Question 1

What is meant by the term "net realizable value" for accounts receivable?

Accepted Answer

It is the amount that a business actually expects to collect from its accounts receivable.Net realizable value = Accounts Receivable - Allowance for Doubtful Accounts.

Question 2

On September 30,2012,Falls Company collected the principal on a one-year note receivable dated October 1,2011.Show the effect of the collection of the principal on Falls' financial statements.

Accepted Answer

The answer of On September 30,2012,Falls Company collected the principal...

Question 3

The Repair Shop provided $618,000 of services to customers during 2012.All customers paid for the services with credit cards.The company submitted the credit card receipts to the credit card company immediately,and the credit card company paid cash in the amount of face value less a 4 percent service charge.
Required:
Record the credit card sales and collection of the receivables in the horizontal statements model,below.Show dollar amounts of increases and decreases.For cash flows,indicate whether the item is an operating activity (OA),investing activity (IA),or financing activity (FA).Use NA to indicate that an element is not affected by an event.

Accepted Answer

The answer of The Repair Shop provided $618,000 of services...

Question 4

Warden Company has the following account balances at the end of 2012:

Accepted Answer

@#IMG-DLM& Required: Compute t

Question 5

The net realizable value of accounts receivable decreases when an account receivable is written off.

Accepted Answer

A) True 
 B)False

Question 6

When a company receives payment from a customer whose account was previously written off,the customer's account should be reinstated.

Accepted Answer

A) True 
 B)False

Question 7

What amounts will Siebens report on its 2012 statement of cash flows?

Accepted Answer

A)  $0 
B)  A cash outflow of $20,000 shown as an operating activity 
C)  A cash outflow of $20,000 and an inflow of $800 for interest 
D)  A cash outflow of $20,000 shown as an investing activity 
A)  $0 
B)  A cash outflow of $20,000 shown as an operating activity 
C)  A cash outflow of $20,000 and an inflow of $800 for interest 
D)  A cash outflow of $20,000 shown as an investing activity

Question 8

An aging of accounts receivable may be used to estimate the amount of accounts receivable that a company is likely not to collect.

Accepted Answer

A) True 
 B)False

Question 9

Warnock Company had $400,000 in credit sales for 2012,and it estimated that 2% of the credit sales would not be collected.The balance in Accounts Receivable at the end of the year was $79,000.Warnock had never used the allowance method to account for its receivables till 2012.The net realizable value of its accounts receivable at the end of the year was $71,000.

Accepted Answer

A) True 
 B)False

Question 10

Barry Company purchased two identical inventory items.The item purchased first cost $7.00 and the item purchased second cost $9.00.Barney sold one of the items for $12.00.Which of the following statements is true?

Accepted Answer

A)  Ending inventory will be lower if Barney uses weighted average than it would be if FIFO were used. 
B)  Cost of goods sold will be higher if Barney uses FIFO than it would be if weighted average were used. 
C)  Ending inventory will be the same no matter which cost flow method is used. 
D)  Gross margin will be higher if Barney uses LIFO than if FIFO were used. 
A)  Ending inventory will be lower if Barney uses weighted average than it would be if FIFO were used. 
B)  Cost of goods sold will be higher if Barney uses FIFO than it would be if weighted average were used. 
C)  Ending inventory will be the same no matter which cost flow method is used. 
D)  Gross margin will be higher if Barney uses LIFO than if FIFO were used.

Question 11

The longer an account receivable has been outstanding,the less likely it is to be collected.

Accepted Answer

A) True 
 B)False

Question 12

Related to this note receivable,what amount of interest income would Siebens report on its 2012 income statement?

Accepted Answer

A)  $1,000 
B)  $1,600 
C)  $800 
D)  $933 
A)  $1,000 
B)  $1,600 
C)  $800 
D)  $933

Question 13

In relation to inventory,differentiate between flow of cost and physical flow of goods.

Accepted Answer

Flow of cost is simply an assumption tha

Question 14

Stewart Company sold 180 units @ $320 each on October 31,2012.Cash selling and administrative expenses were $15,000.The following information is also available:

Accepted Answer

@#IMG-DLM& The company's income tax rate is 40%. R

Question 15

The net effect of the entries to recognize the collection of a previously written-off account under the allowance method will

Accepted Answer

A)  decrease total assets. 
B)  have no effect on total assets or total equity. 
C)  increase total equity. 
D)  decrease total equity. 
A)  decrease total assets. 
B)  have no effect on total assets or total equity. 
C)  increase total equity. 
D)  decrease total equity.

Question 16

During November 2012,Hall Company purchased two identical inventory items.The item purchased first cost $12.00,and the item purchased second cost $15.00.Hall sold one of the inventory items for $20.00.Based on this information

Accepted Answer

A)  the amount of gross margin would be $5.00 if Hall uses the weighted average cost flow method. 
B)  the amount of cost of goods sold would be $12.00 if Hall uses the weighted average cost flow method. 
C)  the amount of gross margin will be $5.00 if Hall uses the FIFO cost flow method. 
D)  the amount of ending inventory will be $12.00 if Hall uses the LIFO cost flow method. 
A)  the amount of gross margin would be $5.00 if Hall uses the weighted average cost flow method. 
B)  the amount of cost of goods sold would be $12.00 if Hall uses the weighted average cost flow method. 
C)  the amount of gross margin will be $5.00 if Hall uses the FIFO cost flow method. 
D)  the amount of ending inventory will be $12.00 if Hall uses the LIFO cost flow method.

