Accounting Chapter 8 Quiz – Flashcards

Accounts receivable are also known as trade receivables.

Dividends​ receivable, interest​ receivable, and taxes receivable are generally categorized as other receivables

Under the direct writeminus−off ​method, the entry to write off an uncollectible account will include​ ________.

Which of the following is true of the balance sheet presentation of the Allowance for Bad​ Debts?

The entity that signs the promissory note and promises to pay the required amount is the​ ________.

The higher the acidminus−test ​ratio, the less able the business is to pay its current liabilities.

Sales through credit cards or debit cards transfer the risk of collection of receivables from the seller to the card issuer.

Bad debt expense is not debited when a company writes off an account receivable when using the allowance method because the company has already recorded the Bad Debt Expense as an adjusting entry.

In order to keep accurate records about the collection of cash for a previously written off​ account, collection of cash for a previously written off​ account, a business should reminus−establish the Accounts Receivable by crediting the receivable account.

In order to keep accurate records about the collection of cash for a previously written off​ account, collection of cash for a previously written off​ account, a business should reminus−establish the Accounts Receivable by debiting the receivable account.

Customer A. Smith owed Stonebridge Electronics​ $225. On April​ 27, 2016, Stonebridge determined this account receivable to be uncollectible and wrote off the account. The company uses the direct writeminus−off method. On July​ 15, 2016, Stonebridge received a check for​ $225 from the customer. How should the July​ 15, 2016 transaction be​ recorded?

Bad debt expense is not debited when a company writes off an account receivable when using the allowance method because the company has already recorded the Bad Debt Expense as an adjusting entry.

When using the allowance​ method, the writeminus−off of a receivable​ ________.

When using the allowance​ method, after a company has previously written off an​ account, ________.

The percentminus−ofminus−sales method calculates bad debts expense based on a percentage of net cash sales.

The percentminus−ofminus−sales ​method, used to compute bad debt​ expense, is also known as the balance sheet approach.

The agingminus−ofminus−receivables method is a balance sheet approach of estimating uncollectible accounts.

The following information is from the records of Pangolin Camera​ Shop: Accounts​ Receivable, December​ 31, 2017 $ 21 comma 000$21,000​ (debit) Allowance for Bad​ Debts, December​ 31, 2017 prior to adjustment 700700​ (debit) Net credit sales for 2017 90 comma 00090,000 Accounts written off as uncollectible during 2017 500500 Bad debts expense is estimated by the agingminus−ofminus−accountsminus−receivables method. Management estimates that $ 3 comma 050$3,050 of accounts receivable will be uncollectible. Calculate the amount of net accounts receivable after the adjustment for bad debts.

The Allowance for Bad Debts account has a credit balance of $ 2 comma 000$2,000 before the adjusting entry for bad debts expense. The​ company's management estimates that 22​% of net credit sales will be uncollectible for the year 2017. Net credit sales for the year amounted to $ 270 comma 000$270,000. What will be the balance of Allowance for Bad Debts on the December​ 31, 2017 balance​ sheet?

The Allowance for Bad Debts account has a credit balance of $ 8 comma 000$8,000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the agingminus−ofminus−receivables ​method, the​ company's management estimates that uncollectible accounts will be $ 14 comma 500$14,500. What will be the balance of the Allowance for Bad Debts reported on the balance​ sheet?

The Allowance for Bad Debts account has a debit balance of $ 8 comma 000$8,000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary​ ledger, the​ company's management estimates that uncollectible accounts will be $ 12 comma 000$12,000. What will be the amount of the adjustment in the Allowance for Bad Debts​ account?

The following information is from the 2017 records of Albert Book​ Shop: Accounts​ receivable, December​ 31, 2017 $ 47 comma 000$47,000​ (debit) Allowance for Bad​ Debts, December​ 31, 2017 prior to adjustment 1 comma 8001,800​ (debit) Net credit sales for 2017 178 comma 000178,000 Accounts written off as uncollectible during 2017 15 comma 00015,000 Cash sales during 2017 28 comma 00028,000 Bad debts expense is estimated by the agingminus−ofminus−receivables method. Management estimates that $ 5 comma 100$5,100 of accounts receivable will be uncollectible. Calculate the amount of bad debts expense for 2017.

The following information is from the 2017 records of Lane Bicycle​ Shop: Accounts​ receivable, December​ 31, 2017 $ 40 comma 000$40,000​ (debit) Allowance for Bad​ Debts, December​ 31, 2017 prior to adjustment 1 comma 9001,900​ (debit) Net credit sales for 2017 179 comma 000179,000 Accounts written off as uncollectible during 2017 17 comma 00017,000 Cash sales during 2017 28 comma 00028,000 Bad debts expense is estimated by the agingminus−ofminus−receivables method. Management estimates that $ 6 comma 000$6,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad​ Debts, after the adjustment for bad debts​ expense, at December​ 31, 2017.

The maturity date for a sixminus−month note issued on January 15 would be​ ________.

nterest on a $ 120 comma 000$120,000 note at 44​% for 45 days is $ 592$592. ​ (Use a 360 day year. Round your answer to the nearest​ dollar.)

On August​ 14, First Avenue Bank lent $ 270 comma 000$270,000 to City Cafe on a 75​ day, 55​% note. What is the maturity value of the​ note? ​ (Use a 360minus−day year and round answers to the nearest​ dollar.)

On April​ 1, 2017, Banne Services received a 99minus−month note for $ 11 comma 000$11,000 at 1111​%. Calculate the amount of interest due at maturity.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

On October​ 1, 2017,​ Parkin, Inc. made a loan to one of its customers. The customer signed a 99minus−month note for $ 120 comma 000$120,000 at 1313​%. Calculate the maturity value of the note.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

On December​ 1, 2017, Going​ Places, Inc. sold machinery to a customer for $ 23 comma 000$23,000. The customer could not pay at the time of sale but agreed to pay 99 months later and signed an 99minus−month note at 1010​% interest. What was the total amount of cash collected by Going Places on the maturity of the​ note? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

On October​ 1, 2017, Ealys Jewelers accepted a 44minus−​month, 1414​% note for $ 6 comma 000$6,000 in settlement of an overdue account receivable. The accounting period ends on December 31. Calculate the accrued interest on the note at December​ 31, 2017.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

A table of notes receivable for 20162016 ​follows: Principal Interest Rate Interest Period During 2016 Note 1 $30,000 4% 3 months Note 2 8,000 5% 180 days Note 3 28,000 12% 90 days Note 4 110,000 10% 6 months For each of the notes​ receivable, compute the amount of interest revenue earned during 20162016. Round to the nearest dollar. ​(Use a​ 360-day year for the notes with interest periods in days and a​ 12-month year for notes with interest periods in​ months.)

Terms​: 1. Accounts receivable 2. Other receivables 3 Debtor 4. Notes receivable 5. Maturity date 6. Creditor Definitions​: a. The party to a credit transaction who takes on an​ obligation/payable. b. The party who receives a receivable and will collect cash in the future. c. A written promise to pay a specified amount of money at a particular future date. d. The date when the note receivable is due. e. A miscellaneous category that includes any other type of receivable where there is a right to receive cash in the future. f. The right to receive cash in the future from customers for goods sold or for services performed.