Question 1

The banker's rule simplifies interest computations by treating a year as having 365 days.

Accepted Answer

A) True 
 B)False

Question 2

Honoring a note receivable indicates that the maker has:

Accepted Answer

A)   Signed.
B)   Paid in full.
C)   Guaranteed.
D)   Notarized.
E)   Cosigned.F) C) and E)
G) A) and B)

Question 3

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Accepted Answer

The answer of The________ method of accounting for bad debts...

Question 4

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

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

Question 6

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 July 9 to record receipt of the note?

Accepted Answer

A)   Debit Accounts Receivable $8,500; credit Sales $8,500.
B)   Debit Notes Receivable $8,670; credit Sales $8,670.
C)   Debit Notes Receivable $8,500; credit Accounts Receivable $8,500.
D)   Debit Notes Receivable $8,500; credit Sales $8,500.
E)   Debit Notes Receivable $8,725; credit Interest Revenue $225; credit Accounts Receivable $8,500.F) A) and D)
G) A) and C)

Question 7

A company has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.Experience suggests that 6% of outstanding receivables are uncollectible.
-The current credit balance (before adjustments)in the allowance for doubtful accounts is $1,200.The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $4,800.

Accepted Answer

A) True 
 B)False

Question 8

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Accepted Answer

A) True 
 B)False

Question 9

The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

Accepted Answer

A) True 
 B)False

Question 10

Companies follow both the expense recognition (matching)principle and the materiality constraint when applying the direct write-off method.

Accepted Answer

A) True 
 B)False

Question 11

Explain the difference between honoring and dishonoring a note receivable.

Accepted Answer

When a note is honored,the mak...

Question 12

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred:
  
Prepare the general journal entries to record these transactions.

Accepted Answer

The answer of The Branson Company uses the percent of...

Question 13

Thatcher Company had a January 1,credit balance in its Allowance for Doubtful Accounts of $4,000 for the current year.The following transactions and events affected the Allowance for Doubtful Accounts during the current year:
  
What amount should appear in the allowance for doubtful accounts in the December 31,balance sheet for the current year?

Accepted Answer

$4,000 - $...

Question 14

Explain how to record the receipt (acceptance)of a note receivable.

Accepted Answer

The receipt of a note receivable is reco...

Question 15

White Company allows customers to make purchases on credit.The terms of all credit sales are 2/10,n/30,and all sales are recorded at the gross price.Other customers can use a bank credit card where the bank deducts a 4% service charge for credit card sales and credits the bank account of White immediately when credit card receipts are deposited.White uses the perpetual inventory method.Prepare journal entries to record the following selected transactions and events.

Accepted Answer

The answer of White Company allows customers to make purchases...

Question 16

A credit sale of $5,275 to a customer would result in which of the following?

Accepted Answer

A)   A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
B)   A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
C)   A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
D)   A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
E)   A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger.F) None of the above
G) A) and C)

Question 17

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

Question 18

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

Accepted Answer

A)   $900
B)   $75
C)   $450
D)   $300
E)   $1,800F) C) and D)
G) None of the above

Question 19

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

Question 20

A company ages its accounts receivables to determine its end of period adjustment for bad debts.At the end of the current year,management estimated that $15,750 of the accounts receivable balance would be uncollectible.
-Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a debit balance of $375.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)     Bad Debts Expense 15,750 Allowance for Doubtful Accounts 15,750\begin{array} { | l | r | r | } \hline 	ext { Bad Debts Expense } & 15,750 & \\hline 	ext { Allowance for Doubtful Accounts } & & 15,750 \\hline\end{array} Bad Debts Expense  Allowance for Doubtful Accounts ​15,750​15,750​​ 
B)     Bad Debts Expense 15,375 Allowance for Doubtful Accounts 15,375\begin{array} { | l | r | r | } \hline 	ext { Bad Debts Expense } & 15,375 & \\hline 	ext { Allowance for Doubtful Accounts } & & 15,375 \\hline\end{array} Bad Debts Expense  Allowance for Doubtful Accounts ​15,375​15,375​​ 
C)     Bad Debts Expense 16,125 Allowance for Doubtful Accounts 16,125\begin{array} { | l | r | r | } \hline 	ext { Bad Debts Expense } & 16,125 & \\hline 	ext { Allowance for Doubtful Accounts } & & 16,125 \\hline\end{array} Bad Debts Expense  Allowance for Doubtful Accounts ​16,125​16,125​​ 
D)     Accounts Receivable 15,750 Bad Debts Expense 375 Sales 16,125\begin{array} { | l | r | r | } \hline 	ext { Accounts Receivable } & 15,750 & \\hline 	ext { Bad Debts Expense } & 375 & \\hline 	ext { Sales } & & 16,125 \\hline\end{array} Accounts Receivable  Bad Debts Expense  Sales ​15,750375​16,125​​ 
E)     Accounts Receivable 16,125 Allowance for Doubtful Accounts 16,125\begin{array} { | l | r | r | } \hline 	ext { Accounts Receivable } & 16,125 & \\hline 	ext { Allowance for Doubtful Accounts } & & 16,125 \\hline\end{array} Accounts Receivable  Allowance for Doubtful Accounts ​16,125​16,125​​F) B) and E)
G) A) and D)

Exam 7: Accounting for Receivables

Correct Answer
verified

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

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

Explain the difference between honoring and dishonoring a note receivable.

Correct Answer
verified
When a note is honored,the mak...
View Answer

Companies follow both the expense recognition (matching)principle and the materiality constraint when applying the direct write-off method.

Correct Answer
verified

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Correct Answer
verified

The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

Correct Answer
verified

Explain how to record the receipt (acceptance)of a note receivable.

Correct Answer
verified
The receipt of a note receivable is reco...
View Answer

The banker's rule simplifies interest computations by treating a year as having 365 days.

Correct Answer
verified

Honoring a note receivable indicates that the maker has:

Correct Answer
verified

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 July 9 to record receipt of the note?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$4,000 - $...
View Answer

A credit sale of $5,275 to a customer would result in which of the following?

Correct Answer
verified

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

Correct Answer
verified

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

Correct Answer
verified

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred: Prepare the general journal entries to record these transactions.

Correct Answer
verified

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Correct Answer
verified

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

Exam 7: Accounting for Receivables

Correct AnswerverifiedShow Answer

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

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

Explain the difference between honoring and dishonoring a note receivable.

Correct AnswerverifiedWhen a note is honored,the mak...View AnswerShow Answer

Companies follow both the expense recognition (matching)principle and the materiality constraint when applying the direct write-off method.

Correct AnswerverifiedShow Answer

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

Correct AnswerverifiedShow Answer

The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

Correct AnswerverifiedShow Answer

Explain how to record the receipt (acceptance)of a note receivable.

Correct AnswerverifiedThe receipt of a note receivable is reco...View AnswerShow Answer

The banker's rule simplifies interest computations by treating a year as having 365 days.

Correct AnswerverifiedShow Answer

Honoring a note receivable indicates that the maker has:

Correct AnswerverifiedShow Answer

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 July 9 to record receipt of the note?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified$4,000 - $...View AnswerShow Answer

A credit sale of $5,275 to a customer would result in which of the following?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

Correct AnswerverifiedShow Answer

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred: Prepare the general journal entries to record these transactions.

Correct AnswerverifiedShow Answer

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When a note is honored,the mak...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The receipt of a note receivable is reco...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$4,000 - $...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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