Question 1

Accounts receivables occur from credit sales to customers.

Accepted Answer

A) True 
 B)False

Question 2

A company had an accounts receivable turnover ratio of 12 and net sales of $744,000 for a given period. What was the average amount of accounts receivables for this period?

Accepted Answer

A)  $8,928,000 
B)  $62,000 
C)  $4,380 
D)  $169.86 
E)  Average accounts receivable cannot be determined from this information 
A)  $8,928,000 
B)  $62,000 
C)  $4,380 
D)  $169.86 
E)  Average accounts receivable cannot be determined from this information

Question 3

The materiality principle:

Accepted Answer

A)  States that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions 
B)  Requires use of the allowance method for bad debts 
C)  Requires use of the direct write-off method 
D)  States that bad debts not be written off 
E)  Requires that expenses be reported in the same period as the sales they helped produce 
A)  States that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions 
B)  Requires use of the allowance method for bad debts 
C)  Requires use of the direct write-off method 
D)  States that bad debts not be written off 
E)  Requires that expenses be reported in the same period as the sales they helped produce

Question 4

Writing off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used, a company should debit _______________________ and credit accounts receivable.

Accepted Answer

Allowance

Question 5

Prepare general journal entries for the following transactions of Viking Company, assuming they use the allowance method to account for uncollectible accounts.

Accepted Answer

The answer of Prepare general journal entries for the following...

Question 6

Hasbro had net sales of $7,875 and its average accounts receivables is $1,350. Calculate Hasbro's accounts receivable turnover:

Accepted Answer

$7,875/$1,

Question 7

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 8

The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Accepted Answer

The answer of The ________________ method of accounting for bad...

Question 9

Vine Company began operations on January 1, 2010. 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:
 
What is the amount required for the adjusting journal entry to record bad debt expense?

Accepted Answer

A)  $18,644.90 
B)  $39,100.70 
C)  $19,783.80 
D)  $19,221.20 
E)  $19,400.20 
A)  $18,644.90 
B)  $39,100.70 
C)  $19,783.80 
D)  $19,221.20 
E)  $19,400.20

Question 10

The percent of accounts receivable method for bad debts estimation uses only income statement account balances to estimate bad debts.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A company receives a 6.2%, 60-day note for $9,650. The total amount of cash due on the maturity date is:

Accepted Answer

A)  $598.30 
B)  $99.72 
C)  $9,650.00 
D)  $10,248.30 
E)  $9,749.72 
A)  $598.30 
B)  $99.72 
C)  $9,650.00 
D)  $10,248.30 
E)  $9,749.72

Question 13

The percent of sales method of estimating bad debts is focused more on realizable value of accounts receivable than matching.

Accepted Answer

A) True 
 B)False

Question 14

Cairo Co. uses the allowance method of accounting for uncollectible accounts. Cairo Co. accepted a $5,000, 12%, 90-day note dated May 16, from Alexandria Co. as in exchange for its past-due account receivable. Make the necessary general journal entries for Cairo Co. on May 16 and the August 14 maturity date, assuming that the:
a. Note is held until maturity and collected in full at that time
b. Note is dishonored; the amount of the note and its interest are written off as uncollectible

Accepted Answer

The answer of Cairo Co. uses the allowance method of...

Question 15

On October 29 of the current year, a company concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method is used to account for bad debts?

Accepted Answer

A)  Decrease in net income; no effect on total assets 
B)  No effect on net income; no effect on total assets 
C)  Decrease in net income; decrease in total assets 
D)  Increase in net income; no effect on total assets 
E)  No effect on net income; decrease in total assets 
A)  Decrease in net income; no effect on total assets 
B)  No effect on net income; no effect on total assets 
C)  Decrease in net income; decrease in total assets 
D)  Increase in net income; no effect on total assets 
E)  No effect on net income; decrease in total assets

Question 16

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

Question 17

Tecom had net sales of $315,000 and average accounts receivable of $75,600. Its competitor, ZCom, had net sales of $299,000 and average accounts receivables of $81,350. Calculate the accounts receivable turnover for both companies. Which company is doing a better job of managing its accounts receivables?

Accepted Answer

Tecom: $315,000/$75,600 = 4.2 times
ZCom

Question 18

A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period?

Accepted Answer

A)  0.20 
B)  5.00 
C)  20.0 
D)  73.0 
E)  1,825 
A)  0.20 
B)  5.00 
C)  20.0 
D)  73.0 
E)  1,825

Question 19

The Connecting Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred:
  
1. Prepare the general journal entries to record these transactions.
If the balance of the allowance for uncollectible accounts was an $8,000 credit on January 1 of the current year, determine the balance of the allowance for doubtful accounts at December 31 of the current year. Assume that the transactions above are the only transactions affecting the allowance for doubtful accounts during the year.

Accepted Answer

@#IMG-DLM&
2. $8,000 - $8,100

Question 20

On November 15, 2010, 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, 2010 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

Exam 7: Accounts and Notes Receivable

Accounts receivables occur from credit sales to customers.

A company had an accounts receivable turnover ratio of 12 and net sales of $744,000 for a given period. What was the average amount of accounts receivables for this period?

The materiality principle:

Writing off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used, a company should debit _______________________ and credit accounts receivable.

Prepare general journal entries for the following transactions of Viking Company, assuming they use the allowance method to account for uncollectible accounts.

Hasbro had net sales of $7,875 and its average accounts receivables is $1,350. Calculate Hasbro's accounts receivable turnover:

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:

The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

The percent of accounts receivable method for bad debts estimation uses only income statement account balances to estimate bad debts.

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

A company receives a 6.2%, 60-day note for $9,650. The total amount of cash due on the maturity date is:

The percent of sales method of estimating bad debts is focused more on realizable value of accounts receivable than matching.

A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period?

On November 15, 2010, 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, 2010 adjusting journal entry?

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 and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

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