Question 1

A company borrowed $5,000 by signing a three-month promissory note at 10%.The total interest on the note is $500.

Accepted Answer

A) True 
 B)False

Question 2

TechCom's customer RDA paid off an $8,300 balance on its account receivable.TechCom should record the transaction as a debit to Accounts Receivable-RDA and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 3

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 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 sales method,what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

Accepted Answer

A)  $55,439.41 
B)  $73,920.00 
C)  $48,317.41 
D)  $70,359.00 
E)  $66,167.80 
A)  $55,439.41 
B)  $73,920.00 
C)  $48,317.41 
D)  $70,359.00 
E)  $66,167.80

Question 4

A company factored $35,000 of its accounts receivable and was charged a 2% factoring fee.The journal entry to record this transaction would include a debit to Cash of $35,000,a debit to Factoring Fee Expense of $700,and a credit to Accounts Receivable of $35,700.

Accepted Answer

A) True 
 B)False

Question 5

How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables?

Accepted Answer

The direct write-off method charges Bad

Question 6

Match between columns
                        Premises:  The accounting principle that requires expenses to be reported in the same period as their related sales.
 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 cost a borrower incurs when taking out a loan; alternatively the profit from lending money for a lender.
 A written promise to pay a specified amount either on demand or at a definite future date.
 The one to whom the promissory note is made payable.
 One who signs a note and promises to pay it at maturity.
 The expected proceeds from converting an asset into cash.
 The accounts of customers who do not pay what they have promised to pay a company.
 A contra asset account with a balance approximating the amount of accounts receivable expected to be uncollectible.
 Amounts due from customers arising from credit sales.

Accepted Answer

The Answer of Accounts receivable and Aging of accounts receivable is...

Question 7

At December 31 of the current year,a company reported the following:
Total sales for the current year: $780,000,includes $160,000 in cash sales.
Accounts receivable balance at Dec.31,current year: $190,000.
Bad debts written off during the current year: $6,800.
Balance of allowance for doubtful accounts at January 1,current year: $8,300 credit.
Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal:
a.1.5% of credit sales
b.5% of accounts receivable

Accepted Answer

a.
 \[\begin{array} { | l | l | l | l |

Question 8

The following information is from the annual financial statements of Nancy Company.
$\begin{array}{lrrr}
&2013&2012&2011\
\text { Net sales } & \$ 307,000 & \$ 238,000 & \$ 285,000 \
\text { Accounts receivable, net (year-end) } & 47,900 & 45,700 & 42,400
\end{array}$
 
What is the accounts receivable turnover ratio for 2013?

Accepted Answer

A)  6.41 
B)  4.97 
C)  6.72 
D)  5.40 
E)  6.56 
A)  6.41 
B)  4.97 
C)  6.72 
D)  5.40 
E)  6.56

Question 9

Vine Company began operations on January 1,2013.During its first year,the company completed a number of transactions involving sales on credit,accounts receivable collections,and bad debts.These transactions are summarized as follows:
a. Sold $ \$ 1,348,300 $ of merchandise (that had cost $ \$ 983,600 $ ) on credit, terms $ n / 30 $.
b. Wrote off $ \$ 19,400 $ of uncollectible accounts receivable.
c. Received $ \$ 666,100 $ cash in payment of accounts receivable.
d. In adjusting the accounts on December 31 , the company estimated that $ 2.90 \% $ of accounts receivable will be uncollectible
What is the amount required for the adjusting journal entry to record bad debt expense?

Accepted Answer

A)  $18,644.90 
B)  $38,621.20 
C)  $19,783.80 
D)  $19,221.20 
E)  $19,400.20 
A)  $18,644.90 
B)  $38,621.20 
C)  $19,783.80 
D)  $19,221.20 
E)  $19,400.20

Question 10

Ace Credit Card Company agrees to transfer cash to Seller Company immediately upon deposit of that company's credit card sales receipts.Ace charges a 2% fee for all credit card sales.If Seller Company deposits $57,300 credit card sales receipts,which of the following statements are true?

Accepted Answer

A)  Ace will receive $56,154 cash from Seller Company. 
B)  Seller Company will receive cash $56,154 from Ace. 
C)  Ace will receive $57,300 cash from Seller Company. 
D)  Seller Company will receive $57,300 cash from Ace. 
E)  Ace will pay Seller Company a $1,146 credit card fee. 
A)  Ace will receive $56,154 cash from Seller Company. 
B)  Seller Company will receive cash $56,154 from Ace. 
C)  Ace will receive $57,300 cash from Seller Company. 
D)  Seller Company will receive $57,300 cash from Ace. 
E)  Ace will pay Seller Company a $1,146 credit card fee.

