Question 1

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?

Accepted Answer

A)   In current assets on the balance sheet
B)   As a deduction from net sales revenue on the income statement
C)   As selling expenses on the income statement
D)   As cost of goods sold on the income statementE) B) and C)
F) All of the above

Question 2

Your company converted an existing account receivable in the amount of $5,000 to a note receivable to allow an extended payment period.The note is due in one year and includes an annual interest rate of 5%,The customer repays the principal at the maturity date.The entry to record the receipt of the principal includes a debit to:

Accepted Answer

A)   Cash and credit to Notes Receivable.
B)   Notes Receivable and credit to Accounts Receivable.
C)   Cash and credit to Interest Receivable.
D)   Notes Receivable and credit to Cash.E) C) and D)
F) B) and C)

Question 3

On June 12,because management knew with near certainty that it had no chance of collection,Sheave Company wrote off a customer's account balance in the amount of $350.On November 3,the customer mailed a payment for $350 to Sheave.To record the receipt of this payment from the customer,the company would debit:

Accepted Answer

A)   Bad Debt Expense and credit Cash.
B)   Accounts Receivable and credit Bad Debt Expense, and then debit Cash and credit Allowance for Doubtful Accounts.
C)   Cash and credit Accounts Receivable.
D)   Accounts Receivable and credit Allowance for Doubtful Accounts, and then debit Cash and credit Accounts Receivable.E) A) and B)
F) B) and C)

Question 4

Assume the Murtha Company reported the following adjusted account balances at year-end.

Assume the company recorded no write-offs or recoveries during 2016.What was the amount of Bad Debt Expense reported in 2016?

Accepted Answer

A)   $79,000
B)   $64,600
C)   $28,800
D)   $14,400E) A) and B)
F) All of the above

Question 5

Using the aging approach,management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $100 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

Accepted Answer

A)   debit to Bad Debt Expense of $1,100
B)   debit to Bad Debt Expense of $900
C)   debit to Bad Debt Expense of $1,000
D)   credit to Allowance for Doubtful Accounts of $1,000E) None of the above
F) C) and D)

Question 6

Friedman Company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000.What is the estimated Bad Debt Expense for the period?

Accepted Answer

A)   $8,000
B)   $17,000
C)   $25,000
D)   $33,000E) A) and B)
F) B) and D)

Question 7

The potential advantages of extending credit to customers include all of the following except higher:

Accepted Answer

A)   wage expenses.
B)   profits.
C)   customer satisfaction.
D)   revenues.E) A) and D)
F) A) and C)

Question 8

For billing and collection purposes,companies keep a separate accounts receivable account for each customer called a:

Accepted Answer

A)   subsidized account
B)   temporary account
C)   subsidiary account
D)   temporal accountE) A) and D)
F) None of the above

Question 9

Countryside Corporation uses the allowance method.Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay.Countryside Corporation should debit:

Accepted Answer

A)   Bad Debt Expense and credit Accounts Receivable for $350.
B)   Allowance for Doubtful Accounts and credit Accounts Receivable for $350.
C)   Bad Debt Expense and credit Cash for $350.
D)   Accounts Receivable and credit Bad Debt Expense for $350.E) None of the above
F) A) and D)

Question 10

Which of the following statements about receivables turnover analysis is correct?

Accepted Answer

A)   The receivables turnover ratio indicates how many times, on average, the process of selling to and collecting from customers occurs during the accounting period.
B)   Companies of similar size in different industries tend to have similar receivables turnover ratios.
C)   A high turnover ratio may suggest the company is allowing too much time for customers to pay.
D)   The days to collect ratio is found by dividing the receivables turnover ratio by 365 days.E) A) and B)
F) None of the above

Question 11

Nevada Wolf,Inc.determined at the end of the year that estimated uncollectible accounts was $50,000.If the Allowance for Doubtful Accounts currently has an unadjusted debit balance of $10,000,what is the amount of bad debts to be recorded at the end of the year?

Accepted Answer

A)   $55,000
B)   $50,000
C)   $40,000
D)   $60,000E) A) and C)
F) None of the above

Question 12

A company lends its supplier $150,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for:

Accepted Answer

A)   $9,000
B)   $13,500
C)   $4,500
D)   $27,000E) None of the above
F) B) and C)

Question 13

Which of the following statements about the receivables turnover analysis is correct?

Accepted Answer

A)   Accounts receivable decline as companies sell on credit.
B)   Accounts receivable increase as companies receive payment.
C)   Receivables turnover refers to how fast receivables are collected.
D)   The days to collect will increase as the receivables turnover increases.E) A) and B)
F) B) and D)

Question 14

Each December 31,Davis Company prepares an aging analysis of its accounts receivable to determine the amount of its adjustment for bad debts.At the end of the current year,management estimated that $16,900 of the accounts receivable balances would be uncollectible.The Allowance for Doubtful Accounts account had a debit balance of $3,200 before any year-end adjustment for bad debts.
Required:
Prepare the adjusting journal entry that Davis Company should make on December 31 of the current year to estimate Bad Debt Expense.

Accepted Answer

The aging of accounts receivable method ...

Question 15

The following information is available:

The receivables turnover ratio for 2016 is closest to:

Accepted Answer

A)   8.93 times
B)   8.48 times
C)   8.71 times
D)   9.14 timesE) A) and D)
F) A) and B)

Question 16

A company's unadjusted trial balance at the end of the year includes the following:

The company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800.What is the amount of Bad Debt Expense to be recorded for the year?

Accepted Answer

A)   $5,800
B)   $4,800
C)   $6,800
D)   $7,800E) All of the above
F) A) and B)

Question 17

What does a high receivable turnover ratio indicate?

