Ch 07 Quiz-MC – Flashcards

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question
A promissory note received from a customer in exchange for an account receivable:
answer
correct Is a note receivable for the recipient.
question
When the maker of a note honors a note this indicates that the note is:
answer
correct Paid in full
question
The matching principle requires:
answer
correct The use of the allowance method of accounting for bad debts.
question
The maturity date of a note receivable:
answer
correct Is the day the note is due to be paid.
question
Chiller Company has credit sales of $5.60 million for year 2013. Chiller estimates that 1.32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted debit balance of $3,561. Chiller prepares a schedule of its December 31, 2010, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: incorrect $51,878.41 $48,317.41 → $55,439.41 - Correct Answer $66,167.80
answer
1095000 * .0085 = 9307.50 322550 * .0142 = 4580.21 84700 * .0760 = 6437.20 50420*.4250 = 21428.50 12500 * .8100 = 10125.00 Total $51,878.41 desired ending balance in Allowance for Doubtful Accounts $51,878.41 + $3,561 = $55,439.41
question
On November 16, 2013, Betty Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $138,460. The note is due in 90 days and has an interest rate of 7.5%. What would be the amount required for the December 31, 2013, adjusting journal entry?
answer
correct $1,298.06
question
The accounts receivable turnover is calculated by:
answer
correct Dividing net sales by average accounts receivable.
question
A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts Receivable $245,000 debit Allowance for uncollected accounts 300 Credit Net Sales 900,000 Credit All sales are made on credit. Based on past experience, the company estimates 0.5% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?
answer
$ 4,500 .005 * $900,000 = $4,500
question
The person who signs a note receivable and promises to pay the principal and interest is the:
answer
correct Maker
question
Temper Company has credit sales of $3.10 million for year 2013. Accounts Receivable total $947,360 and the company estimates that 2% of accounts receivable will remain uncollectible. Historically, .9% of sales have been uncollectible. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted debit balance of $2,575. Temper prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here:
answer
correct $21,522.20 $947,360 x .02 = $18,947.20 desired ending balance in Allowance for Doubtful Accounts $18,947.20 + $2,575 = $21,522.20
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