Question 1

Jill Company provides for bad debt expense at the rate of 3% of credit sales. The following data are available for 2016: $\begin{array}{ll}
  \text {Allowance for doubtful accounts, $ 1 / 1 / 16(\mathrm{Cr} $.)   } &\$15,000\
 \text { Accounts written off as uncollectible during 2016 } &9,000\
 \text {  Credit sales in 2016 } &1,000,000
\end{array}$

The Allowance for Doubtful Accounts balance at December 31 2016 should be

Accepted Answer

A)  $45000. 
B)  $24000. 
C)  $30000. 
D)  $36000.

Question 2

An aging of a company's accounts receivable indicates that $4000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $700 debit balance the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $3300. 
B)  debit to Bad Debt Expense for $4000. 
C)  debit to Bad Debt Expense for $4700. 
D)  credit to Allowance for Doubtful Accounts for $700.

Question 3

In order to encourage prompt payment of a trade receivable companies often offer ______________ to customers.

Accepted Answer

The answer of In order to encourage prompt payment of...

Question 4

Other receivables include nontrade receivables such as loans to company officers.

Accepted Answer

A) True 
 B)False

Question 5

What criteria are used to determine how to record a factoring transaction? $\begin{array}{cc}
 &&&&& \text { GAAP } &&&&&&&&&&\text {  IFRS} 
\end{array}$
a. $\begin{array}{cc}\text {risks and rewards, and loss of control}&\text {risks and rewards, and loss of control}\end{array}$
b. $\begin{array}{cc}\text {risks and rewards, and loss of control}&&\text {loss of control}\end{array}$
c. $\begin{array}{cc}\text {loss of control}&&&&&&&&&&&&\text {loss of control}\end{array}$
d. $\begin{array}{cc}\text {loss of control}&&&&&&&&&&&\text {risks and rewards, and loss of control}\end{array}$

Accepted Answer

The answer of What criteria are used to determine how...

Question 6

Prepare the necessary journal entries for the following transactions for Bush Co.
May 25 Bush Co. received a $25000 2-month 6% note from Bolt Company in settlement of an account receivable.
July 25 Bush Co. received payment on the Bolt note.

Accepted Answer

The answer of Prepare the necessary journal entries for the...

Question 7

On January 15 2016 Jaymes Company received a two-month 4% $7000 note from Peter Long for the settlement of his open account. The entry by Jaymes Company on March 15 2016 if Long dishonors the note and collection is expected is: a. 
$\begin{array}{lrr}
  \text {  Accounts Receivable-P. Long.} &7,000\
 \text {  Notes Receivable.} &&7,000\
 \text {  } &
\end{array}$

b. 
$\begin{array}{lrr}
  \text { Accounts Receivable-P. Long. } &7,047\
 \text { Notes Receivable } &&7,000\
 \text {Interest Revenue  } &&47
\end{array}$

c. 
$\begin{array}{lrr}
  \text {  Accounts Receivable-P. Long.} &6,953\
 \text { Interest Lost. } &47\
 \text {Notes Receivable  } &&7,000
\end{array}$

d. 
$\begin{array}{lrr}
  \text {  Bad Debts Expense} &7,047\
 \text {Notes Receivable  } & &7,047\ 
\end{array}$

Accepted Answer

The answer of On January 15 2016 Jaymes Company received...

Question 8

The interest on a $5000 3% 60-day note receivable is

Accepted Answer

A)  $25. 
B)  $100. 
C)  $150. 
D)  $300.

Question 9

The two key parties to a promissory note are the

Accepted Answer

A)  maker and a bank. 
B)  debtor and the payee. 
C)  maker and the payee. 
D)  sender and the receiver.

Question 10

The maturity value of a $60000 8% 60-day note receivable dated July 3 is

Accepted Answer

A)  $60000. 
B)  $60800. 
C)  $64800. 
D)  $69600.

