Question 1

The following information is available:
 
The receivables turnover ratio for 2016 is closest to:

Accepted Answer

A)  8.93 times 
B)  8.48 times 
C)  8.71 times 
D)  9.14 times 
A)  8.93 times 
B)  8.48 times 
C)  8.71 times 
D)  9.14 times

Question 2

Each December 31,Davis Company prepares an aging analysis of its accounts receivable to determine the amount of its adjustment for bad debts.At the end of the current year,management estimated that $16,900 of the accounts receivable balances would be uncollectible.The Allowance for Doubtful Accounts account had a debit balance of $3,200 before any year-end adjustment for bad debts.
Required:
Prepare the adjusting journal entry that Davis Company should make on December 31 of the current year to estimate Bad Debt Expense.

Accepted Answer

The aging of accounts receivable method

Question 3

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

Accepted Answer

A)  asset account and a credit to a liability account. 
B)  expense account and a credit to an asset account. 
C)  expense account and a credit to a revenue account. 
D)  expense account and a credit to a contra-asset account. 
A)  asset account and a credit to a liability account. 
B)  expense account and a credit to an asset account. 
C)  expense account and a credit to a revenue account. 
D)  expense account and a credit to a contra-asset account.

Question 4

Countryside Corporation uses the allowance method.Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay.Countryside Corporation should debit:

Accepted Answer

A)  Bad Debt Expense and credit Accounts Receivable for $350. 
B)  Allowance for Doubtful Accounts and credit Accounts Receivable for $350. 
C)  Bad Debt Expense and credit Cash for $350. 
D)  Accounts Receivable and credit Bad Debt Expense for $350. 
A)  Bad Debt Expense and credit Accounts Receivable for $350. 
B)  Allowance for Doubtful Accounts and credit Accounts Receivable for $350. 
C)  Bad Debt Expense and credit Cash for $350. 
D)  Accounts Receivable and credit Bad Debt Expense for $350.

Question 5

Using the aging approach,management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $100 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

Accepted Answer

A)  debit to Bad Debt Expense of $1,100 
B)  debit to Bad Debt Expense of $900 
C)  debit to Bad Debt Expense of $1,000 
D)  credit to Allowance for Doubtful Accounts of $1,000 
A)  debit to Bad Debt Expense of $1,100 
B)  debit to Bad Debt Expense of $900 
C)  debit to Bad Debt Expense of $1,000 
D)  credit to Allowance for Doubtful Accounts of $1,000

Question 6

Which of the following statements about receivables turnover analysis is correct?

Accepted Answer

A)  The receivables turnover ratio indicates how many times, on average, the process of selling to and collecting from customers occurs during the accounting period. 
B)  Companies of similar size in different industries tend to have similar receivables turnover ratios. 
C)  A high turnover ratio may suggest the company is allowing too much time for customers to pay. 
D)  The days to collect ratio is found by dividing the receivables turnover ratio by 365 days. 
A)  The receivables turnover ratio indicates how many times, on average, the process of selling to and collecting from customers occurs during the accounting period. 
B)  Companies of similar size in different industries tend to have similar receivables turnover ratios. 
C)  A high turnover ratio may suggest the company is allowing too much time for customers to pay. 
D)  The days to collect ratio is found by dividing the receivables turnover ratio by 365 days.

Question 7

Assume the Murtha Company reported the following adjusted account balances at year-end.
 
Assume the company recorded no write-offs or recoveries during 2016.What was the amount of Bad Debt Expense reported in 2016?

Accepted Answer

A)  $79,000 
B)  $64,600 
C)  $28,800 
D)  $14,400 
A)  $79,000 
B)  $64,600 
C)  $28,800 
D)  $14,400

Question 8

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?

Accepted Answer

A)  In current assets on the balance sheet 
B)  As a deduction from net sales revenue on the income statement 
C)  As selling expenses on the income statement 
D)  As cost of goods sold on the income statement 
A)  In current assets on the balance sheet 
B)  As a deduction from net sales revenue on the income statement 
C)  As selling expenses on the income statement 
D)  As cost of goods sold on the income statement

Question 9

What does a high receivable turnover ratio indicate?

Accepted Answer

A)  Customer payments are collected relatively soon after the sale has been made. 
B)  Sales are growing. 
C)  Credit sales are much greater than cash sales. 
D)  Cash collections are sluggish, taking longer to collect. 
A)  Customer payments are collected relatively soon after the sale has been made. 
B)  Sales are growing. 
C)  Credit sales are much greater than cash sales. 
D)  Cash collections are sluggish, taking longer to collect.

Question 10

A company's unadjusted trial balance at the end of the year includes the following:
 
The company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800.What is the amount of Bad Debt Expense to be recorded for the year?

Accepted Answer

A)  $5,800 
B)  $4,800 
C)  $6,800 
D)  $7,800 
A)  $5,800 
B)  $4,800 
C)  $6,800 
D)  $7,800

Question 11

Friedman Company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000.What is the estimated Bad Debt Expense for the period?

Accepted Answer

A)  $8,000 
B)  $17,000 
C)  $25,000 
D)  $33,000 
A)  $8,000 
B)  $17,000 
C)  $25,000 
D)  $33,000

Question 12

The potential advantages of extending credit to customers include all of the following except higher:

Accepted Answer

A)  wage expenses. 
B)  profits. 
C)  customer satisfaction. 
D)  revenues. 
A)  wage expenses. 
B)  profits. 
C)  customer satisfaction. 
D)  revenues.

Question 13

Accounts Receivable has a $2,300 balance,and the Allowance for Doubtful Accounts has a $200 credit balance.An $80 account receivable is written-off.Net receivables (net realizable value)after the write-off equals:

Accepted Answer

A)  $2,020. 
B)  $2,100. 
C)  $2,180. 
D)  $2,220. 
A)  $2,020. 
B)  $2,100. 
C)  $2,180. 
D)  $2,220.

Question 14

Langley Company uses the allowance method.During January 2016,Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay.The entry to record the write-off will:

Accepted Answer

A)  decrease total assets by $500. 
B)  decrease net income for 2016 by $500. 
C)  decrease net accounts receivable by $500. 
D)  not increase the expenses for 2016. 
A)  decrease total assets by $500. 
B)  decrease net income for 2016 by $500. 
C)  decrease net accounts receivable by $500. 
D)  not increase the expenses for 2016.

Question 15

Which of the following statements about the receivables turnover analysis is correct?

Accepted Answer

A)  Accounts receivable decline as companies sell on credit. 
B)  Accounts receivable increase as companies receive payment. 
C)  Receivables turnover refers to how fast receivables are collected. 
D)  The days to collect will increase as the receivables turnover increases. 
A)  Accounts receivable decline as companies sell on credit. 
B)  Accounts receivable increase as companies receive payment. 
C)  Receivables turnover refers to how fast receivables are collected. 
D)  The days to collect will increase as the receivables turnover increases.

Question 16

Nevada Wolf,Inc.determined at the end of the year that estimated uncollectible accounts was $50,000.If the Allowance for Doubtful Accounts currently has an unadjusted debit balance of $10,000,what is the amount of bad debts to be recorded at the end of the year?

Accepted Answer

A)  $55,000 
B)  $50,000 
C)  $40,000 
D)  $60,000 
A)  $55,000 
B)  $50,000 
C)  $40,000 
D)  $60,000

Question 17

Your company converted an existing account receivable in the amount of $5,000 to a note receivable to allow an extended payment period.The note is due in one year and includes an annual interest rate of 5%,The customer repays the principal at the maturity date.The entry to record the receipt of the principal includes a debit to:

Accepted Answer

A)  Cash and credit to Notes Receivable. 
B)  Notes Receivable and credit to Accounts Receivable. 
C)  Cash and credit to Interest Receivable. 
D)  Notes Receivable and credit to Cash. 
A)  Cash and credit to Notes Receivable. 
B)  Notes Receivable and credit to Accounts Receivable. 
C)  Cash and credit to Interest Receivable. 
D)  Notes Receivable and credit to Cash.

