Deck 5: Receivables and Sales

Question 1

2)Credits sales are recorded as:

A)Debit Cash; credit Unearned Revenue.
B)Debit Service Revenue,credit Accounts Receivable.
C)Debit Cash; credit Service Revenue.
D)Debit Accounts Receivable,credit Service Revenue.

Answer 1

D

Question 2

25)Shupe Inc.estimates uncollectible accounts based on the percentage of accounts receivable.What effect will recording the estimate of uncollectible accounts have on the accounting equation?

A)Increase liabilities and decrease stockholders' equity
B)Decrease assets and decrease liabilities
C)Decrease assets and decrease stockholders' equity
D)Increase assets and decrease stockholders' equity

Answer 2

C

Question 3

18)Garber Plumbers offers a 20% trade discount when providing $2,000 or more of plumbing services to its customers.In March 2012,Garber provided $4,000 of plumbing services to Red Oak,Inc.and $1,500 of services to Cyril,Inc.Each of these customers was granted credit terms of 2/10,net 30.If both customers paid for the plumbing services within the discount period,what was the net sales figure for these two transactions?

A)$5,500.
B)$4,312.
C)$4,486.
D)$4,606.

Answer 3

D

Question 4

5)Gershwin Wallcovering Inc.shipped the wrong shade of paint to a customer.The customer agreed to keep the paint upon being offered a 15% price reduction.Gershwin would record this reduction by crediting Accounts Receivable and debiting:

A)Sales Revenue.
B)Sales Discounts.
C)Sales Returns.
D)Sales Allowances.

Question 5

Barton Health Services provided care to a patient worth $1,200.Because the patient was over the age of 65,Barton granted the patient a 20% discount and the customer paid the correct amount in cash.How would Barton record the service transaction?

A) $\begin{array}{ll}\text { Cash } & 960 \\\text { Service Revenue } &960 \end{array}$
B) $$\begin{array} { l l l } \text { Cash } & 960 \\\text { Trade Discount } & 240 \\\quad \text { Service Revenue } & & 1,200\end{array}$$
C) $\begin{array}{ll}\text { Cash } & 1,200 \\\quad \text { Service Revenue } & 1,200\end{array}$
D) $\begin{array}{lll}\text { Cash } & 1,200 & \\\text { Trade Discount } & & 240 \\\text { Service Revenue } & 960\end{array}$

Question 6

22)Gershwin Wallcovering Inc.shipped the wrong shade of paint to a customer.The customer agreed to keep the paint upon being offered a 15% price reduction.The price reduction is an example of a:

A)Sales revenue.
B)Sales discount.
C)Sales return.
D)Sales allowance.

Question 7

1)Which of the following best describes credit sales?

A)Cash sales to customers that are new to the company.
B)Sales to customers using credit cards.
C)Sales to customers on account.
D)Sales with a high risk that the customer will return the product.

Question 8

A company collects a customer's account within the discount period.Indicate how this transaction would affect the following five financial statement items:
$\begin{array}{llllll}&&& \text { Stockholders' } \\&\text { Assets } &\text { Liabilities } &\underline{\text { Equity }}& \underline{\text { Revenues }} &\underline{\text { Expenses }}\\\text { a. } & \text { Decrease } & \text { No effect } & \text { Decrease } & \text { Decrease } & \text { No effect } \\\text { b. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { Decrease } \\\text { c. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { No effect } \\\text { d. } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect }\end{array}$

A)Option a
B)Option b
C)Option c
D)Option d

Question 9

23)Tom's Textiles shipped the wrong material to a customer,who refused to accept the order.This is an example of a:

A)Sales Revenue.
B)Sales discount.
C)Sales return.
D)Sales allowance.

Question 10

14)Which of the following is recorded upon receipt of a payment on April 7,2012,by a customer who pays a $900 invoice dated March 3,2012,with terms 2/10,n/60?

A)Debit Sales Discounts $18.
B)Credit Purchase Discounts $18.
C)Credit Accounts Receivable $882.
D)Debit Cash $900.

Question 11

26)Under the allowance method,which of the following does not change the balance in the Accounts Receivable account?

A)Returns on credit sales.
B)Collections on customer accounts.
C)Bad debt expense adjustment.
D)Write-offs.

Question 12

A company records a sales return from a credit customer.Indicate how this transaction would affect the following five financial statement items.
$\begin{array}{llllll}&&& \text { Stockholders' } \\&\text { Assets } &\text { Liabilities } &\underline{\text { Equity }}& \underline{\text { Revenues }} &\underline{\text { Expenses }}\\\text { a. } & \text { Decrease } & \text { No effect } & \text { Decrease } & \text { Decrease } & \text { No effect } \\\text { b. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { Decrease } \\\text { c. } & \text { Increase } & \text { Increase } & \text { Increase } & \text { Increase } & \text { No effect } \\\text { d. } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect }\end{array}$

A)Option a
B)Option b
C)Option c
D)Option d

Question 13

24)Accounts receivable are normally reported at the:

A)Present value of future cash receipts.
B)Current value plus accrued interest.
C)Expected amount to be received.
D)Current value less expected collection costs.

Question 14

19)Boynton Jewelers reported the following amounts at the end of the year: total sales = $550,000; sales discounts = $12,000; sales returns = $44,000; sales allowances = $17,000.What was the company's net sales for the year?

A)$489,000.
B)$485,000.
C)$477,000.
D)$499,000.

Question 15

17)On March 17,Jackal Lumber sold building materials to Fredo Limited for $15,000 with terms of 3/10,net 20.What amount did Jackal record as revenue on March 25 when Fredo paid for the building materials?

A)$15,000.
B)$14,550.
C)$15,450.
D)$0.

Question 16

Eric Company has the following information:
$$\begin{array} { | l | r | } \hline \text { Total revenues } & \$ 860,000 \\\hline \text { Sales returns and allowances } & \$ 50,000 \\\hline \text { Sales discounts } & \$ 30,000 \\\hline \text { Ending inventory } & \$ 100,000 \\\hline\end{array}$$
What is the amount of net revenues for Eric Company?

A)$330,000.
B)$230,000.
C)$680,000.
D)$780,000.

Question 17

27)At December 31,Gill Co.reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit).An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable.The amount of the adjustment for uncollectible accounts would be:

A)$6,540.
B)$7,800.
C)$7,140.
D)$7,740.

Question 18

6)Tom's Textiles shipped the wrong material to a customer,who refused to accept the order.Upon receipt of the material,Tom's would credit Accounts Receivable and debit:

A)Sales Revenue.
B)Sales Discounts.
C)Sales Returns.
D)Sales Allowances.

Question 19

7)When customers purchase products on account,Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days.This is an example of a:

A)Bad debt.
B)Sales discount.
C)Sales return.
D)Sales allowances.

Question 20

A company provides services on account.Indicate how this transaction would affect the following five financial statement items:
$\begin{array}{llllll}&&& \text { Stockholders' } \\&\text { Assets } &\text { Liabilities } &\underline{\text { Equity }}& \underline{\text { Revenues }} &\underline{\text { Expenses }}\\\text { a. } & \text { Increase } & \text { Decrease } & \text { Increase } & \text { Decrease } & \text { No effect } \\\text { b. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { Decrease } \\\text { c. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { No effect } \\\text { d. } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect }\\\end{array}$

A)Option a
B)Option b
C)Option c
D)Option d

Question 21

36)At the end of 2012,Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit)before any adjustment.The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.Murray State's adjustment on December 31,2012,to record its estimated uncollectible accounts included a:

A)Credit to Allowance for Uncollectible Accounts of $12,000.
B)Debit to Bad Debt Expense of $7,500.
C)Credit to Allowance for Uncollectible Accounts of $7,500.
D)Both b and c.

Question 22

34)On December 31,2012,Mark Inc.estimates future bad debts to be $6,500.The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment.What adjustment should Mark Inc.record for the estimated bad debts on December 31,2012?

A)Debit Bad Debt Expense,$6,500; credit Allowance for Uncollectible Accounts,$6,500.
B)Debit Bad Debt Expense,$4,000; credit Allowance for Uncollectible Accounts $4,000.
C)Debit Allowance for Uncollectible Accounts,$9,000; credit Bad Debt Expense,$6,500.
D)Debit Bad Debt Expense,$9,000; credit Allowance for Uncollectible Accounts,$9,000.

Question 23

32)Allowance for Uncollectible Accounts is:

A)An expense account.
B)A contra asset account.
C)A contra revenue account.
D)A liability account.

Question 24

37)At the end of 2012,Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (debit)before any adjustment.The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.Murray State's adjustment on December 31,2012,to record its estimated uncollectible accounts included a:

A)Credit to Allowance for Uncollectible Accounts of $12,000.
B)Debit to Bad Debt Expense of $16,500.
C)Credit to Allowance for Uncollectible Accounts of $16,500.
D)Both b and c.

Question 25

33)Richard LLC accounts for possible bad debts using the allowance method.When an actual bad debt occurs,what effect does it have on the accounting equation?

A)Increases assets and increases stockholders' equity.
B)Decreases assets and decreases stockholders' equity.
C)Decreases assets and decreases liabilities.
D)No effect on the accounting equation.

Question 26

A company collects an account receivable previously written off.Indicate how this transaction would affect the following five financial statement items:
$\begin{array}{llllll}&&& \text { Stockholders' } \\&\text { Assets } &\text { Liabilities } &\underline{\text { Equity }}& \underline{\text { Revenues }} &\underline{\text { Expenses }}\\\text { a. } & \text { Increase } & \text { Decrease } & \text { Increase } & \text { Decrease } & \text { No effect } \\\text { b. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { Decrease } \\\text { c. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { No effect } \\\text { d. } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect }\\\end{array}$

A)Option a
B)Option b
C)Option c
D)Option d

Question 27

47)When using an aging method for estimating uncollectible accounts:

A)Older accounts are considered less likely to be collected.
B)The number of days the account is past due is not considered.
C)Older accounts are considered more likely to be collected.
D)No estimate of uncollectible accounts is made.

Question 28

45)At the beginning of 2012,the balance in Jackson Enterprises' Allowance for Uncollectible Accounts was $31,800.During 2012,the company wrote off $38,000 of accounts receivable.Writing off the individual bad debts would include a:

A)Debit to Bad Debt Expense.
B)Credit to Accounts Receivable.
C)Credit to the Allowance for Uncollectible Accounts.
D)Both a and c.

Question 29

30)At December 31,Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and $970 (debit)in Allowance for Uncollectible Accounts.An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable.Bad debt expense for the year should be:

A)$6,220.
B)$6,450.
C)$5,250.
D)$7,190.

Question 30

41)Collections of accounts receivable that previously have been written off are credited to:

A)A Gain account.
B)Accounts Receivable.
C)Bad Debt Expense.
D)Retained Earnings.

Question 31

43)When $2,500 of accounts receivable are determined to be uncollectible,which of the following should the company record to write off the accounts using the allowance method?

A)A debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts.
B)A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense.
C)A debit to Bad Debt Expense and a credit to Accounts Receivable.
D)A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable.

Question 32

44)Using the allowance method,writing off an actual bad debts would include a:

A)Debit to Bad Debt Expense.
B)Credit to Accounts Receivable.
C)Debit to Accounts Receivable.
D)Credit to Allowance for Uncollectible Accounts.

Question 33

39)On December 31,2012,Coolwear Inc.had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $48,400 and $940,respectively.During 2013,Coolwear wrote off $820 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,140 at December 31,2013.Bad debt expense for 2013 would be:

A)$320.
B)$1,140.
C)$820.
D)$1,020.

Question 34

40)Which of the following is recorded by a credit to Accounts Receivable?

A)Sale of inventory on account.
B)Estimating the annual allowance for uncollectible accounts.
C)Estimating annual sales returns.
D)Write-offs of bad debts.

Question 35

42)Lail Inc.accounts for bad debts using the allowance method.On June 1,Lail Inc.wrote off Andrew Green's $2,500 account.Based on Lail's estimation,Andrew Green will never pay any portion of the balance in his account.What effect will this write-off have on Lail Inc.'s balance sheet at the time of the write-off?

A)An increase to stockholders' equity and a decrease to liabilities.
B)No effect.
C)An increase to assets and an increase to stockholders' equity.
D)A decrease to assets and a decrease to stockholders' equity.

Question 36

38)On December 31,2012,Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $53,600 and $1,325,respectively.During 2013,Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31,2013.Bad debt expense for 2013 would be:

A)$1,280.
B)$1,465.
C)$1,420.
D)$1,140.

Question 37

35)Suppose that the balance of a company's Allowance for Uncollectible Accounts was $6,200 (credit)at the end of 2012,prior to any adjustments.The company estimated that the total of uncollectible accounts in its accounts receivable was $44,300 at the end of 2012.Total accounts receivable were $150,000 on December 31,2012,and total credit sales for 2012 were $330,000.What amount of bad debt expense would appear in the company's 2012 income statement,assuming the company uses the percentage-of-receivables method?

A)$38,100.
B)$105,700.
C)$33,000.
D)$50,500.

Question 38

31)A company's adjustment for uncollectible accounts at year-end would include a:

A)Debit to Bad Debt Expense.
B)Credit to Accounts Receivable.
C)Debit to Accounts Receivable.
D)Debit to Allowance for Uncollectible Accounts.

Question 39

29)At December 31,Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and $970 (credit)in Allowance for Uncollectible Accounts.An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable.Bad debt expense for the year should be:

A)$6,220.
B)$6,450.
C)$5,250.
D)$7,190.

Question 40

28)At December 31,Gill Co.reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (debit).An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable.The amount of the adjustment for uncollectible accounts would be:

A)$6,540.
B)$7,800.
C)$7,140.
D)$7,740.

Question 41

56)If the direct write-off method is used to account for uncollectible accounts,which of the following statements is false?

A)An allowance account is not used.
B)No adjustment is made at the end of the year to estimate future uncollectible accounts.
C)Accounts receivable will be reported at its net realizable value.
D)Bad debt expense is recorded at the time an actual bad debt is written-off.

Question 42

67)On January 1,2012,Alice & Co.lends $5,000 to an employee and accepts a 24-month,10% note.At the end of 2012,what effect will the adjustment for accrued interest revenue have on the Alice & Co.'s financial statements?

A)Decreases assets.
B)Decreases revenue.
C)Increases expense.
D)Increases stockholders' equity.

Question 43

Sandburg Veterinarian reports the following information for the year:
$\begin{array}{lr}\text { Net credit sales } & \$ 120,000 \\\text { Average accounts receivable } & 20,000 \\\text { Cash collections on credit sales } & 100,000\end{array}$
What is Sandburg's receivables turnover ratio?

A)6.0.
B)5.0.
C)1.2.
D)0.2.

Question 44

70)The amount of a company's receivables is influenced by several variables,including all of the following except:

A)The level of sales.
B)The nature of the product or service sold.
C)The credit and collection policies.
D)Dividend payments to stockholders.

Question 45

The following information pertains to Lightning,Inc.at the end of December:
$$\begin{array} { l r } \text { Credit Sales } & \$ 60,000 \\\text { Accounts Payable } & 10,000 \\\text { Accounts Receivable } & 7,000 \\\text { Allowance for Uncollectible Accounts } & \$ 400 \text { credit } \\\text { Cash Sales } & 20,000\end{array}$$ Lightning uses the aging method and estimates it will not collect 2% of accounts receivable not yet due,10% of receivables less than 30 days past due,and 40% of receivables greater than 30 days past due.The accounts receivable balance of $7,000 consists of $3,500 not yet due,$2,000 less than 30 days past due,and $1,500 greater than 30 days past due.What is the appropriate amount of Bad Debt Expense?

A)$400.
B)$470.
C)$870.
D)$1,270.

Question 46

60)Hughes Aircraft sold a four-passenger airplane for $380,000,receiving a $50,000 down payment and a 12% note for the balance.This transaction would include a:

A)Credit to Cash.
B)Debit to Sales Discount.
C)Debit to Notes Receivable.
D)Credit to Notes Receivable.

Question 47

On December 31,2012,Andy Inc.has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment.Andy Inc.also has the following information for its accounts receivable and the estimated percentages of bad debts for different past-due amounts:
$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Age Group } \\\text { (days past due) }\end{array} & \begin{array} { c } \text { Accounts } \\\text { Receivable }\end{array} & \begin{array} { c } \text { Estimated Percent } \\\text { Uncollectible }\end{array} \\\hline 0 - 30 & \$ 50,000 & 5 \% \\\hline 31 - 60 & \$ 20,000 & 10 \% \\\hline 61 - 90 & \$ 10,000 & 20 \% \\\hline\end{array}$$
What is the amount of bad debt expense to be reported on Andy Inc.'s financial statements for 2012?

A)$6,500
B)$1,500
C)$5,000
D)$8,000

Question 48

59)The primary difference between a note receivable and an account receivable is:

A)A note receivable cannot be classified as a current asset.
B)Borrowers have the option of not paying a note receivable.
C)An account receivable is more likely to be collected.
D)A note receivable is evidenced by a written debt instrument.

Question 49

61)On February 1,2012,Middleton Corp.lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months.How much interest revenue will Middleton Corp report during 2012?

A)$120.
B)$240.
C)$100.
D)$60.

Question 50

55)Which accounting principle does the direct write-off method violate?

A)Cost.
B)Realization.
C)Revenue recognition.
D)Matching.

Question 51

58)The direct write-off method is generally not permitted for financial reporting purposes because:

A)Compared to the allowance method,it would allow greater flexibility to managers in manipulating reported net income?
B)This method is primarily used for tax purposes.
C)It is too difficult to accurately estimate future bad debts.
D)Expenses (bad debts)are not properly matched with the revenues (credit sales)that they help to generate.

Question 52

65)On September 1,2012,Middleton Corp.lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months.How much interest revenue will Middleton Corp report during 2013?

A)$20.
B)$40.
C)$30.
D)$60.

Question 53

69)Beverage International reports net credit sales for the year of $240,000.The company's accounts receivable balance at the beginning of the year equaled $20,000 and the balance at the end of the year equaled $30,000.What is Beverage International's receivables turnover ratio?

A)12.0.
B)9.6.
C)8.0.
D)1.5.

Question 54

63)On September 1,2012,Middleton Corp.lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months.How much interest revenue will Middleton Corp report during 2012?

A)$20.
B)$40.
C)$30.
D)$60.

Question 55

57)Which method is not allowed under Generally Accepted Accounting Principles for the purpose of accounting for uncollectible accounts?

A)Allowance method.
B)Direct write-off method.
C)Aging method.
D)Percentage-of-receivables method.

Question 56

53)Under the direct write-off method,what adjustment is made at the end of the year to account for possible future bad debts?

A)Debit Bad Debt Expense.
B)Debit Allowance for Uncollectible Accounts.
C)Credit Accounts Receivable.
D)No adjustment is made.

Question 57

McConnell's Bakeries had the following balances on December 31,2012,before any adjustment: Accounts Receivable = $100,000; Allowance for Uncollectible Accounts = $4,100 (credit).McConnell's estimates uncollectible accounts based on an aging of accounts receivable as shown below:
$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Age Group } \\\text { (days past due) }\end{array} & \begin{array} { c } \text { Accounts } \\\text { Receivable }\end{array} & \begin{array} { c } \text { Estimated Percent } \\\text { Uncollectible }\end{array} \\\hline \text { Not yet due } & \$ 50,000 & 4 \% \\\hline 0 - 30 & \$ 20,000 & 8 \% \\\hline 31 - 60 & \$ 18,000 & 10 \% \\\hline \text { More than } 60 & \$ 12,000 & 40 \% \\\hline\end{array}$$
What amount of bad debt expense did McConnell's record in its December 31,2012,adjustment to the allowance account?

A)$10,200.
B)$12,800.
C)$15,300.
D)$6,100.

Question 58

48)Crimson Inc.recorded credit sales of $750,000,of which $600,000 is not yet due,$100,000 is past due for up to 180 days,and $50,000 is past due for more than 180 days.Under the aging of receivables approach,Crimson Inc.expects it will not collect 1% of the amount not yet due,10% of the amount past due for up to 180 days,and 20% of the amount past due for more than 180 days.The allowance account had a debit balance of $1,000 before adjustment.After adjusting for bad debt expense,what is the ending balance of the allowance account?

A)$29,000.
B)$28,000.
C)$27,000.
D)$26,000.

Question 59

54)Under the direct write-off method,what adjustment is made at the time an actual bad debt occurs?

A)Debit Bad Debt Expense,credit Allowance for Uncollectible Accounts.
B)Debit Allowance for Uncollectible Accounts,credit Accounts Receivable.
C)Debit Bad Debt Expense,credit Accounts Receivable.
D)No adjustment is made.

Question 60

71)Toppleson Manufacturing reports a receivables turnover ratio of 14.5.The industry average is 10.7.What most likely is causing this difference?

A)Toppleson is selling to high-risk customers.
B)Toppleson has effective procedures related to selling goods on account.
C)Toppleson provides superior products and services.
D)Toppleson allows customers too long to pay.

Question 61

74)Which of the following statements is true with respect to the percentage-of-credit-sales method for estimating uncollectible accounts?

A)The amount recorded for bad debt expense does not depend on the balance of the allowance for uncollectible accounts.
B)This method is referred to as the balance sheet approach.
C)This method does not allow for future uncollectible accounts.
D)Under this method,bad debt expense is recorded at the time of an actual bad debt.

Question 62

77.Credit sales transfer products and services to a customer today while bearing the risk of collecting payment from that customer in the future.

Question 63

87.Sales returns and allowances occur when the buyer returns the goods or the seller reduces the customer's balance owed.

Question 64

86.The Sales Discounts account is an expense account.
Sales Discounts is a contra revenue account.

Question 65

72)At the beginning of the year,Vici Ventures had accounts receivable of $220,000.At the end of the year,the company had accounts receivable of $340,000.During the year,Vici had total sales of $1,000,000,70% of which were credit sales What was Vici's receivables turnover ratio for the year?

A)2.50
B)3.57
C)2.94
D)146 days

Question 66

89.The Sales Returns account is an expense account.
Sales Returns is a contra revenue account.

Question 67

90.If a company has total revenues of $100,000,sales discounts of $3,000,sales returns of $4,000,and sales allowances of $2,000,the income statement will report net revenues of $91,000.

Question 68

82.When a company sells a $100 service with a 20% trade discount,$80 of revenue is recognized.

Question 69

73)The percentage-of-credit-sales method for estimating uncollectible accounts is sometimes described as:

A)The balance sheet method.
B)The method most used by companies.
C)The income statement method.
D)The percentage-of-receivables method.

Question 70

91.Accounts receivable are reported at their net realizable value.

Question 71

The following information pertains to Lindsey Corp.at the at the end of the year:
$$\begin{array} { l r } \text { Credit Sales } & \$ 150,000 \\\text { Accounts Payable } & 20,000 \\\text { Accounts Receivable } & 30,000 \\\text { Allowance for Uncollectible Accounts } & 800 \text { debit } \\\text { Cash Sales } & 5,500\end{array}$$
Lindsey Corp.uses the percentage-of-credit-sales method and estimates that 2% of the credit sales are uncollectible.After the year-end adjustment,what amount of bad debt expense would Lindsey report for the year?

A)$1,200.
B)$2,200.
C)$3,000.
D)$3,800.

Question 72

88.A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales Allowances.
A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts Receivable.

Question 73

83.A sales discount represents a reduction,not in the selling price of a product or service,but in the amount to be paid by a credit customer if payment is made within a specified period of time.

Question 74

80.Accounts receivable represent the amount of cash owed to the company by its customers from the sale of products or services on account.

Question 75

85.The Sales Discounts account is an example of a contra revenue account.

Question 76

The following information pertains to Lightning,Inc.at the end of the year:
$$\begin{array} { l r r } \text { Credit Sales } & \$ 60,000 \\\text { Accounts Payable } & 10,000 & \\\text { Accounts Receivable } & 7,000 & \\\text { Allowance for Uncollectible Accounts } & 400 & \text { credit } \\\text { Cash Sales } & 20,000 &\end{array}$$
Lightning uses the percentage-of-credit-sales method and estimates 1% of sales are uncollectible.What is the ending balance of the allowance account after the year-end adjustment?

A)$600.
B)$1,000.
C)$200.
D)$1,200.

Question 77

78.At the time of a credit sale,a company would record an increase in assets and an increase in revenues.

Question 78

79.A sale on account is recorded as a debit to Service Revenue and a credit to Accounts Receivable.
A sale on account is recorded as a debit to Accounts Receivable and a credit to Service Revenue.

Question 79

81.Trade discounts represent a discount offered to the purchasers for quick payment.
Trade discounts represent a reduction in the listed price of a product or service.

Question 80

84.A sale on account for $1,000 offered with terms 2/10,n/30 means that the customers will get a $2 discount if payment is made within 10 days; otherwise,full payment is due within 30 days.
2/10 indicates a 2% discount (or $20 in this example)if payment is made within 10 days.