Question 11

Avett Furniture Store has credit sales of $400000 in 2016 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31 2016 $130000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that $7000 will prove to be uncollectible.
On March 4 2017 the credit manager authorizes a write-off of the $1200 balance owed by B. Fernitti.
Instructions
(a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2016.
(b) Show the balance sheet presentation of accounts receivable on December 31 2016.
(c) On March 4 before the write-off assume the balance of Accounts Receivable account is $160000 and the balance of Allowance for Doubtful Accounts is a credit of $3000. Make the appropriate entry to record the write-off of the Ferntti account. Also show the balance sheet presentation of accounts receivable before and after the write-off.

Accepted Answer

The answer of Avett Furniture Store has credit sales of...

Question 12

Receivables might be sold to

Accepted Answer

A)  lengthen the cash-to-cash operating cycle. 
B)  take advantage of deep discounts on the cash realizable value of receivables. 
C)  generate cash quickly. 
D)  finance companies at an amount greater than cash realizable value.

Question 13

Record the following transactions for Kline Company.
1. On April 12 sold $12000 of merchandise to Milton Inc. terms 2/10 n/30.
2. On April 15 Milton returned $2500 of merchandise.
3. On April 22 Milton paid for the merchandise.

Accepted Answer

The answer of Record the following transactions for Kline Company.
1....

Question 14

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Accepted Answer

A) True 
 B)False

Question 15

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Accepted Answer

A) True 
 B)False

Question 16

The three primary accounting problems with accounts receivable are: (1) recognizing (2) depreciating and (3) disposing.

Accepted Answer

A) True 
 B)False

Question 17

At December 31, 2016, Wynne Company reported Accounts Receivable of $45,000 and Allowance for Doubtful Accounts of $3,500. On January 7, 2017, Brown Enterprises declares bankruptcy and it is determined that the receivable of $1,200 from Brown is not collectible. 
1.	What is the cash realizable value of Accounts Receivable at December 31, 2016?
2.	What entry would Wynne make to write off the Brown account?
3.	What is the cash realizable value of Accounts Receivable after the Brown account is written off?

Accepted Answer

The answer of At December 31, 2016, Wynne Company reported...

Question 18

On January 15 2016 Jaymes Company received a two-month 4% $7000 note from Peter Long for the settlement of his open account. The entry by Jaymes Company on January 15 2016 would include a:

Accepted Answer

A)  debit of $7047 to Notes Receivable. 
B)  debit of $7000 to Notes Receivable. 
C)  credit of $7047 to Accounts Receivable. 
D)  credit of $7000 to Notes Receivable.

Question 19

The two methods of accounting for uncollectible accounts are (a) percentage of sales and (b) percentage of receivables.

Accepted Answer

A) True 
 B)False

Question 20

Claims for which formal instruments of credit are issued as proof of the debt are

Accepted Answer

A)  accounts receivable. 
B)  interest receivable. 
C)  notes receivable. 
D)  other receivables.

Exam 9: Accounting for Receivables

An aging of a company's accounts receivable indicates that $4000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $700 debit balance the adjustment to record bad debts for the period will require a

In order to encourage prompt payment of a trade receivable companies often offer ______________ to customers.

Other receivables include nontrade receivables such as loans to company officers.

Prepare the necessary journal entries for the following transactions for Bush Co. May 25 Bush Co. received a $25000 2-month 6% note from Bolt Company in settlement of an account receivable. July 25 Bush Co. received payment on the Bolt note.

The interest on a $5000 3% 60-day note receivable is

The two key parties to a promissory note are the

The maturity value of a $60000 8% 60-day note receivable dated July 3 is

Receivables might be sold to

Record the following transactions for Kline Company. 1. On April 12 sold $12000 of merchandise to Milton Inc. terms 2/10 n/30. 2. On April 15 Milton returned $2500 of merchandise. 3. On April 22 Milton paid for the merchandise.

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

The three primary accounting problems with accounts receivable are: (1) recognizing (2) depreciating and (3) disposing.

On January 15 2016 Jaymes Company received a two-month 4% $7000 note from Peter Long for the settlement of his open account. The entry by Jaymes Company on January 15 2016 would include a:

The two methods of accounting for uncollectible accounts are (a) percentage of sales and (b) percentage of receivables.

Claims for which formal instruments of credit are issued as proof of the debt are