Question 1

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 2

When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account.

Accepted Answer

A) True 
 B)False

Question 3

Journalize the following transactions (Assume a 360-day year when calculating interest.):

Accepted Answer

The answer of Journalize the following transactions (Assume a 360-day...

Question 4

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A)  is the normal balance for that account. 
B)  indicates that actual bad debt write-offs have been less than what was estimated. 
C)  cannot occur if the percentage of receivables method of estimating bad debts is used. 
D)  indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.

Question 5

Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.

Accepted Answer

A) True 
 B)False

Question 6

Interest on a note can be calculated without knowledge of the

Accepted Answer

A)  note's maturity date 
B)  rate of interest 
C)  notes duration 
D)  principal amount

Question 7

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?

Accepted Answer

A)  Bad Debt Expense 500 Allowance for Doubtful Accounts 500 
B)  Bad Debt Expense 500 Accounts Receivable - Bob Smith 500 
C)  Cash 300 Allowance for Doubtful Accounts 200
Accounts Receivable - Bob Smith 500 
D)  Cash 500 Accounts Receivable - Bob Smith 500

Question 8

On October 1, Black Company receives a 6% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

Accepted Answer

A)  $0 
B)  $300 
C)  $600 
D)  $1,200

Question 9

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

Question 10

For each of the following scenarios, indicate the Bad Debt Expense to be recorded in 2011, the balance in the Allowance for Doubtful Accounts Account at December 31, 2011, and the net realizable value of the Accounts Receivable at December 31, 2011:

Accepted Answer

The answer of For each of the following scenarios, indicate...

Question 11

A 60-day, 10% note for $9,000, dated April 15, is received from a customer on account. The face value of the note is

Accepted Answer

A)  $9,850 
B)  $7,200 
C)  $9,900 
D)  $9,000

Question 12

If the direct write-off 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

Question 13

On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the

Accepted Answer

A)  Uncollectible accounts expense for the year 
B)  total of the accounts receivables written-off during the year 
C)  total estimated uncollectible accounts as of the end of the year 
D)  sum of all accounts that are past due.

Question 14

The due date of a 60-day note dated July 10 is September 10.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  realizable value 
B)  maturity value 
C)  face value 
D)  net realizable value

Question 16

Allowance for Doubtful Accounts has a credit balance of $1,400 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $17,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?

Accepted Answer

A)  debit allowance for doubtful Accounts, $16,500; credit Bad Debt Expense, $16,500 
B)  debit Allowance for Doubtful Accounts $19,300; credit Bad Debt Expense, $19,300 
C)  debit Bad Debt Expense, $19,300; credit Allowance for Doubtful Accounts, $19,300 
D)  debit Bad Debt Expense, $16,500; credit allowance for Doubtful Accounts, $16,500

Question 17

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

Accepted Answer

A)  Notes Receivable 6,000 Accounts Receivable-Dame Company 6,000 
B)  Notes Receivable 6,090 Accounts Receivable-Dame Company 6,090 
C)  Notes Receivable 6,090 Accounts Receivable-Dame Company 6,000
Interest Revenue 90 
D)  Notes Receivable 6,000 Interest Revenue 90
Accounts Receivable-Dame Company 6,000
Interest Receivable 90

Question 18

Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12th the company receives a $550 check from Chad Thomas in settlement of Thomas' $1,100 outstanding accounts receivable. Due to Thomas' failing health he is closing his company and is expecting to make no further payments to Discount Mart. Journalize this declaration.

Accepted Answer

The answer of Discount Mart utilizes the allowance method of...

Question 19

An alternative name for Bad Debts Expense is

Accepted Answer

A)  Collection Expense. 
B)  Credit Loss Expense. 
C)  Uncollectible Accounts Expense. 
D)  Deadbeat Expense.

Question 20

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

Accepted Answer

A)  equity, credit 
B)  contra-asset, debit 
C)  equity, debit 
D)  contra-asset, credit

Exam 8: Receivables

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account.

Journalize the following transactions (Assume a 360-day year when calculating interest.):

A debit balance in the Allowance for Doubtful Accounts

Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.

Interest on a note can be calculated without knowledge of the

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?

On October 1, Black Company receives a 6% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

The number of days' sales in receivables

For each of the following scenarios, indicate the Bad Debt Expense to be recorded in 2011, the balance in the Allowance for Doubtful Accounts Account at December 31, 2011, and the net realizable value of the Accounts Receivable at December 31, 2011:

A 60-day, 10% note for $9,000, dated April 15, is received from a customer on account. The face value of the note is

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the

The due date of a 60-day note dated July 10 is September 10.

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

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

An alternative name for Bad Debts Expense is

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