Question 1

Match between columns
                        Premises: A contra asset account with a balance approximating the amount of accounts receivable expected to be uncollectible.
The uncollectible accounts of credit customers who do not pay what they have promised.
A process of classifying accounts receivable by how long it is past its due date for the purpose of estimating the amount of uncollectible accounts.
The accounting principle that requires expenses to be reported in the same period as the sales they helped to produce.
Amounts due from customers for credit sales.
A written promise to pay a specified amount of money, usually with interest, either on demand or at a definite future date.
The party who signs a note and promises to pay it at maturity.
The expected proceeds from converting an asset into cash.
The party to whom the promissory note is payable.
The charge a borrower pays for using money borrowed.

Accepted Answer

The Answer of Allowance for doubtful accounts and Payee of is...

Question 2

After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Accepted Answer

A) True 
 B)False

Question 3

Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.

Accepted Answer

A) True 
 B)False

Question 4

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record the collection on account would be:

Accepted Answer

A) Debit Cash of $625 and credit Accounts Receivable $625. 
B) Debit Sales $625 and credit Accounts Receivable $625. 
C) Debit Accounts Receivable $625 and credit Cash $625. 
D) Debit Cash of $625 and credit Sales $625. 
E) Debit Accounts Receivable $625 and credit Sales $625. 
A) Debit Cash of $625 and credit Accounts Receivable $625. 
B) Debit Sales $625 and credit Accounts Receivable $625. 
C) Debit Accounts Receivable $625 and credit Cash $625. 
D) Debit Cash of $625 and credit Sales $625. 
E) Debit Accounts Receivable $625 and credit Sales $625.

Question 5

The amount due on the maturity date of a $6,000, 60-day 4%, note receivable is: (Use 360 days a year.)

Accepted Answer

A) $6,240. 
B) $5,760. 
C) $6,000. 
D) $6,040. 
E) $5,960. 
A) $6,240. 
B) $5,760. 
C) $6,000. 
D) $6,040. 
E) $5,960.

Question 6

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

Accepted Answer

A) Debit Interest Receivable $500; credit Interest Revenue $500. 
B) Debit Cash for $250; credit Notes Receivable $250. 
C) Debit Interest Revenue $500; credit Notes Receivable $500. 
D) Debit Interest Receivable $250; credit Interest Revenue $250. 
E) Debit Notes Receivable $500; credit Interest Revenue $500. 
A) Debit Interest Receivable $500; credit Interest Revenue $500. 
B) Debit Cash for $250; credit Notes Receivable $250. 
C) Debit Interest Revenue $500; credit Notes Receivable $500. 
D) Debit Interest Receivable $250; credit Interest Revenue $250. 
E) Debit Notes Receivable $500; credit Interest Revenue $500.

Question 7

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Accepted Answer

A note receivable is a promissory note,

Question 8

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note?

Accepted Answer

A) Debit Interest Receivable $20; credit Interest Revenue $20. 
B) Debit Cash $100; credit Notes Receivable $100. 
C) Debit Interest Receivable $100; credit Interest Revenue $100. 
D) Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20. 
E) Debit Cash $20; credit Notes Receivable $20. 
A) Debit Interest Receivable $20; credit Interest Revenue $20. 
B) Debit Cash $100; credit Notes Receivable $100. 
C) Debit Interest Receivable $100; credit Interest Revenue $100. 
D) Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20. 
E) Debit Cash $20; credit Notes Receivable $20.

Question 9

The realizable value refers to the expected proceeds from converting an asset into cash.

Accepted Answer

A) True 
 B)False

Question 10

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

Accepted Answer

A) True 
 B)False

Question 11

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 12

Credit sales are recorded by crediting Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 13

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note? (Use 360 days a year.)

Accepted Answer

A) Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. 
B) Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500. 
C) Debit Cash $8,500; credit Notes Receivable $8,500. 
D) Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670. 
E) Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500. 
A) Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. 
B) Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500. 
C) Debit Cash $8,500; credit Notes Receivable $8,500. 
D) Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670. 
E) Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500.

Question 14

The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

Accepted Answer

A) True 
 B)False

Question 15

The expense recognition (matching)principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

Accepted Answer

A) True 
 B)False

Question 16

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

Accepted Answer

A) 54.8 
B) 1.1 
C) 6.3 
D) 6.1 
E) 63.0 
A) 54.8 
B) 1.1 
C) 6.3 
D) 6.1 
E) 63.0

Question 17

Duerr company makes a $60,000, 60-day, 12% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

Accepted Answer

A) $60,000. 
B) $58,800. 
C) $1,200. 
D) $61,200. 
E) $67,200. 
A) $60,000. 
B) $58,800. 
C) $1,200. 
D) $61,200. 
E) $67,200.

Question 18

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Accepted Answer

A) $37.50. 
B) $450.00. 
C) $11.25. 
D) $112.50. 
E) $1,800.00. 
A) $37.50. 
B) $450.00. 
C) $11.25. 
D) $112.50. 
E) $1,800.00.

Question 19

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)

Accepted Answer

A) $8,130 
B) $7,800 
C) $7,930 
D) $130 
E) $8,050 
A) $8,130 
B) $7,800 
C) $7,930 
D) $130 
E) $8,050

Question 20

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Accepted Answer

A) True 
 B)False

After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record the collection on account would be:

The amount due on the maturity date of a $6,000, 60-day 4%, note receivable is: (Use 360 days a year.)

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note?

The realizable value refers to the expected proceeds from converting an asset into cash.

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Credit sales are recorded by crediting Accounts Receivable.

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note? (Use 360 days a year.)

The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

The expense recognition (matching)principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

Duerr company makes a $60,000, 60-day, 12% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters

Exam 9: Accounting for Receivables

After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record the collection on account would be:

The amount due on the maturity date of a $6,000, 60-day 4%, note receivable is: (Use 360 days a year.)

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note?

The realizable value refers to the expected proceeds from converting an asset into cash.

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Credit sales are recorded by crediting Accounts Receivable.

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note? (Use 360 days a year.)

The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

The expense recognition (matching)principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

Duerr company makes a $60,000, 60-day, 12% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters