Question 1

During August,Quality Auto Parts had credit sales of $88,500,of which $20,000 were sales to companies in foreign countries.Average net receivables were $2,950.Calculate the accounts receivable turnover.

Accepted Answer

The answer of During August,Quality Auto Parts had credit sales...

Question 2

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.What is the amount of interest that will be paid at the end of the four-month period?

Accepted Answer

A) $300 
B) $100 
C) $600 
D) $5,000

Question 3

Timmy's Tires sold $18,750 worth of tires to customers using VISA.The credit card fee is 4% of sales.The amount of sales Timmy's Tires should recognize is ________.

Accepted Answer

A) $750 
B) $19,500 
C) $18,750 
D) $18,000

Question 4

A positive balance in the allowance for uncollectible accounts before an adjusting entry for bad debts expense is recorded means management understated its bad debts expense in the prior period.

Accepted Answer

A) True 
 B)False

Question 5

What is the effect of the adjusting entry for bad debts expense on the Statement of changes in shareholders' equity?

Accepted Answer

A) a decrease in Total shareholders' equity 
B) an increase in Retained earnings 
C) a decrease in Contributed capital 
D) an increase in Net income

Question 6

Brooke's Bikes sold $11,235 worth of mountain bikes to customers using bank credit cards during October.The banks charge a credit card fee of 4% of sales.The amount of sales Brooke's Bikes should recognize for October is _________.

Accepted Answer

A) $449.40 
B) $10,785.60 
C) $11,235 
D) $11,684.40

Question 7

Which of the following statements is FALSE about the allowance method for uncollectible accounts?

Accepted Answer

A) Bad debt expense is estimated and matched with sales. 
B) Expense is recorded during end of the period adjustments. 
C) This method is not acceptable under GAAP. 
D) The method is acceptable under GAAP.

Question 8

Y Company has the following accounting balances at the end of the year before adjustments:  The company estimates that 20% of accounts receivable will be uncollectible.After the correct adjusting entry has been made,which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?

Accepted Answer

A) Bad debts expense will be $4,000 on the income statement and Allowance for uncollectible accounts will be $(5,000)on the balance sheet. 
B) Bad debts expense will be $4,000 on the income statement and Allowance for uncollectible accounts will be $(4,000)on the balance sheet. 
C) Bad debts expense will be $5,000 on the balance sheet and Allowance for uncollectible accounts will be $(5,000)on the income statement. 
D) Bad debts expense will be $5,000 on the income statement and Allowance for uncollectible accounts will be $(5,000)on the balance sheet.

Question 9

"NSF" checks are checks that have been deposited in the bank,but "bounced".

Accepted Answer

A) True 
 B)False

Question 10

On June 30,the accountant for Team Shirts was reviewing items related to accounts receivable.The following information was gathered for June:
a.The April 1 balance in the Allowance for uncollectible accounts was $(1,200).
b.$300 owed by the Power Pugs had been written off in June.
c.Credit sales for June were $7,000.The accountant for Team Shirts estimated that 3% of the sales would eventually be uncollectible.
1.What is the amount of bad debts expense for June? On which financial statement is it found?
2.What will be the amount in the Allowance for uncollectible accounts at June 30? On which financial statement is it found?

Accepted Answer

The answer of On June 30,the accountant for Team Shirts...

Question 11

The amount of interest revenue recorded during a single month on a 6%,3-month note receivable will be the same as the interest revenue on a 6%,6-month note receivable.

Accepted Answer

A) True 
 B)False

Question 12

Match between columns
                        Premises: An account that is subtracted from a related asset account
A contra account to accounts receivable,which shows the amount of money considered to be uncollectible from customers
Credit sales made to customers who pay for the sale with a credit card issued by a bank or financial institution
The amount of accounts receivable a company actually expects to collect in cash

Accepted Answer

The Answer of Credit card sales and Allowance for uncollectible is...

Question 13

The adjusting entry to record bad debts expense using the allowance method usually decreases net income.

Accepted Answer

A) True 
 B)False

Question 14

The write-off of a specific customer's account receivable will cause the current ratio to decrease.

Accepted Answer

A) True 
 B)False

Question 15

The March bank statement for Jem's Jewelers showed an NSF check for $125.On the bank reconciliation,the amount of the check should be ________.

Accepted Answer

A) added to the balance per books 
B) deducted from the balance per books 
C) added to the balance per bank statement 
D) deducted from the balance per bank statement

Question 16

The adjusting entry to record bad debts expense using the allowance method usually decreases total assets.

Accepted Answer

A) True 
 B)False

Question 17

Bad debts expense decreases net income.

Accepted Answer

A) True 
 B)False

Question 18

X Company has the following accounting balances at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?

Accepted Answer

A) Bad debts expense will be $2,000 on the income statement and Allowance for uncollectible accounts will be $(3,000)on the balance sheet. 
B) Bad debts expense will be $3,000 on the income statement and Allowance for uncollectible accounts will be $(2,000)on the balance sheet. 
C) Bad debts expense will be $3,000 on the balance sheet and Allowance for uncollectible accounts will be $(3,000)on the income statement. 
D) Bad debts expense will be $1,000 on the income statement and Allowance for uncollectible accounts will be $(2,000)on the balance sheet.

Question 19

South Sea's sales were $60,000 for 2011 and $45,000 for 2012.Average net receivables were $4,000 for both 2011 and 2012.The receivables turnover for 2011 was ________.

Accepted Answer

A) 15 times 
B) 24.3 days 
C) 11.25 times 
D) 32.4 days

Question 20

Accounts receivable are interest-bearing,while notes receivable are not.

Accepted Answer

A) True 
 B)False

Exam 4: Payment for Goods and Services: Cash and Accounts Receivable

During August,Quality Auto Parts had credit sales of $88,500,of which $20,000 were sales to companies in foreign countries.Average net receivables were $2,950.Calculate the accounts receivable turnover.

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.What is the amount of interest that will be paid at the end of the four-month period?

Timmy's Tires sold $18,750 worth of tires to customers using VISA.The credit card fee is 4% of sales.The amount of sales Timmy's Tires should recognize is ________.

A positive balance in the allowance for uncollectible accounts before an adjusting entry for bad debts expense is recorded means management understated its bad debts expense in the prior period.

What is the effect of the adjusting entry for bad debts expense on the Statement of changes in shareholders' equity?

Brooke's Bikes sold $11,235 worth of mountain bikes to customers using bank credit cards during October.The banks charge a credit card fee of 4% of sales.The amount of sales Brooke's Bikes should recognize for October is _________.

Which of the following statements is FALSE about the allowance method for uncollectible accounts?

"NSF" checks are checks that have been deposited in the bank,but "bounced".

The amount of interest revenue recorded during a single month on a 6%,3-month note receivable will be the same as the interest revenue on a 6%,6-month note receivable.

Match each of the following terms with its definition.Each term is used only once.

The adjusting entry to record bad debts expense using the allowance method usually decreases net income.

The write-off of a specific customer's account receivable will cause the current ratio to decrease.

The March bank statement for Jem's Jewelers showed an NSF check for $125.On the bank reconciliation,the amount of the check should be ________.

The adjusting entry to record bad debts expense using the allowance method usually decreases total assets.

Bad debts expense decreases net income.

South Sea's sales were $60,000 for 2011 and $45,000 for 2012.Average net receivables were $4,000 for both 2011 and 2012.The receivables turnover for 2011 was ________.

Accounts receivable are interest-bearing,while notes receivable are not.