Question 1

An aging of a company's accounts receivable indicates that the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $8,600 
B)  debit to Bad Debt Expense for $7,900 
C)  debit to Bad Debt Expense for $7,200 
D)  credit to Allowance for Doubtful Accounts for $700

Question 2

Financial statement data for the years ended December 31 for Parker Corporation are as follows:?? $$\begin{array} { c c c } 
& \text { Current Year } & \text { Prior Year } \\hline
\text { Sales } &\$ 2,595,600 & \$ 2,409,500 \
\text { Accounts receivable: } & \
\text { Beginning of year } & 390,000 & 400,000\
\text { End of year } & 434,000 &  390,000\
\end{array}$$ (a) Determine the accounts receivable turnover for each year. Round to one decimal place.
(b) Determine the days' sales in receivables for each year. Round to whole days.
(c) Does the change in accounts receivable turnover and days' sales in receivables fromthe first year to the second year indicate a favorable or unfavorable trend?

Accepted Answer

The answer of Financial statement data for the years ended...

Question 3

Two methods of accounting for uncollectible accounts are the

Accepted Answer

A)  direct write-off method and the allowance method 
B)  allowance method and the accrual method 
C)  allowance method and the net realizable method 
D)  direct write-off method and the accrual method

Question 4

When referring to a note receivable or promissory note,

Accepted Answer

A)  the maker is the party to whom the money is due 
B)  the note is not considered a formal credit instrument 
C)  the note cannot be factored to another party 
D)  the note may be used to settle an accounts receivable

Question 5

The direct write-off method records bad debt expense when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 6

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Accepted Answer

The answer of Fellows Corporation has determined that the $2,700...

Question 7

Match each description to the appropriate term (a-h).
-The dollar amount stated on a promissory note

Accepted Answer

A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate

Question 8

At the end of a period  (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the bad debt expense is $45,000.

Accepted Answer

A) True 
 B)False

Question 9

For each of the following notes receivables held by Winter Company, determine the interest revenue to be reported on the income statements. Round answers to nearest whole dollar. $$\begin{array} { | l | c | c | c | c | c | } 
\hline{ \text { Date } } & \text { Face } & \text { Rate } & \text { Term } & \begin{array} { c } 
\text { Year 1 } \
\text { Interest } \
\text { Revenue }
\end{array} & \begin{array} { c } 
\text { Year 2 } \
\text { Interest } \
\text { Revenue }
\end{array} \
\hline \text { Aug. 8, Year 1 } & \$ 15,000 & 7 \% & 180 \text { days } & & \
\hline \text { Oct. 7, Year 1 } & 22,000 & 8 & 60 \text { days } & & \
\hline \text { Jan. 6, Year 2 } & 30,000 & 8 & 90 \text { days } & & \
\hline \text { Nov. 12, Year 1 } & 28,000 & 9 & 60 \text { days } & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following notes receivables...

Question 10

Determine the due date and the amount of interest due at maturity on the following notes:? $$\begin{array} { | c | l | r | c | c | } 
\hline &  { \text { Date of Note } } & \text { Face Amount } & \text { Interest Rate } & \text { Term of Note } \
\hline \text { (a) } & \text { October } 1 & \$ 21,000 & 8 \% & 60 \text { days } \
\hline \text { (b) } & \text { August } 30 & 9,000 & 10 & 120 \text { days } \
\hline \text { (c) } & \text { May } 30 & 12,000 & 12 & 90 \text { days } \
\hline \text { (d) } & \text { March } 6 & 15,000 & 9 & 60 \text { days } \
\hline \text { (e) } & \text { May 23 } & 9,000 & 10 & 60 \text { days } \
\hline
\end{array}$$

Accepted Answer

The answer of Determine the due date and the amount...

Question 11

When a company receives an interest-bearing note receivable, it will

Accepted Answer

A)  debit Notes Receivable for the maturity value of the note 
B)  debit Notes Receivable for the face value of the note 
C)  credit Notes Receivable for the maturity value of the note 
D)  credit Notes Receivable for the face value of the note

Question 12

For fiscal Year 1 and Year 2, Grange Co. reported the following:? $~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$Year Ended December 31,
$\begin{array}{lcc}
&\underline{\text { Year } 2} & \underline{\text { Year } 1} \
Sales&\$34,124,961&\$44,123,486\
Accounts~ receivable &719,365&749,321
\end{array}$ (a) Compute the accounts receivable turnover for Year 2. Round to two decimal places.
(b) Compute the days' sales in receivables at the end of Year 2. Round to two decimal places.

Accepted Answer

The answer of For fiscal Year 1 and Year 2,...

Question 13

The journal entry to record a note received from a customer to replace an account is

Accepted Answer

A)  debit Notes Receivable; credit Accounts Receivable 
B)  debit Accounts Receivable; credit Notes Receivable 
C)  debit Cash; credit Notes Receivable 
D)  debit Notes Receivable; credit Notes Payable

Question 14

On June 30 
(the end of the period), Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.

Accepted Answer

The answer of On June 30 
(the end of the...

Question 15

At the end of the current year, Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $3,500,000. Bad debt expense is estimated at ½ of 1% of net sales.?Determine 
(a) the amount of the adjusting entry for bad debt expense; 
(b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and 
(c) the net realizable value of accounts receivable.

Accepted Answer

The answer of At the end of the current year,...

Question 16

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?

Accepted Answer

A)  debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 
B)  debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 
C)  debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 
D)  debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

Question 17

The interest on a 6%, 60-day note for $5,000 is $300.

Accepted Answer

A) True 
 B)False

Question 18

Paper Company receives a $6,000, three-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note? a. Notes Receivable, Dame Company$\quad\quad$6,000
$\quad\quad$Accounts Receivable, Dame Company$\quad\quad$6,000
b. Notes Receivable, Dame Company$\quad\quad$6,090
$\quad\quad$Accounts Receivable, Dame Company$\quad\quad$6,090
c. Notes Receivable, Dame Company$\quad\quad$6,090
$\quad\quad$Accounts Receivable, Dame Company$\quad\quad$6,000
$\quad\quad$Interest Revenue$\quad\quad$90
d. Notes Receivable, Dame Company$\quad\quad$6,000
Interest Revenue$\quad\quad$90
$\quad\quad$Accounts Receivable, Dame Company$\quad\quad$6,000
$\quad\quad$Interest Receivable$\quad\quad$90

Accepted Answer

The answer of Paper Company receives a $6,000, three-month, 6%...

Question 19

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts

Accepted Answer

A)  is $29,500 
B)  is $34,500 
C)  is $32,000 
D)  cannot be determined

Question 20

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Exam 9: Receivables

An aging of a company's accounts receivable indicates that the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a

Two methods of accounting for uncollectible accounts are the

When referring to a note receivable or promissory note,

The direct write-off method records bad debt expense when an account is determined to be uncollectible.

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Match each description to the appropriate term (a-h) . -The dollar amount stated on a promissory note

When a company receives an interest-bearing note receivable, it will

The journal entry to record a note received from a customer to replace an account is

On June 30 (the end of the period), Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?

The interest on a 6%, 60-day note for $5,000 is $300.

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of credit sales. If credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.