Question 1

A note is dishonored when it is not fully paid at maturity.

Accepted Answer

A) True 
 B)False

Question 2

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Accepted Answer

A) True 
 B)False

Question 3

Three accounting issues associated with accounts receivable are

Accepted Answer

A)   depreciating, returns, and valuing.
B)   depreciating, valuing, and collecting.
C)   recognizing, valuing, and disposing.
D)   accrual, bad debts, and disposing.E) A) and B)
F) A) and C)

Question 4

On March 1, 2010, Joe Miles purchased a suit at Calvin's Fine Apparel Store. The suit cost $250 and Joe used his Calvin credit card. Calvin charges 2% per month interest if payment on credit charges is not made within 30 days. On April 30, 2010, Joe had not yet made his payment. What entry should Calvin make on April 30th?

Accepted Answer

The answer of On March 1, 2010, Joe Miles purchased...

Question 5

Nolte Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2010, the balance in Accounts Receivable was $680,000 and net credit sales amounted to $3,500,000 during 2010. An aging analysis of the accounts receivable indicated that $36,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible.
Instructions
Prepare the adjusting entries to record estimated bad debts expense using the (1) percentage of sales basis and (2) the percentage of receivables basis under each of the following independent assumptions:
(a) Allowance for Doubtful Accounts has a credit balance of $3,200 before adjustment.
(b) Allowance for Doubtful Accounts has a debit balance of $730 before adjustment.

Accepted Answer

(1) Percentage of sales basis:...

Question 6

The direct write-off method

Accepted Answer

A)   is acceptable for financial reporting purposes.
B)   debits Allowance for Doubtful Accounts to record write-offs of accounts.
C)   shows only actual losses from uncollectible accounts receivable.
D)   estimates bad debt losses.E) All of the above
F) C) and D)

Question 7

Two methods of accounting for uncollectible accounts are the

Accepted Answer

A)   allowance method and the accrual method.
B)   allowance method and the net realizable method.
C)   direct write-off method and the accrual method.
D)   direct write-off method and the allowance method.E) All of the above
F) B) and D)

Question 8

Bad Debts Expense is reported on the income statement as

Accepted Answer

A)   part of cost of goods sold.
B)   reducing gross profit.
C)   an operating expense.
D)   a contra-revenue account.E) B) and D)
F) B) and C)

Question 9

Fowler Company on July 15 sells merchandise on account to Coffey Co. for $1,000, terms 2/10, n/30. On July 20 Coffey Co. returns merchandise worth $400 to Fowler Company. On July 24 payment is received from Coffey Co. for the balance due. What is the amount of cash received?

Accepted Answer

A)   $600
B)   $588
C)   $580
D)   $1,000E) None of the above
F) A) and D)

Question 10

Short-term notes receivables

Accepted Answer

A)   have a related allowance account called Allowance for Doubtful Notes Receivable.
B)   are reported at their gross realizable value.
C)   use the same estimations and computations as accounts receivable to determine cash realizable value.
D)   present the same valuation problems as long-term notes receivables.E) None of the above
F) C) and D)

Question 11

Writing off an uncollectible account under the allowance method requires a debit to

Accepted Answer

A)   Accounts Receivable.
B)   Allowance for Doubtful Accounts.
C)   Bad Debts Expense.
D)   Uncollectible Accounts Expense.E) A) and C)
F) C) and D) B

Question 12

A company has net credit sales of $900,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of

Accepted Answer

A)   $18,000.
B)   $19,000.
C)   $17,980.
D)   $17,000.E) None of the above
F) All of the above

Question 13

The term "receivables" refers to

Accepted Answer

A)   amounts due from individuals or companies.
B)   merchandise to be collected from individuals or companies.
C)   cash to be paid to creditors.
D)   cash to be paid to debtors.E) B) and C)
F) A) and B)

Question 14

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Accepted Answer

A)   net realizable value.
B)   maturity value.
C)   face value.
D)   face value plus interest.E) All of the above
F) B) and D)

Question 15

The interest on a $5,000, 10%, 1-year note receivable is

Accepted Answer

A)   $5,000.
B)   $500.
C)   $5,050.
D)   $5,500.E) B) and C)
F) A) and D) B

Question 16

At December 31, 2010, Grayson Company reported Accounts Receivable of $34,000 and Allowance for Doubtful Accounts of $3,500. On January 7, 2011, Duffy Enterprises declares bankruptcy and it is determined that the receivable of $1,200 from Duffy is not collectible.
1. What is the cash realizable value of Accounts Receivable at December 31, 2010?
2. What entry would Grayson make to write off the Duffy account?
3. What is the cash realizable value of Accounts Receivable after the Duffy account is written off?

