: $8,300
Bad debts written off during the current year: $6,800.
Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal 5% of accounts receivable.

Accepted Answer

The answer of At December 31 of the current year,...

Question 19

Companies use two methods to account for uncollectible accounts, the direct write-off method and the allowance method.

Accepted Answer

A) True 
 B)False

Question 20

A company borrowed $1,000 by signing a six month promissory note at 5% interest. The total amount of interest is $25.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Receivables

A maker who dishonors a note is one who does not pay it at maturity.

A credit sale of $3,275 to a customer would result in:

Match each of the following terms with the appropriate definitions.

A company borrowed $10,000 by signing a 180-day promissory note at 11%. The maturity value of the note is:

A promissory note received from a customer in exchange for an account receivable:

The quality of receivables refers to:

Credit sales are recorded by crediting an Accounts Receivable.

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $4,800, 90-day, 10% note. What entry should TechCom make on January 15 of the next year when the note is paid?

The maturity date of a note refers to the date the note must be repaid.

Prepare general journal entries for the following transactions of this company for the current year:

All of the following are regarding credit card expense except:

The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

A company borrowed $6,000 by signing a 4-month promissory note at 12%. The total interest on the note is $720.

Companies use two methods to account for uncollectible accounts, the direct write-off method and the allowance method.

A company borrowed $1,000 by signing a six month promissory note at 5% interest. The total amount of interest is $25.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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