Accepted Answer

A)   Customer payments are collected relatively soon after the sale has been made.
B)   Sales are growing.
C)   Credit sales are much greater than cash sales.
D)   Cash collections are sluggish, taking longer to collect.E) C) and D)
F) B) and C)

Question 18

Accounts Receivable has a $2,300 balance,and the Allowance for Doubtful Accounts has a $200 credit balance.An $80 account receivable is written-off.Net receivables (net realizable value) after the write-off equals:

Accepted Answer

A)   $2,020.
B)   $2,100.
C)   $2,180.
D)   $2,220.E) B) and C)
F) A) and B)

Question 19

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

Accepted Answer

A)   asset account and a credit to a liability account.
B)   expense account and a credit to an asset account.
C)   expense account and a credit to a revenue account.
D)   expense account and a credit to a contra-asset account.E) None of the above
F) A) and B)

Question 20

Langley Company uses the allowance method.During January 2016,Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay.The entry to record the write-off will:

Accepted Answer

A)   decrease total assets by $500.
B)   decrease net income for 2016 by $500.
C)   decrease net accounts receivable by $500.
D)   not increase the expenses for 2016.E) B) and C)
F) None of the above

Exam 8: Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Using the aging approach,management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $100 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

Correct Answer
verified

A company lends its supplier $150,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for:

Correct Answer
verified

Countryside Corporation uses the allowance method.Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay.Countryside Corporation should debit:

Correct Answer
verified

Correct Answer
verified

Langley Company uses the allowance method.During January 2016,Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay.The entry to record the write-off will:

Correct Answer
verified

The following information is available: The receivables turnover ratio for 2016 is closest to:

Correct Answer
verified

Friedman Company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000.What is the estimated Bad Debt Expense for the period?

Correct Answer
verified

Correct Answer
verified

Accounts Receivable has a $2,300 balance,and the Allowance for Doubtful Accounts has a $200 credit balance.An $80 account receivable is written-off.Net receivables (net realizable value) after the write-off equals:

Correct Answer
verified

Which of the following statements about the receivables turnover analysis is correct?

Correct Answer
verified

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?

Correct Answer
verified

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

Correct Answer
verified

Which of the following statements about receivables turnover analysis is correct?

Correct Answer
verified

Assume the Murtha Company reported the following adjusted account balances at year-end. Assume the company recorded no write-offs or recoveries during 2016.What was the amount of Bad Debt Expense reported in 2016?

Correct Answer
verified

The potential advantages of extending credit to customers include all of the following except higher:

Correct Answer
verified

What does a high receivable turnover ratio indicate?

Correct Answer
verified

Nevada Wolf,Inc.determined at the end of the year that estimated uncollectible accounts was $50,000.If the Allowance for Doubtful Accounts currently has an unadjusted debit balance of $10,000,what is the amount of bad debts to be recorded at the end of the year?

Correct Answer
verified

Correct Answer
verified
The aging of accounts receivable method ...
View Answer

A company's unadjusted trial balance at the end of the year includes the following: The company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800.What is the amount of Bad Debt Expense to be recorded for the year?

Correct Answer
verified

For billing and collection purposes,companies keep a separate accounts receivable account for each customer called a:

Correct Answer
verified

Exam 8: Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Using the aging approach,management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $100 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

Correct AnswerverifiedShow Answer

A company lends its supplier $150,000 for 3 years at a 6% annual interest rate.Interest payments are to be made twice a year.Each interest payment will be for:

Correct AnswerverifiedShow Answer

Countryside Corporation uses the allowance method.Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay.Countryside Corporation should debit:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Langley Company uses the allowance method.During January 2016,Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay.The entry to record the write-off will:

Correct AnswerverifiedShow Answer

The following information is available: The receivables turnover ratio for 2016 is closest to:

Correct AnswerverifiedShow Answer

Friedman Company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000.What is the estimated Bad Debt Expense for the period?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Accounts Receivable has a $2,300 balance,and the Allowance for Doubtful Accounts has a $200 credit balance.An $80 account receivable is written-off.Net receivables (net realizable value) after the write-off equals:

Correct AnswerverifiedShow Answer

Which of the following statements about the receivables turnover analysis is correct?

Correct AnswerverifiedShow Answer

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?

Correct AnswerverifiedShow Answer

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

Correct AnswerverifiedShow Answer

Which of the following statements about receivables turnover analysis is correct?

Correct AnswerverifiedShow Answer

Assume the Murtha Company reported the following adjusted account balances at year-end. Assume the company recorded no write-offs or recoveries during 2016.What was the amount of Bad Debt Expense reported in 2016?

Correct AnswerverifiedShow Answer

The potential advantages of extending credit to customers include all of the following except higher:

Correct AnswerverifiedShow Answer

What does a high receivable turnover ratio indicate?

Correct AnswerverifiedShow Answer

Nevada Wolf,Inc.determined at the end of the year that estimated uncollectible accounts was $50,000.If the Allowance for Doubtful Accounts currently has an unadjusted debit balance of $10,000,what is the amount of bad debts to be recorded at the end of the year?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe aging of accounts receivable method ...View AnswerShow Answer

A company's unadjusted trial balance at the end of the year includes the following: The company uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800.What is the amount of Bad Debt Expense to be recorded for the year?

Correct AnswerverifiedShow Answer

For billing and collection purposes,companies keep a separate accounts receivable account for each customer called a:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

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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Correct Answer
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Correct Answer
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Correct Answer
verified
The aging of accounts receivable method ...
View Answer

Correct Answer
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Correct Answer
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