Question 1

An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $14,000.
B)  debit to Allowance for Doubtful Accounts for $12,900.
C)  debit to Bad Debt Expense for $12,900.
D)  credit to Allowance for Doubtful Accounts for $14,000.E) A) and B)
F) None of the above

Question 2

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Accepted Answer

A)  The card company states interest as a monthly percentage rather than an annual percentage.
B)  The card company allows a grace period before interest is accrued.
C)  The card company allows cardholders to skip payments on their cards.
D)  The card company calculates finance charges from the date of purchase to the date the amount is paid.E) B) and D)
F) B) and C)

Question 3

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Accepted Answer

A)  The use of allowance accounts and the allowance method.
B)  Recording of discounts
C)  Recording sales returns and allowances
D)  All of these are essentially the same for IFRS and GAAP.E) A) and B)
F) All of the above

Question 4

Accepted Answer

Haven Company uses the percentage of receivables method for recording bad debt expense.The accounts receivable balance is $600,000 and credit sales are $2,700,000.Management estimates that 4% of accounts receivable will 1.  ) undefined
 ) undefined

Question 5

Accepted Answer

Randie Company lends Luann Company $10,000 on April 1, accepting a four-month, 6% interest note.Randie Company prepares financial statements on April 30.What adjusting entry should 1.  ) undefined
 ) undefined

Question 6

Receivables might be sold to

Accepted Answer

A)  lengthen the cash-to-cash operating cycle.
B)  take advantage of deep discounts on the cash realizable value of receivables.
C)  generate cash quickly.
D)  finance companies at an amount greater than cash realizable value.E) B) and D)
F) A) and B)

Question 7

A customer charges a treadmill at Annie's Sport Shop.The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days.The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge?

Accepted Answer

A)  $8
B)  $20
C)  $80
D)  $240E) All of the above
F) B) and C)

Question 8

Notes receivable are recorded in the accounts at

Accepted Answer

A)  cash (net)  realizable value.
B)  face value.
C)  gross realizable value.
D)  maturity value.E) A) and C)
F) A) and B)

Question 9

Trade accounts receivable are valued and reported on the balance sheet

Accepted Answer

A)  in the investment section.
B)  at gross amounts less sales returns and allowances.
C)  at net realizable value.
D)  only if they are not past due.E) A) and B)
F) A) and C)

Question 10

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A)  sales receivables.
B)  non-trade receivables.
C)  trade receivables.
D)  merchandise receivables.E) A) and B)
F) A) and C)

Question 11

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Accepted Answer

A)  when a credit sale is past due.
B)  at the end of each accounting period.
C)  whenever a pre-determined amount of credit sales have been made.
D)  when an account is determined to be uncollectible.E) A) and D)
F) C) and D)

Question 12

During 2021, Alfred Inc.had sales on account of $198,000, cash sales of $81,000, and collections on account of $126,000.In addition, they collected $2,175 which had been written off as uncollectible in 2020.As a result of these transactions, the change in the accounts receivable balance indicates a

Accepted Answer

A)  $69,825 increase.
B)  $72,000 increase.
C)  $150,825 increase.
D)  $153,000 increase.E) A) and D)
F) B) and D)

Question 13

Bad Debt 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) A) and B)
F) B) and D)

Question 14

An aging of a company's accounts receivable indicates that $5,000 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $5,000.
B)  debit to Allowance for Doubtful Accounts for $4,100.
C)  debit to Bad Debt Expense for $4,100.
D)  credit to Allowance for Doubtful Accounts for $5,000.E) None of the above
F) A) and B)

Question 15

Which of the following is not true regarding a promissory note?

Accepted Answer

A)  Promissory notes may not be transferred to another party by endorsement.
B)  Promissory notes may be sold to another party.
C)  Promissory notes give a stronger legal claim to the holder than accounts receivable.
D)  Promissory notes may be bearer notes and not specifically identify the payee by name.E) A) and B)
F) C) and D)

Question 16

A company regularly sells its receivables to a factor that assesses a 2% service charge on the amount of receivables purchased.Which of the following statements is true for the seller of the receivables?

Accepted Answer

A)  The loss section of the income statement will increase each time receivables are sold.
B)  The credit to Accounts Receivable is less than the debit to Cash when the accounts are sold.
C)  Selling expenses will increase each time accounts are sold.
D)  The other expense section of the income statement will increase each time accounts are sold.E) A) and B)
F) A) and D)

Question 17

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $15,000.If the balance of the Allowance for Doubtful Accounts is a $2,000 credit before adjustment, what is the amount of bad debt expense for that period?

