Question 1

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Accepted Answer

A) True 
 B)False

Question 2

To write off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit ________ and credit accounts receivable.

Accepted Answer

allowance ...

Question 3

On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account.
-Compute the maturity date for the note.

Accepted Answer

A)  October 8
B)  October 7
C)  November 8
D)  November 7
E)  November 6F) B) and D)
G) B) and C)

Question 4

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The estimated amount of bad debts expense is $3,500.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Prudence Co.receives a $26,000,90-day,4% note receivable.What is the total principal and interest due at maturity?

Accepted Answer

The answer of Prudence Co.receives a $26,000,90-day,4% note receivable.What is...

Question 7

A promissory note:

Accepted Answer

A)  Is a short-term investment for the maker.
B)  Is a written promise to pay a specified amount of money at a certain date.
C)  Is a liability to the payee.
D)  Is another name for an installment receivable.
E)  Cannot be used in payment of an account receivable.F) C) and D)
G) B) and E)

Question 8

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 9

A company borrowed $10,000 by signing a six-month promissory note at 5% interest.The amount of interest to be paid at maturity is $25.

Accepted Answer

A) True 
 B)False

Question 10

Separate accounts receivable information for each customer is important because it reveals all of the following except:

Accepted Answer

A)  How much each customer has purchased on credit.
B)  How much each customer has paid.
C)  How much each customer still owes.
D)  The basis for sending bills to customers.
E)  When the customer intends to pay outstanding balances.F) A) and B)
G) A) and C)

Question 11

A 90-day note issued on April 10 matures on:

Accepted Answer

A)  July 9.
B)  July 10.
C)  July 11.
D)  July 12.
E)  July 13.F) B) and D)
G) B) and C)

Question 12

The maturity date of a note refers to the date the note must be repaid.

Accepted Answer

A) True 
 B)False

Question 13

A company had net sales of $600,000,total sales of $750,000,and an average accounts receivable of $75,000.Its accounts receivable turnover equals:

Accepted Answer

A)  0.13
B)  0.80
C)  7.75
D)  8.00
E)  10.00F) D) and E)
G) C) and D)

Question 14

Dishonoring a note means the maker no longer has to pay.

Accepted Answer

A) True 
 B)False

Question 15

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

Accepted Answer

A)  37.8.
B)  9.7.
C)  68.3.
D)  7.1.
E)  51.7.F) A) and E)
G) A) and D)

Question 16

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 Cash for $250; credit Notes Receivable $250.
B)  Debit Interest Revenue $500; credit Notes Receivable $500.
C)  Debit Interest Receivable $250; credit Interest Revenue $250.
D)  Debit Interest Receivable $500; credit Interest Revenue $500.
E)  Debit Notes Receivable $500; credit Interest Revenue $500.F) B) and D)
G) B) and C)

Question 17

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.
-If the note is dishonored,but Uniform Supply intends to continue collection efforts,what entry should Uniform Supply make on January 15 of the next year? (Assume no reversing entries are made.) (Use 360 days a year.)

Accepted Answer

A)  Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920.
B)  Debit Cash $4,920; credit Notes Receivable $4,920.
C)  Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20,credit Notes Receivable $4,800.
D)  Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100,credit Notes Receivable $4,800.
E)  Debit Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100,credit Notes Receivable $4,800.F) C) and D)
G) All of the above

Question 18

At December 31,Yarrow Company reports the following results for its calendar year from the adjusted trial balance.
  a.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 1.1% of credit sales.
b.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be .8% of total sales.
c.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7.0% of year-end accounts receivable.

Accepted Answer

$2,300,000 * .011 = $25,300
...

Question 19

Using the allowance method for bad debts expense,the Allowance for Doubtful Accounts is decreased:

Accepted Answer

A)  When the estimate of bad debts is expensed.
B)  When a specific customer account is written off.
C)  When a specific customer account is collected.
D)  When a sale to a credit customer is made.
E)  When all customer accounts are considered collectible.F) B) and D)
G) B) and C)

Question 20

The person that borrows money and signs a promissory note is called the maker.

Accepted Answer

A) True 
 B)False

Exam 7: Accounting for Receivables

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The estimated amount of bad debts expense is $3,500.

Correct Answer
verified

A company borrowed $10,000 by signing a six-month promissory note at 5% interest.The amount of interest to be paid at maturity is $25.

Correct Answer
verified

A 90-day note issued on April 10 matures on:

Correct Answer
verified

Using the allowance method for bad debts expense,the Allowance for Doubtful Accounts is decreased:

Correct Answer
verified

Separate accounts receivable information for each customer is important because it reveals all of the following except:

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 promissory note:

Correct Answer
verified

On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account. -Compute the maturity date for the note.

Correct Answer
verified

Correct Answer
verified

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Correct Answer
verified

The maturity date of a note refers to the date the note must be repaid.

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

Prudence Co.receives a $26,000,90-day,4% note receivable.What is the total principal and interest due at maturity?

Correct Answer
verified

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

Correct Answer
verified

To write off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit ________ and credit accounts receivable.

Correct Answer
verified
allowance ...
View Answer

Correct Answer
verified
$2,300,000 * .011 = $25,300
...
View Answer

Dishonoring a note means the maker no longer has to pay.

Correct Answer
verified

A company had net sales of $600,000,total sales of $750,000,and an average accounts receivable of $75,000.Its accounts receivable turnover equals:

Correct Answer
verified

The person that borrows money and signs a promissory note is called the maker.

Correct Answer
verified

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

Correct Answer
verified

Exam 7: Accounting for Receivables

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The estimated amount of bad debts expense is $3,500.

Correct AnswerverifiedShow Answer

A company borrowed $10,000 by signing a six-month promissory note at 5% interest.The amount of interest to be paid at maturity is $25.

Correct AnswerverifiedShow Answer

A 90-day note issued on April 10 matures on:

Correct AnswerverifiedShow Answer

Using the allowance method for bad debts expense,the Allowance for Doubtful Accounts is decreased:

Correct AnswerverifiedShow Answer

Separate accounts receivable information for each customer is important because it reveals all of the following except:

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 promissory note:

Correct AnswerverifiedShow Answer

On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account. -Compute the maturity date for the note.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Correct AnswerverifiedShow Answer

The maturity date of a note refers to the date the note must be repaid.

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

Prudence Co.receives a $26,000,90-day,4% note receivable.What is the total principal and interest due at maturity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To write off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit ________ and credit accounts receivable.

Correct Answerverifiedallowance ...View AnswerShow Answer

Correct Answerverified $2,300,000 * .011 = $25,300 ...View AnswerShow Answer

Dishonoring a note means the maker no longer has to pay.

Correct AnswerverifiedShow Answer

A company had net sales of $600,000,total sales of $750,000,and an average accounts receivable of $75,000.Its accounts receivable turnover equals:

Correct AnswerverifiedShow Answer

The person that borrows money and signs a promissory note is called the maker.

Correct AnswerverifiedShow Answer

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

Correct AnswerverifiedShow Answer

Correct Answer
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allowance ...
View Answer

Correct Answer
verified
$2,300,000 * .011 = $25,300
...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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