Question 1

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note? (Use 360 days a year.)

Accepted Answer

A)  Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500.
B)  Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500.
C)  Debit Cash $8,500; credit Notes Receivable $8,500.
D)  Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670.
E)  Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500.F) A) and C)
G) B) and C)

Question 2

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Accepted Answer

A note receivable is a promissory note, ...

Question 3

Match between columns
                        Premises: A contra asset account with a balance approximating the amount of accounts receivable expected to be uncollectible.
The uncollectible accounts of credit customers who do not pay what they have promised.
A process of classifying accounts receivable by how long it is past its due date for the purpose of estimating the amount of uncollectible accounts.
The accounting principle that requires expenses to be reported in the same period as the sales they helped to produce.
Amounts due from customers for credit sales.
A written promise to pay a specified amount of money, usually with interest, either on demand or at a definite future date.
The party who signs a note and promises to pay it at maturity.
The expected proceeds from converting an asset into cash.
The party to whom the promissory note is payable.
The charge a borrower pays for using money borrowed.

Accepted Answer

The Answer of Allowance for doubtful accounts and Payee of is...

Question 4

The amount due on the maturity date of a $6,000, 60-day 4%, note receivable is: (Use 360 days a year.)

Accepted Answer

A)  $6,240.
B)  $5,760.
C)  $6,000.
D)  $6,040.
E)  $5,960.F) C) and D)
G) A) and B)

Question 5

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

Accepted Answer

A)  Debit Interest Receivable $500; credit Interest Revenue $500.
B)  Debit Cash for $250; credit Notes Receivable $250.
C)  Debit Interest Revenue $500; credit Notes Receivable $500.
D)  Debit Interest Receivable $250; credit Interest Revenue $250.
E)  Debit Notes Receivable $500; credit Interest Revenue $500.F) None of the above
G) A) and B)

Question 6

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 7

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Accepted Answer

A) True 
 B)False

Question 8

Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.

Accepted Answer

A) True 
 B)False

Question 9

Duerr company makes a $60,000, 60-day, 12% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

Accepted Answer

A)  $60,000.
B)  $58,800.
C)  $1,200.
D)  $61,200.
E)  $67,200.F) B) and D)
G) C) and E)

Question 10

After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Accepted Answer

A) True 
 B)False

Question 11

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

Accepted Answer

A) True 
 B)False

Question 12

The realizable value refers to the expected proceeds from converting an asset into cash.

Accepted Answer

A) True 
 B)False

Question 13

The expense recognition (matching)principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

Accepted Answer

A) True 
 B)False

Question 14

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

Accepted Answer

A)  54.8
B)  1.1
C)  6.3
D)  6.1
E)  63.0F) A) and D)
G) C) and D)

Question 15

The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

Accepted Answer

A) True 
 B)False

Question 16

Credit sales are recorded by crediting Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 17

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record the collection on account would be:

Accepted Answer

A)  Debit Cash of $625 and credit Accounts Receivable $625.
B)  Debit Sales $625 and credit Accounts Receivable $625.
C)  Debit Accounts Receivable $625 and credit Cash $625.
D)  Debit Cash of $625 and credit Sales $625.
E)  Debit Accounts Receivable $625 and credit Sales $625.F) B) and E)
G) A) and C)

Question 18

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note?

Accepted Answer

A)  Debit Interest Receivable $20; credit Interest Revenue $20.
B)  Debit Cash $100; credit Notes Receivable $100.
C)  Debit Interest Receivable $100; credit Interest Revenue $100.
D)  Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20.
E)  Debit Cash $20; credit Notes Receivable $20.F) All of the above
G) B) and E)

Question 19

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Accepted Answer

A)  $37.50.
B)  $450.00.
C)  $11.25.
D)  $112.50.
E)  $1,800.00.F) A) and C)
G) B) and E)

Question 20

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)

Accepted Answer

A)  $8,130
B)  $7,800
C)  $7,930
D)  $130
E)  $8,050F) C) and D)
G) B) and E)

Exam 9: Accounting for Receivables

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Correct Answer
verified

The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

Correct Answer
verified

Duerr company makes a $60,000, 60-day, 12% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

Correct Answer
verified

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

Correct Answer
verified

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Correct Answer
verified

Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.

Correct Answer
verified

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note?

Correct Answer
verified

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)

Correct Answer
verified

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

Correct Answer
verified

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Correct Answer
verified
A note receivable is a promissory note, ...
View Answer

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record the collection on account would be:

Correct Answer
verified

Match each of the appropriate definitions with correct term .

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note? (Use 360 days a year.)

Correct Answer
verified

Credit sales are recorded by crediting Accounts Receivable.

Correct Answer
verified

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Correct Answer
verified

After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Correct Answer
verified

The amount due on the maturity date of a $6,000, 60-day 4%, note receivable is: (Use 360 days a year.)

Correct Answer
verified

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

Correct Answer
verified

The realizable value refers to the expected proceeds from converting an asset into cash.

Correct Answer
verified

The expense recognition (matching)principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

Correct Answer
verified

Exam 9: Accounting for Receivables

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.

Correct AnswerverifiedShow Answer

The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

Correct AnswerverifiedShow Answer

Duerr company makes a $60,000, 60-day, 12% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

Correct AnswerverifiedShow Answer

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

Correct AnswerverifiedShow Answer

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

Correct AnswerverifiedShow Answer

Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.

Correct AnswerverifiedShow Answer

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note?

Correct AnswerverifiedShow Answer

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

Correct AnswerverifiedShow Answer

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Correct AnswerverifiedA note receivable is a promissory note, ...View AnswerShow Answer

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record the collection on account would be:

Correct AnswerverifiedShow Answer

Match each of the appropriate definitions with correct term .

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

Credit sales are recorded by crediting Accounts Receivable.

Correct AnswerverifiedShow Answer

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Correct AnswerverifiedShow Answer

After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Correct AnswerverifiedShow Answer

The amount due on the maturity date of a $6,000, 60-day 4%, note receivable is: (Use 360 days a year.)

Correct AnswerverifiedShow Answer

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

Correct AnswerverifiedShow Answer

The realizable value refers to the expected proceeds from converting an asset into cash.

Correct AnswerverifiedShow Answer

The expense recognition (matching)principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

Correct AnswerverifiedShow Answer

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A note receivable is a promissory note, ...
View Answer

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