Question 17

Mohr Manufacturing,Inc.had the following sales during 2012:   Mohr also had the following beginning and ending balances in the receivables accounts:   Mohr,which uses the allowance method of accounting for uncollectible accounts,estimated that 3% of the credit sales will go uncollected.The credit card company charges Mohr a 4% service charge.
a)What was the amount of uncollectible accounts expense related to credit sales?
b)What was the amount of the company's expense for credit card fees during the year?
c)What was Mohr's cash flow from customers for the year?

Accepted Answer

@#IMG-DLM& Calculations: Collection from

Question 18

On September 30,2012,Falls Company collected the accrued interest revenue on a one-year note receivable dated October 1,2010.Show the effect of the collection of previously-accrued interest on Falls' financial statements.

Accepted Answer

The answer of On September 30,2012,Falls Company collected the accrued...

Question 19

On March 31,2012,Stuart Co.wrote off a $600 account receivable of one of its customers.The $600 sale had been made in 2011.Stuart uses the allowance method to account for uncollectible accounts expense.Show how the write-off of the account would affect Stuart's financial statements.

Accepted Answer

The answer of On March 31,2012,Stuart Co.wrote off a $600...

Question 20

What are some of the costs a business incurs in making credit sales to customers? What is the primary benefit of making credit sales?

Accepted Answer

Costs include the cost of handling the a

What is meant by the term "net realizable value" for accounts receivable?

On September 30,2012,Falls Company collected the principal on a one-year note receivable dated October 1,2011.Show the effect of the collection of the principal on Falls' financial statements.

Warden Company has the following account balances at the end of 2012:

The net realizable value of accounts receivable decreases when an account receivable is written off.

When a company receives payment from a customer whose account was previously written off,the customer's account should be reinstated.

What amounts will Siebens report on its 2012 statement of cash flows?

An aging of accounts receivable may be used to estimate the amount of accounts receivable that a company is likely not to collect.

Barry Company purchased two identical inventory items.The item purchased first cost $7.00 and the item purchased second cost $9.00.Barney sold one of the items for $12.00.Which of the following statements is true?

The longer an account receivable has been outstanding,the less likely it is to be collected.

Related to this note receivable,what amount of interest income would Siebens report on its 2012 income statement?

In relation to inventory,differentiate between flow of cost and physical flow of goods.

Stewart Company sold 180 units @ $320 each on October 31,2012.Cash selling and administrative expenses were $15,000.The following information is also available:

The net effect of the entries to recognize the collection of a previously written-off account under the allowance method will

During November 2012,Hall Company purchased two identical inventory items.The item purchased first cost $12.00,and the item purchased second cost $15.00.Hall sold one of the inventory items for $20.00.Based on this information

On September 30,2012,Falls Company collected the accrued interest revenue on a one-year note receivable dated October 1,2010.Show the effect of the collection of previously-accrued interest on Falls' financial statements.

On March 31,2012,Stuart Co.wrote off a $600 account receivable of one of its customers.The $600 sale had been made in 2011.Stuart uses the allowance method to account for uncollectible accounts expense.Show how the write-off of the account would affect Stuart's financial statements.

What are some of the costs a business incurs in making credit sales to customers? What is the primary benefit of making credit sales?

An Introduction to Accounting

Understanding the Accounting Cycle

Accounting for Merchandising Businesses

Internal Controls,accounting for Cash,and Ethics

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, partnerships, and Corporations

Filters

Exam 5: Accounting for Receivables and Inventory Cost Flow

What is meant by the term "net realizable value" for accounts receivable?

On September 30,2012,Falls Company collected the principal on a one-year note receivable dated October 1,2011.Show the effect of the collection of the principal on Falls' financial statements.

Warden Company has the following account balances at the end of 2012:

The net realizable value of accounts receivable decreases when an account receivable is written off.

When a company receives payment from a customer whose account was previously written off,the customer's account should be reinstated.

What amounts will Siebens report on its 2012 statement of cash flows?

An aging of accounts receivable may be used to estimate the amount of accounts receivable that a company is likely not to collect.

Barry Company purchased two identical inventory items.The item purchased first cost $7.00 and the item purchased second cost $9.00.Barney sold one of the items for $12.00.Which of the following statements is true?

The longer an account receivable has been outstanding,the less likely it is to be collected.

Related to this note receivable,what amount of interest income would Siebens report on its 2012 income statement?

In relation to inventory,differentiate between flow of cost and physical flow of goods.

Stewart Company sold 180 units @ $320 each on October 31,2012.Cash selling and administrative expenses were $15,000.The following information is also available:

The net effect of the entries to recognize the collection of a previously written-off account under the allowance method will

During November 2012,Hall Company purchased two identical inventory items.The item purchased first cost $12.00,and the item purchased second cost $15.00.Hall sold one of the inventory items for $20.00.Based on this information

On September 30,2012,Falls Company collected the accrued interest revenue on a one-year note receivable dated October 1,2010.Show the effect of the collection of previously-accrued interest on Falls' financial statements.

On March 31,2012,Stuart Co.wrote off a $600 account receivable of one of its customers.The $600 sale had been made in 2011.Stuart uses the allowance method to account for uncollectible accounts expense.Show how the write-off of the account would affect Stuart's financial statements.

What are some of the costs a business incurs in making credit sales to customers? What is the primary benefit of making credit sales?

An Introduction to Accounting

Understanding the Accounting Cycle

Accounting for Merchandising Businesses

Internal Controls,accounting for Cash,and Ethics

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, partnerships, and Corporations

Filters