FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: Receivables and Sales

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Short Answer

Review LaterAdd Note

Review Later

Calculate the missing amount for each of the following notes receivable. $\begin{array} { c c c c } \begin{array} { c } \text { Face } \\\text { Value }\end{array} & \begin{array} { c } \text { Annual } \\\text { Interest rate }\end{array} & \begin{array} { c } \text { Fraction of } \\\text { the Year }\end{array} & \text { Interest } \\\hline \$ 15,000 & 4 \% & 8 \text { months } & ( \text { a) } \\\$ 25,000 & 8 \% & \text { (b) } & \$ 500 \\\$ 30,000 & ( \text { c) } & 4 \text { months } & \$ 500 \\\text { (d) } & 6 \% & 6 \text { months } & \$ 600\end{array}$

Correct Answer

verified

(a)$400; (...

View Answer

Show Answer

Question 32

True/False

Review LaterAdd Note

Review Later

Under the allowance method,when a company collects cash from an account previously written off,total assets increase.

A) True
B) False

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

At the beginning of 2012,the balance in Jackson Enterprises' Allowance for Uncollectible Accounts was $31,800.During 2012,the company wrote off $38,000 of accounts receivable.Writing off the individual bad debts would include a:

Collections of accounts receivable that previously have been written off are credited to:

A $10,000 note that has a stated interest rate of 10% and is due in six months would have interest of $1,000.

The Sales Returns account is an expense account.

Under the allowance method,which of the following does not change the balance in the Accounts Receivable account?

On December 31,2012,Coolwear Inc.had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $48,400 and $940,respectively.During 2013,Coolwear wrote off $820 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,140 at December 31,2013.Bad debt expense for 2013 would be:

Sandburg Veterinarian reports the following information for the year: $\begin{array}{lr}\text { Net credit sales } & \$ 120,000 \\\text { Average accounts receivable } & 20,000 \\\text { Cash collections on credit sales } & 100,000\end{array}$ What is Sandburg's receivables turnover ratio?

The following information pertains to Lightning,Inc.at the end of December: $\begin{array} { l r } \text { Credit Sales } & \$ 60,000 \\\text { Accounts Payable } & 10,000 \\\text { Accounts Receivable } & 7,000 \\\text { Allowance for Uncollectible Accounts } & \$ 400 \text { credit } \\\text { Cash Sales } & 20,000\end{array}$ Lightning uses the aging method and estimates it will not collect 2% of accounts receivable not yet due,10% of receivables less than 30 days past due,and 40% of receivables greater than 30 days past due.The accounts receivable balance of $7,000 consists of $3,500 not yet due,$2,000 less than 30 days past due,and $1,500 greater than 30 days past due.What is the appropriate amount of Bad Debt Expense?

When customers purchase products on account,Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days.This is an example of a:

The Sales Discounts account is an example of a contra revenue account.

If the direct write-off method is used to account for uncollectible accounts,which of the following statements is false?

Tom's Textiles shipped the wrong material to a customer,who refused to accept the order.This is an example of a:

A company reports the following amounts at the end of the year: Total sales = $500,000; sales discounts = $10,000; sales returns = $30,000; sales allowances = $20,000.Compute net sales.

A company provides services on account.Indicate how this transaction would affect the following five financial statement items: $\begin{array}{llllll}&&& \text { Stockholders' } \\&\text { Assets } &\text { Liabilities } &\underline{\text { Equity }}& \underline{\text { Revenues }} &\underline{\text { Expenses }}\\\text { a. } & \text { Increase } & \text { Decrease } & \text { Increase } & \text { Decrease } & \text { No effect } \\\text { b. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { Decrease } \\\text { c. } & \text { Increase } & \text { No effect } & \text { Increase } & \text { Increase } & \text { No effect } \\\text { d. } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect } & \text { No effect }\\\end{array}$

Accounts receivable are reported at their net realizable value.

One disadvantage of the allowance method (over the direct write-off method)for recording uncollectible accounts is that it generally matches bad debt expense with the revenue it helped to generate.

On March 13,a company writes off a customer's account of $3,800.On June 3,the customer unexpectedly pays the $3,800 balance.Using the allowance method,record the write-off on March 13 and the cash collection on June 3.

A company has the following balances on December 31,2012,after year-end adjustments: Accounts Receivable = $75,000; Service Revenue = $400,000; Allowance for Uncollectible Accounts = $5,000; Cash = $20,000.Calculate the net realizable value of accounts receivable.