Question 1

A supplementary record created to maintain a separate account for each customer is called the
________.

Accepted Answer

accounts r...

Question 2

Honoring a note receivable indicates that the maker has:

Accepted Answer

A)   Paid in full.
B)   Notarized.
C)   Guaranteed.
D)   Cosigned.
E)   Signed.

Question 3

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Accepted Answer

A) True 
 B)False

Question 4

The use of the direct write-off method is allowed under the materiality constraint.

Accepted Answer

A) True 
 B)False

Question 5

The Links Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred:
Sept 7 Links Company determined that the $8,000 account receivable of the Rainier Company was uncollectible, and wrote it off.
Oct 15 Links Company determined that the $3,500 account receivable of the Olympic Company was uncollectible and wrote it off.
Nov 9 Rainier Company paid $6,000 of the amount owed to the Links
Company. Links Company does not expect further collections from the Rainier Company.
Dec 31 Links Company estimates that 1% of its $1,900,000 of credit sales would be uncollectible.
1. Prepare the general journal entries to record these transactions.
2. If the balance of the allowance for uncollectible accounts was a $4,000 credit on January 1 of the current year, determine the balance of the allowance for uncollectible accounts at December 31 of the current year. Assume that the transactions above are the only transactions affecting the allowance for uncollectible accounts during the year.

Accepted Answer

The answer of The Links Company uses the percent of...

Question 6

Match between columns
                        Premises:  A measure of both the quality and liquidity of accounts receivable that indicates how often, on average, receivables are received and collected during the period.
 Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.
 The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.
 Refers to a note maker's inability or refusal to pay a note at maturity.
 A method of accounting for bad debts that matches the estimated loss from uncollectible accounts receivable against the sales they helped to produce.
 Selling all or a portion of accounts receivable to a finance company or bank.
 The accounting principle that requires financial statements (including the notes to report all relevant information about operations and financial condition.
 Committing accounts receivable as security for a loan.
 A method of accounting for bad debts that records the loss from an uncollectible account receivable immediately upon determining it is uncollectible.
 The amount that the signer of a note agrees to pay back when the note matures, not including interest.

Accepted Answer

The Answer of Allowance method and Installment accounts receivable and is...

Question 7

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

Accepted Answer

A)   5.00
B)   3.0
C)   20.0
D)   73.0
E)   0.33

Question 8

________ is the charge for using borrowed money until its due date.

Accepted Answer

The answer of ________ is the charge for using borrowed...

Question 9

Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the collection of the note and interest at maturity should be: (Use 360 days a year.)

Accepted Answer

A)   Debit Cash $25,437.50; credit Notes Receivable for $25,437.50.
B)   Debit Cash $26,750; credit Interest Revenue $1,750, credit Notes Receivable $25,000.
C)   Debit Cash $25,437.50; credit Interest Revenue $437.50; credit Notes Receivable $25,000.
D)   Debit Cash for $25,000; credit Notes Receivable $25,000.
E)   Debit Notes Payable $25,000; Debit Interest Expense $1,750; credit Cash $26,750.

Question 10

The accounts receivable turnover is calculated by dividing ________ by ________.

Accepted Answer

net sales;...

Question 11

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. 
-The current balance (before adjustments)  in the allowance for doubtful accounts is an $800 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Accepted Answer

A)   $3,568
B)   $4,400
C)   $3,632
D)   $3,600
E)   $2,800

Question 12

The expense recognition (matching)  principle, as applied to bad debts, requires:

Accepted Answer

A)   The use of the direct write-off method for bad debts.
B)   That bad debts not be written off.
C)   That bad debts be disclosed in the financial statements.
D)   That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.
E)   The use of the allowance method of accounting for bad debts.

Question 13

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is: (Use 360 days a year.)

Accepted Answer

A)   $150.00.
B)   $37.50.
C)   $75.00.
D)   $87.50.
E)   $50.00.

Question 14

The ________ method uses both past and current receivables to estimate the allowance amount, and assumes that the longer an amount is past due, the more likely it is to be uncollectible.

Accepted Answer

aging of a...

Question 15

A company borrowed $16,000 by signing a 4-month promissory note at 12%. The amount of interest to be paid at maturity is $640.

Accepted Answer

A) True 
 B)False

Question 16

A company factored $45,000 of its accounts receivable and was charged a 4% factoring fee. The journal entry to record this transaction would include a:

Accepted Answer

A)   Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,800, and a credit to Accounts Receivable of $46,800.
B)   Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000.
C)   Debit to Cash of $43,200, a debit to Factoring Fee Expense of $1,800, and a credit to Accounts Receivable of $45,000.
D)   Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.
E)   Debit to Cash of $46,800 and a credit to Accounts Receivable of $46,800.