Accepted Answer

A)  $2,000
B)  $13,000
C)  $15,000
D)  $17,000E) A) and B)
F) All of the above

Question 18

Newton Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500.During August, the following transactions occurred.  Instructions
Journalize the transactions.

Accepted Answer

The answer of Newton Company has the following accounts in...

Question 19

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A)  is the normal balance for that account.
B)  indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.
C)  indicates that actual bad debt write-offs have been less than what was estimated.
D)  cannot occur if the percentage of sales method of estimating bad debts is used.E) All of the above
F) C) and D)

Question 20

Deborah Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $50,000 (Cr.) , respectively.An aging of accounts receivable indicated that $180,000 is expected to become uncollectible.The amount of the adjusting entry for bad debts at December 31 is

Accepted Answer

A)  $130,000.
B)  $180,000.
C)  $210,000.
D)  $230,000.E) B) and C)
F) A) and D)

Exam 8: Accounting for Receivables

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Correct Answer
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A customer charges a treadmill at Annie's Sport Shop.The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days.The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge?

Correct Answer
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Receivables might be sold to

Correct Answer
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Which of the following is not true regarding a promissory note?

Correct Answer
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Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Correct Answer
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A company regularly sells its receivables to a factor that assesses a 2% service charge on the amount of receivables purchased.Which of the following statements is true for the seller of the receivables?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Correct Answer
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A debit balance in the Allowance for Doubtful Accounts

Correct Answer
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An aging of a company's accounts receivable indicates that $5,000 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Correct Answer
verified

Notes or accounts receivables that result from sales transactions are often called

Correct Answer
verified

Trade accounts receivable are valued and reported on the balance sheet

Correct Answer
verified

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $15,000.If the balance of the Allowance for Doubtful Accounts is a $2,000 credit before adjustment, what is the amount of bad debt expense for that period?

Correct Answer
verified

An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Correct Answer
verified

Bad Debt Expense is reported on the income statement as

Correct Answer
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Notes receivable are recorded in the accounts at

Correct Answer
verified

During 2021, Alfred Inc.had sales on account of $198,000, cash sales of $81,000, and collections on account of $126,000.In addition, they collected $2,175 which had been written off as uncollectible in 2020.As a result of these transactions, the change in the accounts receivable balance indicates a

Correct Answer
verified

Newton Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500.During August, the following transactions occurred. Instructions Journalize the transactions.

Correct Answer
verified

Exam 8: Accounting for Receivables

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Correct AnswerverifiedShow Answer

A customer charges a treadmill at Annie's Sport Shop.The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days.The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge?

Correct AnswerverifiedShow Answer

Receivables might be sold to

Correct AnswerverifiedShow Answer

Which of the following is not true regarding a promissory note?

Correct AnswerverifiedShow Answer

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Correct AnswerverifiedShow Answer

A company regularly sells its receivables to a factor that assesses a 2% service charge on the amount of receivables purchased.Which of the following statements is true for the seller of the receivables?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Correct AnswerverifiedShow Answer

A debit balance in the Allowance for Doubtful Accounts

Correct AnswerverifiedShow Answer

An aging of a company's accounts receivable indicates that $5,000 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Correct AnswerverifiedShow Answer

Notes or accounts receivables that result from sales transactions are often called

Correct AnswerverifiedShow Answer

Trade accounts receivable are valued and reported on the balance sheet

Correct AnswerverifiedShow Answer

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $15,000.If the balance of the Allowance for Doubtful Accounts is a $2,000 credit before adjustment, what is the amount of bad debt expense for that period?

Correct AnswerverifiedShow Answer

An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Correct AnswerverifiedShow Answer

Bad Debt Expense is reported on the income statement as

Correct AnswerverifiedShow Answer

Notes receivable are recorded in the accounts at

Correct AnswerverifiedShow Answer

During 2021, Alfred Inc.had sales on account of $198,000, cash sales of $81,000, and collections on account of $126,000.In addition, they collected $2,175 which had been written off as uncollectible in 2020.As a result of these transactions, the change in the accounts receivable balance indicates a

Correct AnswerverifiedShow Answer

Newton Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500.During August, the following transactions occurred. Instructions Journalize the transactions.

Correct AnswerverifiedShow Answer

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