Question 1

The amount received on June 24 is $686. Because payment is made within the discount period of 10 days, the amount received is $700 ($1,000 - return of $300) minus the discount of $14 ($700 Ã 2%), for a cash amount of $686.

Accepted Answer

On June 15, Kersee Company sold merchandise on account to Eng Co. for $1,000, terms 2/10, n/30. On June 20, Eng Co. returns merchandise worth $300 to Kersee Company. On June 24, payment is received from Eng Co. for the balance due. What is the amount of cash received on June 24?

Question 2

Interest receivable

Accepted Answer

Which of the following should be classified as an \"other\" receivable?

Question 3

Trade receivables

Accepted Answer

What type of receivables result from sales transactions?

Question 4

When service is provided on account

Accepted Answer

When is a receivable recorded by a service organization?

Question 5

False

Accepted Answer

Receivables are reported on the balance sheet at the cash amount owed by customers. (true or False)

Question 6

Because the estimate is based on a percentage of receivables, the $800 balance in the Allowance accounts must be considered. The amount by which the allowance account will be increased is 7.5% times $160,000, which is $12,000. Since there is already a balance of $5,000 in the allowance account, the difference of $7,000 should be added, giving a balance of $12,000.

Accepted Answer

Net credit sales for the month are $4,000,000 for Marx Clothiers. Its accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage of receivables basis. The Allowance for Doubtful Accounts has a credit balance of $5,000 before adjustment. How much is the balance of the allowance account after adjustment?

Question 7

Allowance for Doubtful Accounts 100   Accounts Receivable 100

Accepted Answer

Obama Company has identified that Bill Clinton\'s receivable account of $100 is uncollectible. What is the journal entry needed to write off the account under the allowance method?

Question 8

Accounts Receivable and Allowance for Doubtful Accounts

Accepted Answer

When an uncollectible account is recovered after it has been written off, which of the following accounts will be credited in the process?

Question 9

Bad Debts Expense 3,200   Allowance for Doubtful Accounts 3,200

Accepted Answer

RyTronics uses the percentage of receivables method for estimating bad debts expense. The Accounts Receivable balance is $100,000 at year-end and the total credit sales were $800,000. Management estimates that 4% of receivables will be uncollectible. What adjusting entry will be recorded if the Allowance for Doubtful Accounts has a credit balance of $800 before adjustment?

Question 10

Allowance for Doubtful Accounts is debited.

Accepted Answer

Which of the following is one effect of recording thewrite off of an account under the allowance method?

Question 11

True

Accepted Answer

The direct write-off method violates the matching principle (True or False)

Question 12

False

Accepted Answer

Allowance for Doubtful Accounts is written off at the end of the fiscal year.(True or False)

Question 13

true

Accepted Answer

Under the allowance method, the write off of an account receivable leaves the net realizable value of the receivables unchanged.(True or False)

Question 14

Realizing notes receivable

Accepted Answer

Which one of the following is not one of the three basic issues in accounting for notes receivable?  -Realizing notes receivable -Recognizing notes receivable -Disposing of notes receivable -Valuing notes receivable

Question 15

Face Value

Accepted Answer

At what amount is a short-term notes receivable recorded on the issue date?

Question 16

Notes Receivable 4,000   Accounts Receivable 4,000

Accepted Answer

Michael Co. accepts a $4,000, 3-month, 12% promissory note in settlement of an account with Tani Co. The entry to record this transaction is:

Question 17

A promissory note is not a negotiable instrument

Accepted Answer

Which one of these statements about promissory notes is incorrect?  -A promissory note is more liquid than an account receivable. -A promissory note is more liquid than an account receivable. -The party making the promise to pay is called the maker. -A promissory note is not a negotiable instrument. -The party to whom payment is to be made is called the payee.

Question 18

December 14

Accepted Answer

A 90-day promissory note is issued on September 15. What is the note\'s maturity date?

Question 19

735,000

Accepted Answer

An analysis and aging of the accounts receivable of Raja Company at December 31 reveal these data: Accounts receivable $800,000 Allowance for doubtful accounts per books before adjustment (credit) 12,000 Amounts expected to become uncollectible 65,000  How much is the cash realizable value of the accounts receivable at December 31, after adjustment?