Question 11

How does Jarrett Pumphrey of ClearCorrect,view decisions involving sales on credit?

Accepted Answer

Jarrett feels that decisions involving s

Question 12

The accounts receivable turnover is calculated by dividing _________________ by _____________________.

Accepted Answer

net sales;

Question 13

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 $175.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  $\begin{array}{|l|c|c|}
\hline \text { Bad Debt Expense } & 15,750 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,750 \
\hline
\end{array}$ 
B)  $$\begin{array} { |l | r | r | } 
\hline \text { Bad Debt Experse } & 15,575 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,575 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debt Experse } & 15,925 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,925 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 15,750 & \
\hline \text { Bad Debt Expense } & 175 & \
\hline \text { Sales } & & 15,925 \
\hline
\end{array}$$ 
E)  $\begin{array}{|l|c|c|}
\hline \text { Accounts Receivable } & 15,925 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,925 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|c|c|}
\hline \text { Bad Debt Expense } & 15,750 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,750 \
\hline
\end{array}$ 
B)  $$\begin{array} { |l | r | r | } 
\hline \text { Bad Debt Experse } & 15,575 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,575 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Bad Debt Experse } & 15,925 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,925 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Receivable } & 15,750 & \
\hline \text { Bad Debt Expense } & 175 & \
\hline \text { Sales } & & 15,925 \
\hline
\end{array}$$ 
E)  $\begin{array}{|l|c|c|}
\hline \text { Accounts Receivable } & 15,925 & \
\hline \text { Allowance for Doubtful Accounts } & & 15,925 \
\hline
\end{array}$

Question 14

It is never good practice to accept a note receivable in exchange for an overdue account receivable.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

Installmen

Question 16

The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due,the lower the likelihood of collection.

Accepted Answer

A) True 
 B)False

Question 17

A promissory note:

Accepted Answer

A)  Is a short-term investment for the maker. 
B)  Is a written promise to pay a specified amount of money at a certain date. 
C)  Is a liability to the payee. 
D)  Is another name for an installment receivable. 
E)  Cannot be used in payment of an account receivable. 
A)  Is a short-term investment for the maker. 
B)  Is a written promise to pay a specified amount of money at a certain date. 
C)  Is a liability to the payee. 
D)  Is another name for an installment receivable. 
E)  Cannot be used in payment of an account receivable.

Question 18

When the maker of a note honors a note this indicates that the note is:

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

Question 19

A company borrowed $1,000 by signing a six-month promissory note at 5% interest.The total amount of interest on this promissory note is $25.

Accepted Answer

A) True 
 B)False

Question 20

The _______________________ method uses both past and current receivables to estimate the allowance amount and assumes that the longer an amount is past due,the more likely it is to be uncollectible.

Accepted Answer

aging of a

Exam 7: Accounts and Notes Receivable

A company borrowed $5,000 by signing a three-month promissory note at 10%.The total interest on the note is $500.

TechCom's customer RDA paid off an $8,300 balance on its account receivable.TechCom should record the transaction as a debit to Accounts Receivable-RDA and a credit to Cash.

A company factored $35,000 of its accounts receivable and was charged a 2% factoring fee.The journal entry to record this transaction would include a debit to Cash of $35,000,a debit to Factoring Fee Expense of $700,and a credit to Accounts Receivable of $35,700.

How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables?

The following information is from the annual financial statements of Nancy Company. 2013 2012 2011 Net sales \ 307,000 \ 238,000 \ 285,000 Accounts receivable, net (year-end) 47,900 45,700 42,400 What is the accounts receivable turnover ratio for 2013?

Ace Credit Card Company agrees to transfer cash to Seller Company immediately upon deposit of that company's credit card sales receipts.Ace charges a 2% fee for all credit card sales.If Seller Company deposits $57,300 credit card sales receipts,which of the following statements are true?

How does Jarrett Pumphrey of ClearCorrect,view decisions involving sales on credit?

The accounts receivable turnover is calculated by dividing _________________ by _____________________.

It is never good practice to accept a note receivable in exchange for an overdue account receivable.

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

The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due,the lower the likelihood of collection.

A promissory note:

When the maker of a note honors a note this indicates that the note is:

A company borrowed $1,000 by signing a six-month promissory note at 5% interest.The total amount of interest on this promissory note is $25.

The _______________________ method uses both past and current receivables to estimate the allowance amount and assumes that the longer an amount is past due,the more likely it is to be uncollectible.

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

Filters

The accounts receivable turnover is calculated by dividing _ by _____.