Quiz 8 (Midterm)

Front 1

Accounts receivable are valued and reported on the balance sheet

Back 1

at cash realizable value.

Front 2

The direct write-off method of accounting for uncollectible accounts

Back 2

is not generally accepted as a basis for estimating bad debts.

Front 3

When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded

Back 3

in the same year as the credit sale.

Front 4

Allowance for Doubtful Accounts on the balance sheet

Back 4

is deducted from accounts receivable

Front 5

When an account is written off using the allowance method, accounts receivable

Back 5

x

Front 6

Using the allowance method, the uncollectible accounts for the year is estimated to be $40,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 debit before adjustment, what is the amount of bad debt expense for the period?

Back 6

$49,000

Front 7

An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data:

Accounts receivable

$2,400,000

Allowance for doubtful accounts per books before adjustment (credit)

150,000

Amounts expected to become uncollectible

195,000

What is the cash realizable value of the accounts receivable at December 31 after adjustment?

Back 7

$2,205,000

Front 8

During 2014 Wheeler Inc. had sales on account of $528,000, cash sales of $216,000, and collections on account of $336,000. In addition, they collected $5,800 which had been written off as uncollectible in 2013. As a result of these transactions the change in the accounts receivable indicates a

Back 8

$192,000 increase

Front 9

Smithson Corporation's unadjusted trial balance includes the following balances (assume normal balances):

•

Accounts Receivable

$3,357,000

•

Allowances for Doubtful Accounts

$63,900

Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debts expense will the company record?

Back 9

$137,520

Front 10

The interest on a $6,000, 6%, 90-day note receivable is

Back 10

$90.

Front 11

Rosen Company receives a $5,000, 3-month, 6% promissory note from Bay Company in settlement of an open accounts receivable. What entry will Rosen Company make upon receiving the note?

Back 11

x

Front 12

Barber Company lends Monroe Company $30,000 on April 1, accepting a four-month, 6% interest note. Barber Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

Back 12

Interest Receivable 150

Interest Revenue 150

Front 13

Nance Co. holds Gant Inc.'s $25,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is:

Back 13

Cash 25,750

Notes Receivable 25,000

Interest Revenue 750

Front 14

A high accounts receivable turnover ratio indicates

Back 14

customers are making payments very quickly.

Front 15

Leary Corporation had net credit sales during the year of $900,000 and cost of goods sold of $540,000. The balance in receivables at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover?

Back 15

6.0

Front 16

Windsor Corporation sells its goods on terms of 2/10, n/30. It has an accounts receivable turnover of 8. What is its average collection period (days)?

Back 16

x

Front 17

Simonic Retailers accepted $90,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $90,000 and a debit(s) to

Back 17

Cash $86,400 and Service Charge Expense $3,600.

Front 18

The sale or transfer of accounts receivable in order to raise funds is called

Back 18

factoring

Front 19

The retailer considers Visa and MasterCard sales as

Back 19

cash sales.

Front 20

Bad Debt Expense is reported on the income statement as

Back 20

an operating expense.