Question 20

Bad Debts Expense 1,600   Allowance for Doubtful Accounts 1,600

Accepted Answer

Ryan Leaf Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $60,000 at year-end and the total credit sales were $2,300,000 for the year. Management estimates that 3% of receivables will be uncollectible. What adjusting entry should be made if the Allowance for Doubtful Accounts has a credit balance of $200 before adjustment?

Question 21

Bad Debts Expense 800   Allowance for Doubtful Accounts 800

Accepted Answer

If a company uses the allowance method for uncollectible accounts, then the entry to record $800 of estimated uncollectibles is

Question 22

After the write-offs are recorded, Allowance for Doubtful Accounts will have a debit balance of $12,000 ($18,000 credit beginning balance combined with a $30,000 debit for the write-offs). The desired balance, using the percentage of receivables basis, is a credit balance of $20,000 ($200,000 Ã 10%). In order to have an ending balance of $20,000, a credit entry of $32,000 must be made to Allowance for Doubtful Accounts. Thus, the amount of the adjusting entry must be $32,000.

Accepted Answer

During 2012, Patterson Wholesale Company had net credit sales of $750,000. On January 1, 2012, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2012, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2012?

Question 23

Accounts Receivable

Accepted Answer

Which of the following is the debit effect of the journal entry to record the dishonor of a note receivable?  -Allowance for Doubtful Accounts -Loss on Notes Receivable -Bad Debts Expense -Accounts Receivable

Question 24

Two credits and one debit

Accepted Answer

When a note receivable is paid on time and no interest has been previously accrued, what will the journal entry to record the transaction contain?   a. Two debits and one credit b. Two credits and one debit c. One debit and one credit d. None of the above

Question 25

Cash 10,300   Notes Receivable 10,000  Interest Revenue 300

Accepted Answer

Schleis Co. holds Murphy Inc.\'s $10,000, 120-day, 9% note. What is the entry to be made by Schleis Co. when the note is collected, assuming no interest has previously been accrued?

Question 26

Debit to Accounts Receivable for $21,700

Accepted Answer

A company holds a 120-day, 10%, $21,000 note which was not paid in full on the maturity date. Which of the following will the journal entry on the maturity date include?

Question 27

Allowance for Doubtful Accounts is shown as a deduction from Accounts Receivable on the balance sheet

Accepted Answer

Which statement is true about reporting receivables on the balance sheet?  -Bad Debts Expense is is shown as a deduction from Accounts Receivable on the balance sheet. -Allowance for Doubtful Accounts is shown as a deduction from Accounts Receivable on the balance sheet. -Bad Debts Expense and Allowance for Doubtful Accounts are shown as a deduction from Accounts Receivable on the balance sheet. - Bad Debts Expense is subtracted from Accounts Receivable and is then shown as a deduction from Accounts Receivable on the balance sheet.

Question 28

Accounts Receivable $642,000  Less: Allowance for Doutful Accounts  (2,000) $640,000

Accepted Answer

Which one of the following is the correct presentation of Accounts Receivable and its contra account on the balance sheet?   Accounts Receivable $642,000  Less: Bad Debt Expense (17,000) $625,000  Accounts Receivable $642,000  Less: Bad Debt Expense (17,000)  Less: Allowance for Doubtful Accounts  (2,000) $623,000  Accounts Receivable $642,000  Less: Allowance for Doutful Accounts  2,000 $644,000  Accounts Receivable $642,000  Less: Allowance for Doutful Accounts  (2,000) $640,000

Question 29

Determining who gets credit and who doesn\'t

Accepted Answer

What is often the most critical part of managing receivables?

Question 30

A concentration of credit Risk

Accepted Answer

Which of the following is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of a company?   -Payment risk -Credit risk -A concentration of credit risk -Concentration risk

Question 31

etermining which vendor from which credit should be requested

Accepted Answer

Which one of the following is not one of the principles of managing accounts receivable?  -Determining which vendor from which credit should be requested -Monitoring collections -Establishing a payment period -Accelerating cash receipts from receivables when necessary

Question 32

$800,000/[($100,000 + $150,000)/2] = 6.4.

Accepted Answer

Eddy Corporation had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in receivables at the beginning of the year was $100,000 and at the end of the year was $150,000. How much is the receivables turnover ratio?

Question 33

365/7 = 52 days

Accepted Answer

Prall Corporation sells its goods on terms of 2/10, n/30. It has a receivables turnover ratio of 7.00. What is its average collection period (days)?

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