Deck 5: Receivables and Sales

Question 1

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.

Answer 1

B

Question 2

On November 10 of the current year, Flores Mills provides services to a customer for $8,000 with credit terms 2/10, n/30. The customer made the correct payment on November 17. How would Flores record the collection of cash on November 17?

A) $\begin{array}{c}\text { Cash } &7,840\\\qquad \text { Accounts Receivable }&&7,840\end{array}$
B) $$\begin{array} { l r r } \text { Cash } & 7,840 & \\\text { Sales Discounts } & 160 & \\\quad \text { Accounts Receivable } & & 8,000\end{array}$$
C) $$\begin{array} { l r r } \text { Cash } & 7,840 & \\\text { Sales Revenue } & 160 & \\\quad \text { Accounts Receivable } & & 8,000\end{array}$$
D) $\begin{array}{l}\text { Cash } &8,000\\\text { Accounts Receivable }&&8,000\end{array}$

Answer 2

$$\begin{array} { l r r } \text { Cash } & 7,840 & \\\text { Sales Discounts } & 160 & \\\quad \text { Accounts Receivable } & & 8,000\end{array}$$

Question 3

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.

Answer 3

C

Question 4

On July 8, Ray Inc. sold 100 printers to Office Rental Company at $600 each and offered a 2% discount for payment within 10 days. On July 15, Office Rental Company paid the full amount in cash. What should Ray Inc. record on July 15?

A)
B)
C)
D)

Question 5

Eric Company has the following information: What is the amount of net revenues for Eric Company?

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

Question 6

Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on June 10, assuming the customer made the correct payment on that date?

A)
B)
C)
D)

Question 7

Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date?

A)
B)
C)
D)

Question 8

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.

Question 9

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 10

Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 12?

A)
B)
C)
D)

Question 11

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 12

A company collects a customer's account within the discount period. Indicate how this transaction would affect the following five financial statement items:

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

Question 13

A company provides services on account. Indicate how this transaction would affect the following five financial statement items:

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

Question 14

On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. How would Flores record the sale on November 10?

A) $\begin{array}{lll}\text { Accounts Receivable } & 7,840 & \\\text { Sales Revenue } & & 7,840\end{array}$
B) $\begin{array}{lll}\text { Accounts Receivable } & 8,000 \\\text { Sales Revenue } & & 8,000\end{array}$
C) $$\begin{array} { c r r } \text { Accounts Receivable } & 7,840 & \\\quad \text { Cash Discounts } & 160 & \\\text { Sales Revenue } & & 8,000\end{array}$$
D) $$\begin{array} { c r r } \text { Accounts Receivable } & 8,000 & \\\text { Cash Discounts } & & 160 \\\text { Sales Revenue } & 7,840\end{array}$$

Question 15

On November 10 of the current year, Flores Mills provides services to a customer for $8,000 with credit terms 2/10, n/30. The customer made the correct payment on December 5. How would Flores record the collection of cash on December 5?

A)
B)
C)
D)

Question 16

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.

Question 17

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 18

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 19

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

Question 20

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 21

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 22

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 23

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 24

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 25

Allowance for Uncollectible Accounts is:

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

Question 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 27

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 28

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 29

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

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 31

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 32

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 33

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 34

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

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 36

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

Question 37

A company records a sales return from a credit customer. Indicate how this transaction would affect the following five financial statement items.

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

Question 38

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 39

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 40

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 41

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 42

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 43

A company collects an account receivable previously written off. Indicate how this transaction would affect the following five financial statement items:

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

Question 44

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 45

During 2012, Bears Inc. recorded credit sales of $500,000. Before adjustments at year-end, Bears has accounts receivable of $300,000, of which $50,000 is past due, and the allowance account had a credit balance of $2,500. Using the aging of receivables approach, what would be the adjustment assuming Bears expects it will not to collect 5% of the amount not yet past due and 20% of the amount past due?

A)
B)
C)
D)

Question 46

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

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

Question 47

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 48

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 49

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 50

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 51

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 52

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 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 54

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 55

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 56

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 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 58

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

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 60

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 61

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 62

On July 1, 2012, Herzog Mining lends cash and accepts a $9,000 note receivable that offers 10% interest and is due in nine months. How would Herzog record the transaction on April 1, 2013, when the borrower pays Herzog the correct amount owed?

A)
B) $$\begin{array}{l}\text { Cash }&9,675\\\text { Notes Receivable } & 9,000 \\\text { Interest Revenue } & 225 \\\text { Interest Receivable } & 450\end{array}$$
C)
D)

Question 63

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

Question 64

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

Question 65

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 66

On February 1, 2012, Sanger Corp. lends cash and accepts a $2,000 note receivable that offers 10% interest and is due in six months. What would Sanger record on August 1, 2012, when the borrower pays Sanger the correct amount owed?

A)
B)
C)
D)

Question 67

The following information pertains to Lightning, Inc. at the end of the year: $$\begin{array} { l r } \text { Credit Sales } & \$ 60,000 \\\text { Accounts Payable } & 10,000 \\\text { Accounts Receivable } & 7,000 \\\text { Allowance for Uncollectible Accounts } & 400 \text { credit } \\\text { Cash Sales } & 20,000\end{array}$$ Lightning uses the 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 68

On August 1, 2012, Turner Manufacturing lends cash and accepts a $6,000 note receivable that offers 8% interest and is due in nine months. How would Turner record the year-end adjustment to accrue interest in 2012?

A)
B)
C)
D)

Question 69

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

Question 70

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 71

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 72

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 73

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 74

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 75

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 76

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

Question 77

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 78

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 79

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 80

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

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