Question 1

Calculate the total amount of interest that would be owed on a $9,000,60-day,9% note receivable.

Accepted Answer

$9,000 x .

Question 2

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Accepted Answer

A) True 
 B)False

Question 3

A 90-day note issued on April 20 has a maturity date of:

Accepted Answer

A)  July 17 
B)  July 18 
C)  July 19 
D)  July 20 
E)  July 21 
A)  July 17 
B)  July 18 
C)  July 19 
D)  July 20 
E)  July 21

Question 4

On November 15,2013,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?

Accepted Answer

A)  $35,913.06 
B)  $34,615.00 
C)  $10,384.50 
D)  $1,298.06 
E)  $2,596.13 
A)  $35,913.06 
B)  $34,615.00 
C)  $10,384.50 
D)  $1,298.06 
E)  $2,596.13

Question 5

____________________ is the charge for using (not paying)money until a later date.

Accepted Answer

The answer of ____________________ is the charge for using (not...

Question 6

A credit sale of $2,500 to a customer would result in:

Accepted Answer

A)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable ledger. 
B)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable ledger. 
C)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable ledger. 
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable ledger. 
E)  A credit to Sales and a credit to the customer's account in the accounts receivable ledger. 
A)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable ledger. 
B)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable ledger. 
C)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable ledger. 
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable ledger. 
E)  A credit to Sales and a credit to the customer's account in the accounts receivable ledger.

Question 7

The materiality constraint permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in comparison to the company's other financial statement items such as sales and net income.

Accepted Answer

A) True 
 B)False

Question 8

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 $39,375 of the accounts receivable balance would be uncollectible.Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a credit balance of $3,285.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  $$\begin{array} { | l | c | c | } 
\hline \text { Bad Debt Expense } & 36,090 & \
\hline \text { Allowance for Doubtful Accounts } & & \mathbf { 3 6 , 0 9 0 } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | c | c | } 
\hline \text { Bad Debt Expense } & 42,660 & \
\hline \text { Allowance for Doubtful Accounts } & & 42,660 \
\hline
\end{array}$$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debt Expense } & 39,375 & \
\hline \text { Allowance for Doubtful Accounts } & & 39,375 \
\hline
\end{array}$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 39,375 & \
\hline \text { Bad Debt Expense } & 3,285 & \
\hline \text { Sales } & & 42,660 \
\hline
\end{array}$$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 36,090 & \
\hline \text { Allowance for Doubtful Accounts } & & 36,090 \
\hline
\end{array}$ 
A)  $$\begin{array} { | l | c | c | } 
\hline \text { Bad Debt Expense } & 36,090 & \
\hline \text { Allowance for Doubtful Accounts } & & \mathbf { 3 6 , 0 9 0 } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | c | c | } 
\hline \text { Bad Debt Expense } & 42,660 & \
\hline \text { Allowance for Doubtful Accounts } & & 42,660 \
\hline
\end{array}$$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Bad Debt Expense } & 39,375 & \
\hline \text { Allowance for Doubtful Accounts } & & 39,375 \
\hline
\end{array}$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 39,375 & \
\hline \text { Bad Debt Expense } & 3,285 & \
\hline \text { Sales } & & 42,660 \
\hline
\end{array}$$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 36,090 & \
\hline \text { Allowance for Doubtful Accounts } & & 36,090 \
\hline
\end{array}$

Question 9

What is the maturity date of a six-month note receivable dated February 5?

Accepted Answer

August 4
 \[\begin{array} { r r r r r r

Question 10

The accounting principle that requires financial statements (including notes)to report all relevant information about the operations and financial condition of a company is called:

Accepted Answer

A)  Relevance 
B)  Full disclosure 
C)  Evaluation 
D)  Materiality 
E)  Matching 
A)  Relevance 
B)  Full disclosure 
C)  Evaluation 
D)  Materiality 
E)  Matching

Question 11

Prepare the adjusting journal entry to record the estimate for bad debts assuming:
On December 31 of the current year,a company's unadjusted trial balance revealed the following: accounts receivable of $185,600; sales revenue of $1,280,000; (75% were on credit); and allowance for doubtful accounts of $1,600 (credit balance).
1.Bad debts expense is estimated to be 1.5% of credit sales.
2.6% of the accounts receivable balance is assumed to be uncollectible

Accepted Answer

"1.
 \[\begin{array} { | l | l | l | l |

Question 12

Chiller Company has credit sales of $5.60 million for year 2013.Accounts Receivable total $1,565,170 and the company 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 credit balance of $3,561.Chiller prepares 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:
$\begin{array}{ccc}
\text { December } 31,2013 & \text { Age of Accounts } & \text { Expected Percent } \
\text { Accounts Receivable } & \text { Receivable } & \text { Uncollectible } \
 1,095,000 & \text { Not yet due } & 0.85 \% \
322,550 & 1 \text { to } 30 \text { days past due } & 1.42 \
84,700 & 31 \text { to } 60 \text { days past due } & 7.60 \
 50,420 & 61 \text { to } 90 \text { days past due } & 42.50 \
 12,500 & \text { Over } 90 \text { days past due } & 81.00
\end{array}$
Assuming the company uses the percent of accounts receivable method,what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

Accepted Answer

A)  $59,045.80 
B)  $51,878.41 
C)  $48,317.41 
D)  $62,606.80 
E)  $66,167.80 
A)  $59,045.80 
B)  $51,878.41 
C)  $48,317.41 
D)  $62,606.80 
E)  $66,167.80

Question 13

ABC Co.sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee.Prepare the journal entry for ABC Co.to record the sale.

Accepted Answer

None

Question 14

A company had an accounts receivable turnover ratio of 8 and net sales of $600,000 for a given period.What was the average accounts receivable amount for this period?

Accepted Answer

A)  $4,800,000. 
B)  $2,919.99. 
C)  $205.48. 
D)  $75,000. 
E)  Average accounts receivable cannot be determined from this information. 
A)  $4,800,000. 
B)  $2,919.99. 
C)  $205.48. 
D)  $75,000. 
E)  Average accounts receivable cannot be determined from this information.

Question 15

The person to whom a note is payable to is known as the ______________.

Accepted Answer

The answer of The person to whom a note is...

Question 16

A dishonored note receivable is usually reclassified as an account receivable.

Accepted Answer

A) True 
 B)False

Question 17

A maker who dishonors a note is one who does not pay it upon maturity.

Accepted Answer

A) True 
 B)False

Question 18

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:
$\begin{array}{ccc}
\text { December } 31,2013 & \text { Age of Accounts } & \text { Expected Percent } \
\text { Accounts Receivable } & \text { Receivable } & \text { Uncollectible } \
 1,095,000 & \text { Not yet due } & 0.85 \% \
322,550 & 1 \text { to } 30 \text { days past due } & 1.42 \
84,700 & 31 \text { to } 60 \text { days past due } & 7.60 \
 50,420 & 61 \text { to } 90 \text { days past due } & 42.50 \
 12,500 & \text { Over } 90 \text { days past due } & 81.00
\end{array}$
Assuming the company uses the aging of accounts receivable method,what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

Accepted Answer

A)  $59,045.80 
B)  $51,878.41 
C)  $48,317.41 
D)  $55,439.41 
E)  $66,167.80 
A)  $59,045.80 
B)  $51,878.41 
C)  $48,317.41 
D)  $55,439.41 
E)  $66,167.80

Question 19

Accounts receivable occur from credit sales to customers.

Accepted Answer

A) True 
 B)False

Question 20

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

Accepted Answer

The answer of When the maker of a note is...

Exam 7: Accounts and Notes Receivable

Calculate the total amount of interest that would be owed on a $9,000,60-day,9% note receivable.

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

A 90-day note issued on April 20 has a maturity date of:

On November 15,2013,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?

____________________ is the charge for using (not paying)money until a later date.

A credit sale of $2,500 to a customer would result in:

The materiality constraint permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in comparison to the company's other financial statement items such as sales and net income.

What is the maturity date of a six-month note receivable dated February 5?

The accounting principle that requires financial statements (including notes)to report all relevant information about the operations and financial condition of a company is called:

ABC Co.sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee.Prepare the journal entry for ABC Co.to record the sale.

A company had an accounts receivable turnover ratio of 8 and net sales of $600,000 for a given period.What was the average accounts receivable amount for this period?

The person to whom a note is payable to is known as the ______________.

A dishonored note receivable is usually reclassified as an account receivable.

A maker who dishonors a note is one who does not pay it upon maturity.

Accounts receivable occur from credit sales to customers.

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

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