Question 18

A company lends its supplier $150,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for:

Accepted Answer

A)  $9,000 
B)  $13,500 
C)  $4,500 
D)  $27,000 
A)  $9,000 
B)  $13,500 
C)  $4,500 
D)  $27,000

Question 19

On June 12,because management knew with near certainty that it had no chance of collection,Sheave Company wrote off a customer's account balance in the amount of $350.On November 3,the customer mailed a payment for $350 to Sheave.To record the receipt of this payment from the customer,the company would debit:

Accepted Answer

A)  Bad Debt Expense and credit Cash. 
B)  Accounts Receivable and credit Bad Debt Expense, and then debit Cash and credit Allowance for Doubtful Accounts. 
C)  Cash and credit Accounts Receivable. 
D)  Accounts Receivable and credit Allowance for Doubtful Accounts, and then debit Cash and credit Accounts Receivable. 
A)  Bad Debt Expense and credit Cash. 
B)  Accounts Receivable and credit Bad Debt Expense, and then debit Cash and credit Allowance for Doubtful Accounts. 
C)  Cash and credit Accounts Receivable. 
D)  Accounts Receivable and credit Allowance for Doubtful Accounts, and then debit Cash and credit Accounts Receivable.

Question 20

For billing and collection purposes,companies keep a separate accounts receivable account for each customer called a:

Accepted Answer

A)  subsidized account 
B)  temporary account 
C)  subsidiary account 
D)  temporal account 
A)  subsidized account 
B)  temporary account 
C)  subsidiary account 
D)  temporal account

The following information is available: The receivables turnover ratio for 2016 is closest to:

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

Countryside Corporation uses the allowance method.Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay.Countryside Corporation should debit:

Using the aging approach,management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $100 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

Which of the following statements about receivables turnover analysis is correct?

Assume the Murtha Company reported the following adjusted account balances at year-end. Assume the company recorded no write-offs or recoveries during 2016.What was the amount of Bad Debt Expense reported in 2016?

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?

What does a high receivable turnover ratio indicate?

A company's unadjusted trial balance at the end of the year includes the following: The company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800.What is the amount of Bad Debt Expense to be recorded for the year?

Friedman Company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000.What is the estimated Bad Debt Expense for the period?

The potential advantages of extending credit to customers include all of the following except higher:

Accounts Receivable has a $2,300 balance,and the Allowance for Doubtful Accounts has a $200 credit balance.An $80 account receivable is written-off.Net receivables (net realizable value)after the write-off equals:

Langley Company uses the allowance method.During January 2016,Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay.The entry to record the write-off will:

Which of the following statements about the receivables turnover analysis is correct?

Nevada Wolf,Inc.determined at the end of the year that estimated uncollectible accounts was $50,000.If the Allowance for Doubtful Accounts currently has an unadjusted debit balance of $10,000,what is the amount of bad debts to be recorded at the end of the year?

A company lends its supplier $150,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for:

For billing and collection purposes,companies keep a separate accounts receivable account for each customer called a:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 8: Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

The following information is available: The receivables turnover ratio for 2016 is closest to:

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

Countryside Corporation uses the allowance method.Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay.Countryside Corporation should debit:

Using the aging approach,management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $100 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

Which of the following statements about receivables turnover analysis is correct?

Assume the Murtha Company reported the following adjusted account balances at year-end. Assume the company recorded no write-offs or recoveries during 2016.What was the amount of Bad Debt Expense reported in 2016?

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?

What does a high receivable turnover ratio indicate?

A company's unadjusted trial balance at the end of the year includes the following: The company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800.What is the amount of Bad Debt Expense to be recorded for the year?

Friedman Company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000.What is the estimated Bad Debt Expense for the period?

The potential advantages of extending credit to customers include all of the following except higher:

Accounts Receivable has a $2,300 balance,and the Allowance for Doubtful Accounts has a $200 credit balance.An $80 account receivable is written-off.Net receivables (net realizable value)after the write-off equals:

Langley Company uses the allowance method.During January 2016,Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay.The entry to record the write-off will:

Which of the following statements about the receivables turnover analysis is correct?

Nevada Wolf,Inc.determined at the end of the year that estimated uncollectible accounts was $50,000.If the Allowance for Doubtful Accounts currently has an unadjusted debit balance of $10,000,what is the amount of bad debts to be recorded at the end of the year?

A company lends its supplier $150,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for:

For billing and collection purposes,companies keep a separate accounts receivable account for each customer called a:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters