Question 1

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) C) and E)
G) B) and C)

Question 2

A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1,including a $720 sale to Marshall Fresh.On December 31,Year 1,the company estimated its bad debts at 1.5% of its credit sales.On June 1,Year 2,the company wrote off,as uncollectible,the $720 account of Marshall Fresh.On December 21,Year 2,Marshall Fresh unexpectedly paid his account in full.Prepare the necessary journal entries:
(a)On December 31,Year 1,to reflect the estimate of bad debts expense.
(b)On June 1,Year 2,to write off the bad debt.
(c)On December 21,Year 2,to record the unexpected collection.

Accepted Answer

The answer of A company that uses the percent of...

Question 3

On July 9,Mifflin Company receives a $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?

Accepted Answer

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

Question 4

Gemstone Products allows customers to use bank credit cards to charge purchases.The bank used by Gemstone Products processes all bank credit cards in exchange for a 3% processing fee and all credit card receipts deposited are credited to the company account on the day of deposit.Assume that on January 18,Gemstone Products sold and deposited $18,000 worth of bank credit card receipts.Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of Gemstone Products allows customers to use bank...

Question 5

Sellers allow customers to use credit cards for all of the following reasons except:

Accepted Answer

A)  To be able to charge more due to fees and interest.
B)  To lessen the risk of extending credit to customers who cannot pay.
C)  To speed up receipt of cash from the credit sale.
D)  To increase total sales volume.
E)  To avoid having to evaluate a customer's credit standing for each sale.F) A) and D)
G) A) and E)

Question 6

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

Accepted Answer

The answer of When the maker of a note is...

Question 7

All of the following statements regarding valuation of receivables under U.S.GAAP and IFRS are true except:

Accepted Answer

A)  Both require the allowance method for uncollectibles unless uncollectibles are immaterial.
B)  Both require that receivables be reported net of estimated collectibles.
C)  Both require that the expenses for estimated collectibles be recorded in the same period revenues generated from those receivables are recorded.
D)  Both allow using percent of sales,percent of receivables,or aging of receivables to estimate uncollectibles.
E)  Both require that the expense related to uncollectibles be recorded when the receivable is determined to be uncollectible.F) D) and E)
G) All of the above

Question 8

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

Question 9

Winkler Company borrows $85,000 and pledges its receivables as security.The journal entry to record this transaction would be:

Accepted Answer

A)  Debit Cash of $85,000 and credit Accounts Receivable $85,000.
B)  Debit Cash of $85,000 and credit Accounts Payable $85,000.
C)  Debit Note Receivable $85,000 and credit Accounts Receivable $85,000.
D)  Debit Cash $85,000 and credit Notes Payable $85,000.
E)  Debit Accounts Receivable $85,000 and credit Notes Payable $85,000.F) B) and E)
G) A) and D)

Question 10

Under IFRS,the term provision:

Accepted Answer

A)  Refers to expense.
B)  Usually refers to a liability whose amount or timing is uncertain.
C)  Means establishing a provision for bad debts.
D)  Means establishing a contra-asset account.
E)  Means establishing an asset account.F) A) and B)
G) A) and C)

Question 11

Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash.Northern Bank charges a 5% factoring fee.What entry should Jervis make on to record the transaction?

Accepted Answer

A)  Debit Cash $71,250;debit Factoring Fee Expense $3,750;credit Accounts Receivable $75,000
B)  Debit Accounts Receivable $71,250;debit Factoring Fee Expense $3,750;credit Cash $75,000
C)  Debit Cash $75,000;credit Factoring Fee Expense $3,750;credit Accounts Receivable $75,000
D)  Debit Cash $71,250;credit Accounts Receivable $71,250
E)  Debit Accounts Receivable $75,000;credit Factoring Fee Expense $3,750;credit Cash $71,250F) B) and D)
G) A) and C)

Question 12

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense.  All sales are made on credit.Based on past experience,the company estimates 1% of credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  Debit Bad Debts Expense $19,750;credit Allowance for Doubtful Accounts $19,750.
B)  Debit Bad Debts Expense $15,225;credit Allowance for Doubtful Accounts $15,225.
C)  Debit Bad Debts Expense $22,250;credit Allowance for Doubtful Accounts $22,250.
D)  Debit Bad Debts Expense $7,350;credit Allowance for Doubtful Accounts $7,350.
E)  Debit Bad Debts Expense $21,000;credit Allowance for Doubtful Accounts $21,000.F) All of the above
G) B) and C)

Question 13

Prepare general journal entries for the following transactions of Norman Company,assuming they use the allowance method to account for uncollectible accounts.

Accepted Answer

The answer of Prepare general journal entries for the following...

Question 14

Factoring receivables is beneficial to a seller for all of the following reasons except:

Accepted Answer

A)  Allows firms to receive cash earlier.
B)  Passes ownership of the receivables to the factor.
C)  There are no fees for factoring.
D)  Seller avoids the cost of billing and accounting for receivables.
E)  May transfer the risk of bad debts to the factor.F) A) and B)
G) A) and C)

Question 15

On October 17 of the current year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Assuming the allowance method is used to account for bad debts,what effect will this write-off have on the company's net income and total assets?

Accepted Answer

A)  Decrease in net income;no effect on total assets.
B)  No effect on net income;no effect on total assets.
C)  Decrease in net income;decrease in total assets.
D)  Increase in net income;no effect on total assets.
E)  No effect on net income;decrease in total assets.F) A) and D)
G) A) and E)

Question 16

Each December 31,Kimura Company ages 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 $1,200 before any year-end adjustment for bad debts.Prepare the adjusting journal entry that Kimura Company should make on December 31,of the current year,to estimate bad debts expense.

Accepted Answer

The answer of Each December 31,Kimura Company ages its accounts...

Question 17

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $95,000.Its accounts receivable turnover equals:

Accepted Answer

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

Question 18

Bonita Company estimates uncollectible accounts using the allowance method at December 31.It prepared the following aging of receivables analysis.  a.Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method.
b.Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a.Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $550 credit.
c.Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a.Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300 debit.

Accepted Answer

The answer of Bonita Company estimates uncollectible accounts using the...

Question 19

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) C) and D)
G) B) and C)

Question 20

_______________ refers to the expected proceeds from converting an asset into cash.

Accepted Answer

The answer of _______________ refers to the expected proceeds from...

Exam 9: Accounting for Receivables

Correct Answer
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Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash.Northern Bank charges a 5% factoring fee.What entry should Jervis make on to record the transaction?

Correct Answer
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All of the following statements regarding valuation of receivables under U.S.GAAP and IFRS are true except:

Correct Answer
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Correct Answer
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_______________ refers to the expected proceeds from converting an asset into cash.

Correct Answer
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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
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Correct Answer
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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

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $95,000.Its accounts receivable turnover equals:

Correct Answer
verified

Factoring receivables is beneficial to a seller for all of the following reasons except:

Correct Answer
verified

Winkler Company borrows $85,000 and pledges its receivables as security.The journal entry to record this transaction would be:

Correct Answer
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Correct Answer
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On July 9,Mifflin Company receives a $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?

Correct Answer
verified

On October 17 of the current year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Assuming the allowance method is used to account for bad debts,what effect will this write-off have on the company's net income and total assets?

Correct Answer
verified

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

Correct Answer
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Prepare general journal entries for the following transactions of Norman Company,assuming they use the allowance method to account for uncollectible accounts.

Correct Answer
verified

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

Correct Answer
verified

Under IFRS,the term provision:

Correct Answer
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Sellers allow customers to use credit cards for all of the following reasons except:

Correct Answer
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Exam 9: Accounting for Receivables

Correct AnswerverifiedShow Answer

Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash.Northern Bank charges a 5% factoring fee.What entry should Jervis make on to record the transaction?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All of the following statements regarding valuation of receivables under U.S.GAAP and IFRS are true except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

_______________ refers to the expected proceeds from converting an asset into cash.

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 AnswerverifiedShow 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

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $95,000.Its accounts receivable turnover equals:

Correct AnswerverifiedShow Answer

Factoring receivables is beneficial to a seller for all of the following reasons except:

Correct AnswerverifiedShow Answer

Winkler Company borrows $85,000 and pledges its receivables as security.The journal entry to record this transaction would be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On July 9,Mifflin Company receives a $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?

Correct AnswerverifiedShow Answer

On October 17 of the current year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Assuming the allowance method is used to account for bad debts,what effect will this write-off have on the company's net income and total assets?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Prepare general journal entries for the following transactions of Norman Company,assuming they use the allowance method to account for uncollectible accounts.

Correct AnswerverifiedShow Answer

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

Correct AnswerverifiedShow Answer

Under IFRS,the term provision:

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Sellers allow customers to use credit cards for all of the following reasons except:

Correct AnswerverifiedShow Answer

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