Question 1

The accounts receivable turnover indicates how often accounts receivable are received and collected during the period.

Accepted Answer

A) True 
 B)False

Question 2

A company has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.Experience suggests that 6% of outstanding receivables are uncollectible.The current credit balance (before adjustments)in the allowance for doubtful accounts is $1,200.The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $4,800.

Accepted Answer

A) True 
 B)False

Question 3

On May 31,a company had a balance in its accounts receivable of $103,200.Prepare journal entries to record the following transactions for June.Assume the company uses a perpetual inventory system.

Accepted Answer

The answer of On May 31,a company had a balance...

Question 4

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200

Accepted Answer

A) True 
 B)False

Question 5

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card.Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made.The journal entry to record this sale transaction would be:

Accepted Answer

A) Debit Cash of $300 and credit Sales $300. 
B) Debit Cash of $300 and credit Accounts Receivable $300. 
C) Debit Accounts Receivable $300 and credit Sales $300. 
D) Debit Cash $295.50; debit Credit Card Expense $4.50 and credit Sales $300. 
E) Debit Cash $295.50 and credit Sales $295.50. 
A) Debit Cash of $300 and credit Sales $300. 
B) Debit Cash of $300 and credit Accounts Receivable $300. 
C) Debit Accounts Receivable $300 and credit Sales $300. 
D) Debit Cash $295.50; debit Credit Card Expense $4.50 and credit Sales $300. 
E) Debit Cash $295.50 and credit Sales $295.50.

Question 6

A company has the following unadjusted account balances at December 31,of the current year; Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance).The company uses the aging of accounts receivable to estimate its bad debts.The following aging schedule reflects its accounts receivable at the current year-end:
   1.Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31,of the current year,balance sheet.
2.Prepare the adjusting journal entry to record bad debts expense for the current year .

Accepted Answer

$96,000 * .010 = $ 960 64,000 * .025 = 1

Question 7

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.)(Use 360 days a year.)

Accepted Answer

A) Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920. 
B) Debit Cash $4,920; credit Notes Receivable $4,920. 
C) Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800. 
D) Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100; credit Notes Receivable $4,800. 
E) Debit Cash $4,920; credit Interest Revenue $120; credit Notes Receivable $4,800. 
A) Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920. 
B) Debit Cash $4,920; credit Notes Receivable $4,920. 
C) Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800. 
D) Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100; credit Notes Receivable $4,800. 
E) Debit Cash $4,920; credit Interest Revenue $120; credit Notes Receivable $4,800.

Question 8

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes)to report all relevant information?

Accepted Answer

A) Relevance. 
B) Full disclosure. 
C) Evaluation. 
D) Materiality. 
E) Expense recognition (matching). 
A) Relevance. 
B) Full disclosure. 
C) Evaluation. 
D) Materiality. 
E) Expense recognition (matching).

Question 9

The banker's rule simplifies interest computations by treating a year as having 365 days.

Accepted Answer

A) True 
 B)False

Question 10

Gideon Company uses the allowance method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Allowance for Doubtful Accounts } & & 2,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Allowance for Doubtful Accounts } & & 2,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$

Question 11

Gideon Company uses the direct write-off method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.On July 10,Gideon received a check for the full amount of $2,000 from Hopkins.On July 10,the entry or entries Gideon makes to record the recovery of the bad debt is:

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Allowance for Doubtful Accounts } & & 2,000 \
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkinse } & & 2,000 \
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Allowance for Doubtful Accounts } & & 2,000 \
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Bad debts expense } & & 2,000 \
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkinse } & & 2,000 \
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$

Question 12

Gideon Company uses the direct write-off method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Bad Debts Expense } & & 2,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Bad Debts Expense } & & 2,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Allowance for Doubtful Accounts } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable-A Hopkins } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 2,000 & \
\hline \text { Accounts Receivable-A Hopkins } & & 2,000 \
\hline
\end{array}$

Question 13

Craigmont uses the allowance method to account for uncollectible accounts.Its year-end unadjusted trial balance shows Accounts Receivable of $104,500,allowance for doubtful accounts of $665 (credit)and sales of $925,000.If uncollectible accounts are estimated to be 0.5% of sales,what is the amount of the bad debts expense adjusting entry?

Accepted Answer

A) $4,625 
B) $3,960 
C) $5,290 
D) $4,750 
E) $4,825 
A) $4,625 
B) $3,960 
C) $5,290 
D) $4,750 
E) $4,825

Question 14

________ are amounts owed by customers from credit sales where payment is required in periodic amounts over an extended time period.