Accepted Answer

1. Cash realizable value = $34...

Question 17

The maturity value of a $30,000, 8%, 3-month note receivable is

Accepted Answer

A)   $30,600.
B)   $30,240.
C)   $32,400.
D)   $30,200.E) A) and C)
F) B) and D)

Question 18

If an account is collected after having been previously written off,

Accepted Answer

A)   the allowance account should be debited.
B)   only the control account needs to be credited.
C)   both income statement and balance sheet accounts will be affected.
D)   there will be both a debit and a credit to accounts receivable.E) A) and B)
F) B) and C)

Question 19

Using the following information:  During 2010, sales on account were $145,000 and collections on account were $86,000. Also during 2010, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $54,000.
The change in the cash realizable value from the balance at 12/31/09 to 12/31/10 was a

Accepted Answer

A)   $50,000 increase.
B)   $59,000 increase.
C)   $42,000 increase.
D)   $51,000 increase.E) None of the above
F) A) and D) C

Question 20

Receivables may be sold because they may be the only reasonable source of cash.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Receivables

A note is dishonored when it is not fully paid at maturity.

Correct Answer
verified

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Correct Answer
verified

Three accounting issues associated with accounts receivable are

Correct Answer
verified

Correct Answer
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Correct Answer
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(1) Percentage of sales basis:...
View Answer

The direct write-off method

Correct Answer
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Two methods of accounting for uncollectible accounts are the

Correct Answer
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Bad Debts Expense is reported on the income statement as

Correct Answer
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Fowler Company on July 15 sells merchandise on account to Coffey Co. for $1,000, terms 2/10, n/30. On July 20 Coffey Co. returns merchandise worth $400 to Fowler Company. On July 24 payment is received from Coffey Co. for the balance due. What is the amount of cash received?

Correct Answer
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Short-term notes receivables

Correct Answer
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Writing off an uncollectible account under the allowance method requires a debit to

Correct Answer
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B

A company has net credit sales of $900,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of

Correct Answer
verified

The term "receivables" refers to

Correct Answer
verified

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Correct Answer
verified

The interest on a $5,000, 10%, 1-year note receivable is

Correct Answer
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B

Correct Answer
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1. Cash realizable value = $34...
View Answer

The maturity value of a $30,000, 8%, 3-month note receivable is

Correct Answer
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If an account is collected after having been previously written off,

Correct Answer
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Correct Answer
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C

Receivables may be sold because they may be the only reasonable source of cash.

Correct Answer
verified

Exam 9: Accounting for Receivables

A note is dishonored when it is not fully paid at maturity.

Correct AnswerverifiedShow Answer

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Correct AnswerverifiedShow Answer

Three accounting issues associated with accounts receivable are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified(1) Percentage of sales basis:...View AnswerShow Answer

The direct write-off method

Correct AnswerverifiedShow Answer

Two methods of accounting for uncollectible accounts are the

Correct AnswerverifiedShow Answer

Bad Debts Expense is reported on the income statement as

Correct AnswerverifiedShow Answer

Fowler Company on July 15 sells merchandise on account to Coffey Co. for $1,000, terms 2/10, n/30. On July 20 Coffey Co. returns merchandise worth $400 to Fowler Company. On July 24 payment is received from Coffey Co. for the balance due. What is the amount of cash received?

Correct AnswerverifiedShow Answer

Short-term notes receivables

Correct AnswerverifiedShow Answer

Writing off an uncollectible account under the allowance method requires a debit to

Correct AnswerverifiedB

A company has net credit sales of $900,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of

Correct AnswerverifiedShow Answer

The term "receivables" refers to

Correct AnswerverifiedShow Answer

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Correct AnswerverifiedShow Answer

The interest on a $5,000, 10%, 1-year note receivable is

Correct AnswerverifiedB

Correct Answerverified1. Cash realizable value = $34...View AnswerShow Answer

The maturity value of a $30,000, 8%, 3-month note receivable is

Correct AnswerverifiedShow Answer

If an account is collected after having been previously written off,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

Receivables may be sold because they may be the only reasonable source of cash.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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(1) Percentage of sales basis:...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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1. Cash realizable value = $34...
View Answer

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Correct Answer
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C

Correct Answer
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