Question 17

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 credit balance of $375. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)     Accounts Receivable 16,125 Allowance for Doubtful Accounts 16,125\begin{array} { | l | l | l | } \hline 	ext { Accounts Receivable } & 16,125 & \\hline 	ext { Allowance for Doubtful Accounts } & & 16,125 \\hline\end{array} Accounts Receivable  Allowance for Doubtful Accounts ​16,125​16,125​​ 
B)     Accounts Receivable 15,750 Bad Debts Expense 375 Sales 16,125\begin{array} { | l | r | r | } \hline 	ext { Accounts Receivable } & 15,750 & \\hline 	ext { Bad Debts Expense } & 375 & \\hline 	ext { Sales } & & 16,125 \\hline\end{array} Accounts Receivable  Bad Debts Expense  Sales ​15,750375​16,125​​ 
C)     Bad Debts Expense 16,125 Allowance for Doubtful Accounts 16,125\begin{array} { | l | l | l | } \hline 	ext { Bad Debts Expense } & 16,125 & \\hline 	ext { Allowance for Doubtful Accounts } & & 16,125 \\hline\end{array} Bad Debts Expense  Allowance for Doubtful Accounts ​16,125​16,125​​ 
D)     Bad Debts Expense 15,375 Allowance for Doubtful Accounts 15,375\begin{array} { | l | l | l | } \hline 	ext { Bad Debts Expense } & 15,375 & \\hline 	ext { Allowance for Doubtful Accounts } & & 15,375 \\hline\end{array} Bad Debts Expense  Allowance for Doubtful Accounts ​15,375​15,375​​ 
E)     Bad Debts Expense 15,750 Allowance for Doubtful Accounts 15,750\begin{array} { | l | l | l | } \hline 	ext { Bad Debts Expense } & 15,750 & \\hline 	ext { Allowance for Doubtful Accounts } & & 15,750 \\hline\end{array} Bad Debts Expense  Allowance for Doubtful Accounts ​15,750​15,750​​

Question 18

A company had net sales of $550,000 and an average accounts receivable of $110,000. Its accounts receivable turnover equals 5.0.

Accepted Answer

A) True 
 B)False

Question 19

The expense recognition (matching) principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.

Accepted Answer

A) True 
 B)False

Question 20

The process of using accounts receivable as security for a loan is known as pledging accounts receivable.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Receivables

The ________ method uses both past and current receivables to estimate the allowance amount, and assumes that the longer an amount is past due, the more likely it is to be uncollectible.

Correct Answer
verified
aging of a...
View Answer

Correct Answer
verified

Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the collection of the note and interest at maturity should be: (Use 360 days a year.)

Correct Answer
verified

A company borrowed $16,000 by signing a 4-month promissory note at 12%. The amount of interest to be paid at maturity is $640.

Correct Answer
verified

Correct Answer
verified

The expense recognition (matching) principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.

Correct Answer
verified

Honoring a note receivable indicates that the maker has:

Correct Answer
verified

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

Correct Answer
verified

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is: (Use 360 days a year.)

Correct Answer
verified

Match the following definitions with the appropriate term

________ is the charge for using borrowed money until its due date.

Correct Answer
verified

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Correct Answer
verified

A supplementary record created to maintain a separate account for each customer is called the ________.

Correct Answer
verified
accounts r...
View Answer

Correct Answer
verified

The expense recognition (matching) principle, as applied to bad debts, requires:

Correct Answer
verified

A company factored $45,000 of its accounts receivable and was charged a 4% factoring fee. The journal entry to record this transaction would include a:

Correct Answer
verified

The accounts receivable turnover is calculated by dividing by .

Correct Answer
verified
net sales;...
View Answer

A company had net sales of $550,000 and an average accounts receivable of $110,000. Its accounts receivable turnover equals 5.0.

Correct Answer
verified

The use of the direct write-off method is allowed under the materiality constraint.

Correct Answer
verified

The process of using accounts receivable as security for a loan is known as pledging accounts receivable.

Correct Answer
verified

Exam 9: Accounting for Receivables

The ________ method uses both past and current receivables to estimate the allowance amount, and assumes that the longer an amount is past due, the more likely it is to be uncollectible.

Correct Answerverifiedaging of a...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the collection of the note and interest at maturity should be: (Use 360 days a year.)

Correct AnswerverifiedShow Answer

A company borrowed $16,000 by signing a 4-month promissory note at 12%. The amount of interest to be paid at maturity is $640.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The expense recognition (matching) principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.

Correct AnswerverifiedShow Answer

Honoring a note receivable indicates that the maker has:

Correct AnswerverifiedShow Answer

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

Correct AnswerverifiedShow Answer

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is: (Use 360 days a year.)

Correct AnswerverifiedShow Answer

Match the following definitions with the appropriate term

________ is the charge for using borrowed money until its due date.

Correct AnswerverifiedShow Answer

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Correct AnswerverifiedShow Answer

A supplementary record created to maintain a separate account for each customer is called the ________.

Correct Answerverifiedaccounts r...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The expense recognition (matching) principle, as applied to bad debts, requires:

Correct AnswerverifiedShow Answer

A company factored $45,000 of its accounts receivable and was charged a 4% factoring fee. The journal entry to record this transaction would include a:

Correct AnswerverifiedShow Answer

The accounts receivable turnover is calculated by dividing ________ by ________.

Correct Answerverifiednet sales;...View AnswerShow Answer

A company had net sales of $550,000 and an average accounts receivable of $110,000. Its accounts receivable turnover equals 5.0.

Correct AnswerverifiedShow Answer

The use of the direct write-off method is allowed under the materiality constraint.

Correct AnswerverifiedShow Answer

The process of using accounts receivable as security for a loan is known as pledging accounts receivable.

Correct AnswerverifiedShow Answer

Correct Answer
verified
aging of a...
View Answer

Correct Answer
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Correct Answer
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accounts r...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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The accounts receivable turnover is calculated by dividing by .

Correct Answer
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net sales;...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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