Accepted Answer

Installmen

Question 15

Craigmont uses the allowance method to account for uncollectible accounts.Its year-end unadjusted trial balance shows Accounts Receivable of $104,500,allowance for doubtful accounts of $665 (credit)and sales of $925,000.If uncollectible accounts are estimated to be 4% of accounts receivable,what is the amount of the bad debts expense adjusting entry?

Accepted Answer

A) $4,845 
B) $4,180 
C) $3,515 
D) $3,700 
E) $3,850 
A) $4,845 
B) $4,180 
C) $3,515 
D) $3,700 
E) $3,850

Question 16

A company ages its accounts receivables to determine its end of period adjustment for bad debts.At the end of the current year,management estimated that $15,750 of the accounts receivable balance would be uncollectible.Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a debit balance of $375.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 15,750 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,750 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 15,375 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,375 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 15,750 & \
\hline \text { Bad Debts Expense } & 375 & \
\hline \text { Sales } & & 16,125 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|l|}
\hline \text { Accounts Receivable } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 15,750 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,750 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 15,375 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,375 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debts Expense } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 15,750 & \
\hline \text { Bad Debts Expense } & 375 & \
\hline \text { Sales } & & 16,125 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|l|}
\hline \text { Accounts Receivable } & 16,125 & \
\hline \text { Allowance for Doubtful Accounts } & & 16,125 \
\hline
\end{array}$

Question 17

Axle Co.'s accounts receivable turnover was 9.9 for this year and 11.0 for last year.Betterman's turnover was 9.3 for this year and 9.3 for last year.These results imply that:

Accepted Answer

A) Betterman has the better turnover for both years. 
B) Axle has the better turnover for both years. 
C) Betterman's turnover is improving. 
D) Axle's credit policies are too loose. 
E) Betterman is collecting its receivables more quickly than Axle in both years. 
A) Betterman has the better turnover for both years. 
B) Axle has the better turnover for both years. 
C) Betterman's turnover is improving. 
D) Axle's credit policies are too loose. 
E) Betterman is collecting its receivables more quickly than Axle in both years.

Question 18

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

Accepted Answer

A) True 
 B)False

Question 19

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Accepted Answer

A) True 
 B)False

Question 20

Honoring a note receivable indicates that the maker has:

Accepted Answer

A) Signed. 
B) Paid in full. 
C) Guaranteed. 
D) Notarized. 
E) Cosigned. 
A) Signed. 
B) Paid in full. 
C) Guaranteed. 
D) Notarized. 
E) Cosigned.

The accounts receivable turnover indicates how often accounts receivable are received and collected during the period.

On May 31,a company had a balance in its accounts receivable of $103,200.Prepare journal entries to record the following transactions for June.Assume the company uses a perpetual inventory system.

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card.Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made.The journal entry to record this sale transaction would be:

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.)(Use 360 days a year.)

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes)to report all relevant information?

The banker's rule simplifies interest computations by treating a year as having 365 days.

Gideon Company uses the allowance method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

Gideon Company uses the direct write-off method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

________ are amounts owed by customers from credit sales where payment is required in periodic amounts over an extended time period.

Axle Co.'s accounts receivable turnover was 9.9 for this year and 11.0 for last year.Betterman's turnover was 9.3 for this year and 9.3 for last year.These results imply that:

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Honoring a note receivable indicates that the maker has:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 7: Reporting and Analyzing Receivables

The accounts receivable turnover indicates how often accounts receivable are received and collected during the period.

On May 31,a company had a balance in its accounts receivable of $103,200.Prepare journal entries to record the following transactions for June.Assume the company uses a perpetual inventory system.

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card.Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made.The journal entry to record this sale transaction would be:

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.)(Use 360 days a year.)

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes)to report all relevant information?

The banker's rule simplifies interest computations by treating a year as having 365 days.

Gideon Company uses the allowance method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

Gideon Company uses the direct write-off method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

________ are amounts owed by customers from credit sales where payment is required in periodic amounts over an extended time period.

Axle Co.'s accounts receivable turnover was 9.9 for this year and 11.0 for last year.Betterman's turnover was 9.3 for this year and 9.3 for last year.These results imply that:

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Honoring a note receivable indicates that the maker has:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters