Question 1

Which receivables accounting and reporting issue is essentially the same for IFRS and GAAP?

Accepted Answer

A)  The use of allowance accounts and the allowance method. 
B)  How to record discounts. 
C)  How to record factoring. 
D)  All of these answer choices are essentially the same for IFRS and GAAP. 
A)  The use of allowance accounts and the allowance method. 
B)  How to record discounts. 
C)  How to record factoring. 
D)  All of these answer choices are essentially the same for IFRS and GAAP.

Question 2

The interest on a $6,000, 6%, 90-day note receivable is

Accepted Answer

A)  $360. 
B)  $180 
C)  $90. 
D)  $270. 
A)  $360. 
B)  $180 
C)  $90. 
D)  $270.

Question 3

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 4

Nance Co. holds Gant Inc.'s $25,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is:

Accepted Answer

The answer of Nance Co. holds Gant Inc.'s $25,000, 120...

Question 5

A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company.

Accepted Answer

A) True 
 B)False

Question 6

Two Brothers, a small book publishing company, wrote off the debt of The Learning Place, and the Academy of Basic Education, both small private schools, after it determined that the schools were facing serious financial difficulty. No notice of the action was sent to the schools; Two Brothers simply stopped sending bills. Nearly a year later, The Learning Place was given a large endowment and a government grant. The resulting publicity brought the school to the attention of Two Brothers, which immediately reinstated the account, and sent a new bill to the school, including interest for the entire time the debt was outstanding. No further action was taken regarding the Academy of Basic Education, which was still operational.
Required:
Did Two Brothers act ethically in reinstating the debt of one client, and not the other? Explain.

Accepted Answer

Yes it is ethical to reinstate the debt

Question 7

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $4,500. 
B)  debit to Bad Debt Expense for $6,100. 
C)  debit to Bad Debt Expense for $2,900. 
D)  credit to Allowance for Doubtful Accounts for $4,500. 
A)  debit to Bad Debt Expense for $4,500. 
B)  debit to Bad Debt Expense for $6,100. 
C)  debit to Bad Debt Expense for $2,900. 
D)  credit to Allowance for Doubtful Accounts for $4,500.

Question 8

When a company receives an interest-bearing note receivable, it will

Accepted Answer

A)  debit Notes Receivable for the maturity value of the note. 
B)  credit Notes Receivable for the maturity value of the note. 
C)  debit Notes Receivable for the face value of the note. 
D)  credit Notes Receivable for the face value of the note. 
A)  debit Notes Receivable for the maturity value of the note. 
B)  credit Notes Receivable for the maturity value of the note. 
C)  debit Notes Receivable for the face value of the note. 
D)  credit Notes Receivable for the face value of the note.

Question 9

Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off.

Accepted Answer

A) True 
 B)False

Question 10

The December 31, 2013, balance sheet of the Kramer Company had Accounts Receivable of $650,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2014, the following transactions occurred: sales on account $1,550,000; sales returns and allowances, $100,000; collections from customers, $1,250,000; accounts written off, $35,000; previously written off accounts of $8,000 were collected.
Instructions
(a) Journalize the 2014 transactions.
(b) If the company uses the percentage of receivables basis to estimate bad debt expense and determines that uncollectible accounts are expected to be 6% of accounts receivable, what is the adjusting entry at December 31, 2014?

Accepted Answer

The answer of The December 31, 2013, balance sheet of...

Question 11

A dishonored note is a note that is not paid in full at maturity.

Accepted Answer

A) True 
 B)False

Question 12

Compute the missing amount for each of the following notes:

Accepted Answer

(a) $6250 ($50000 * .05 * 2.5

Question 13

Strickman Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions:

Accepted Answer

The answer of Strickman Company uses the allowance method for...

Question 14

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

Accepted Answer

A) True 
 B)False

Question 15

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Revenue.

Accepted Answer

A) True 
 B)False

Question 16

The account Allowance for Doubtful Accounts is classified as a(n)

Accepted Answer

A)  liability. 
B)  contra account of Bad Debt Expense. 
C)  expense. 
D)  contra account to Accounts Receivable. 
A)  liability. 
B)  contra account of Bad Debt Expense. 
C)  expense. 
D)  contra account to Accounts Receivable.

Question 17

Compute the maturity value as indicated for each of the following notes receivable.
1. A $9,000, 6%, 3-month note dated July 20.
Maturity value $____________.
2. A $16,000, 9%, 150-day note dated August 5.
Maturity value $____________.

Accepted Answer

1. Maturity value: $9135
$9000

Question 18

Trent Distributors has the following transactions related to notes receivable during the last two months of the year.
Dec. 1 Loaned $16,000 cash to E. Kinder on a 1-year, 6% note.
16 Sold goods to J. Jones, receiving a $4,800, 60-day, 7% note.
31 Accrued interest revenue on all notes receivable.
Instructions
Journalize the transactions for Trent Distributors.

Accepted Answer

The answer of Trent Distributors has the following transactions related...

Question 19

The ledger of the Ramirez Company at the end of the current year shows Accounts Receivable of $200,000. Instructions
(a) If Allowance for Doubtful Accounts has a credit balance of $3,000 in the trial balance and bad debts are expected to be 8% of accounts receivable, journalize the adjusting entry for end of the period. (Show all calculations.)
(b) If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial balance and bad debts are expected to be 8% of accounts receivable, journalize the adjusting entry for end of the period. (Show all calculations.)

Accepted Answer

The answer of The ledger of the Ramirez Company at...

Question 20

Which of the following is not true regarding a promissory note?

Accepted Answer

A)  Promissory notes may not be transferred to another party by endorsement. 
B)  Promissory notes may be sold to another party. 
C)  Promissory notes give a stronger legal claim to the holder than accounts receivable. 
D)  Promissory notes may be bearer notes and not specifically identify the payee by name. 
A)  Promissory notes may not be transferred to another party by endorsement. 
B)  Promissory notes may be sold to another party. 
C)  Promissory notes give a stronger legal claim to the holder than accounts receivable. 
D)  Promissory notes may be bearer notes and not specifically identify the payee by name.

Which receivables accounting and reporting issue is essentially the same for IFRS and GAAP?

The interest on a $6,000, 6%, 90-day note receivable is

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Nance Co. holds Gant Inc.'s $25,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is:

A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company.

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a

When a company receives an interest-bearing note receivable, it will

Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off.

A dishonored note is a note that is not paid in full at maturity.

Compute the missing amount for each of the following notes:

Strickman Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions:

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Revenue.

The account Allowance for Doubtful Accounts is classified as a(n)

Compute the maturity value as indicated for each of the following notes receivable. 1. A $9,000, 6%, 3-month note dated July 20. Maturity value $. 2. A $16,000, 9%, 150-day note dated August 5. Maturity value $.

Which of the following is not true regarding a promissory note?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters

Exam 8: Reporting and Analyzing Receivables

Which receivables accounting and reporting issue is essentially the same for IFRS and GAAP?

The interest on a $6,000, 6%, 90-day note receivable is

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Nance Co. holds Gant Inc.'s $25,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is:

A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company.

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a

When a company receives an interest-bearing note receivable, it will

Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off.

A dishonored note is a note that is not paid in full at maturity.

Compute the missing amount for each of the following notes:

Strickman Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions:

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Revenue.

The account Allowance for Doubtful Accounts is classified as a(n)

Compute the maturity value as indicated for each of the following notes receivable. 1. A $9,000, 6%, 3-month note dated July 20. Maturity value $____________. 2. A $16,000, 9%, 150-day note dated August 5. Maturity value $____________.

Which of the following is not true regarding a promissory note?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters

Compute the maturity value as indicated for each of the following notes receivable. 1. A $9,000, 6%, 3-month note dated July 20. Maturity value $. 2. A $16,000, 9%, 150-day note dated August 5. Maturity value $.