Question 1

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 C)
G) None of the above

Question 2

A company received a $15,000,90-day,10% note receivable.The journal entry to record receipt of the note includes a debit to Notes Receivable.

Accepted Answer

A) True 
 B)False

Question 3

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

Accepted Answer

A) True 
 B)False

Question 4

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

Accepted Answer

A)   Debit Accounts Receivable $7,200; credit Notes Receivable $7,200.
B)   Debit Accounts Receivable $7,200; credit Allowance for Doubtful Accounts $7,200.
C)   Debit Bad Debt Expense $7,344; credit Notes Receivable $7,344.
D)   Debit Accounts Receivable $7,344; credit Interest Revenue $144; credit Notes Receivable $7,200.
E)   Debit Accounts Receivable $7,056; debit Interest Revenue $144; credit Notes Receivable $7,200.F) None of the above
G) A) and E)

Question 5

Match each of the following terms with the appropriate definitions.
-The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.

Accepted Answer

A)  Factoring accounts receivable
B)  Allowance method
C)  Accounts receivable turnover
D)  Principal of a note
E)  Materiality constraintF) Installment accounts receivableG) Pledging accounts receivableH) Direct write-off methodI) Dishonoring a noteJ) Full disclosure principleK) D) and F)
L) A) and D)

Question 6

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction 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) D) and E)
G) B) and D)

Question 7

BizCom's customer,Redding,paid off an $8,300 balance on its account receivable.BizCom should record the transaction as a debit to Accounts Receivable-Redding and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 8

Match each of the following terms with the appropriate definitions.
-Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Accepted Answer

A)  Factoring accounts receivable
B)  Allowance method
C)  Accounts receivable turnover
D)  Principal of a note
E)  Materiality constraintF) Installment accounts receivableG) Pledging accounts receivableH) Direct write-off methodI) Dishonoring a noteJ) Full disclosure principleK) B) and F)
L) E) and I)

Question 9

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

Accepted Answer

A) True 
 B)False

Question 10

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Accepted Answer

A) True 
 B)False

Question 11

Prudence Co.receives a $26,000,90-day,4% note receivable.What is maturity value of the note?

Accepted Answer

$26,000 * .04 * 90/3...

Question 12

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Accepted Answer

A) True 
 B)False

Question 13

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Jasper makes a $25,000,90-day,7% cash loan to Clayborn Co.Jasper's entry to record the transaction should be:

Accepted Answer

A)   Debit Notes Receivable for $25,000; credit Cash $25,000.
B)   Debit Accounts Receivable $25,000; credit Notes Receivable $25,000.
C)   Debit Cash $25,000; credit Notes Receivable for $25,000.
D)   Debit Notes Payable $25,000; credit Accounts Payable $25,000.
E)   Debit Notes Receivable $25,000; credit Sales $25,000.F) A) and C)
G) None of the above

Question 16

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
 $$\begin{array} { l l l } 
&\text { Debit } & \text { Credit } \
\text { Cash sales } & & \$ 188,000\
\text { Credit sales } & & 275,000  \
\text { Accounts receivable } & \$ 76,000 &\
\text { Allowance for doubtful accounts } & &1,000 \

\end{array}$$ 
Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

Accepted Answer

None...

Question 17

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $90,000.Its accounts receivable turnover equals:

Accepted Answer

A)   6.1
B)   63.0
C)   54.8
D)   1.1
E)   6.3F) B) and C)
G) None of the above

Question 18

On July 31,Orwell Co.has $448,800 of accounts receivable.
Required:
1.Prepare journal entries to record the following selected August transactions.The company uses the perpetual inventory system.
2.Also prepare any footnotes to the August 31 financial statements that result from these transactions.
3.Calculate the balance in the Accounts Receivable account as of August 10.
  
security for the loan.The note is a 90-day,9% note.

Accepted Answer

1.

2.Orwell should include t...

Question 19

Match each of the following terms with the appropriate definitions.
-Selling all or a portion of accounts receivable to a finance company or bank.

Accepted Answer

A)  Factoring accounts receivable
B)  Allowance method
C)  Accounts receivable turnover
D)  Principal of a note
E)  Materiality constraintF) Installment accounts receivableG) Pledging accounts receivableH) Direct write-off methodI) Dishonoring a noteJ) Full disclosure principleK) C) and J)
L) H) and J)

Question 20

A maker who dishonors a note is one who does not pay it at maturity.

Accepted Answer

A) True 
 B)False

Exam 7: Accounting for Receivables

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

Correct Answer
verified

A maker who dishonors a note is one who does not pay it at maturity.

Correct Answer
verified

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

Correct Answer
verified

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction would be:

Correct Answer
verified

A company received a $15,000,90-day,10% note receivable.The journal entry to record receipt of the note includes a debit to Notes Receivable.

Correct Answer
verified

Correct Answer
verified
1.
2.Orwell should include t...
View Answer

Match each of the following terms with the appropriate definitions. -The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.

Correct Answer
verified

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Correct Answer
verified

Prudence Co.receives a $26,000,90-day,4% note receivable.What is maturity value of the note?

Correct Answer
verified
$26,000 * .04 * 90/3...
View 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 Answer
verified

BizCom's customer,Redding,paid off an $8,300 balance on its account receivable.BizCom should record the transaction as a debit to Accounts Receivable-Redding and a credit to Cash.

Correct Answer
verified

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

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Correct Answer
verified

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $90,000.Its accounts receivable turnover equals:

Correct Answer
verified

Jasper makes a $25,000,90-day,7% cash loan to Clayborn Co.Jasper's entry to record the transaction should be:

Correct Answer
verified

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -Selling all or a portion of accounts receivable to a finance company or bank.

Correct Answer
verified

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Correct Answer
verified

Correct Answer
verified
None...
View Answer

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Correct Answer
verified

Exam 7: Accounting for Receivables

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

Correct AnswerverifiedShow Answer

A maker who dishonors a note is one who does not pay it at maturity.

Correct AnswerverifiedShow Answer

The percent of sales method for estimating bad debts uses only income statement account balances to estimate bad debts.

Correct AnswerverifiedShow Answer

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction would be:

Correct AnswerverifiedShow Answer

A company received a $15,000,90-day,10% note receivable.The journal entry to record receipt of the note includes a debit to Notes Receivable.

Correct AnswerverifiedShow Answer

Correct Answerverified1. 2.Orwell should include t...View AnswerShow Answer

Match each of the following terms with the appropriate definitions. -The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.

Correct AnswerverifiedShow Answer

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Correct AnswerverifiedShow Answer

Prudence Co.receives a $26,000,90-day,4% note receivable.What is maturity value of the note?

Correct Answerverified$26,000 * .04 * 90/3...View AnswerShow 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

BizCom's customer,Redding,paid off an $8,300 balance on its account receivable.BizCom should record the transaction as a debit to Accounts Receivable-Redding and a credit to Cash.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Correct AnswerverifiedShow Answer

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $90,000.Its accounts receivable turnover equals:

Correct AnswerverifiedShow Answer

Jasper makes a $25,000,90-day,7% cash loan to Clayborn Co.Jasper's entry to record the transaction should be:

Correct AnswerverifiedShow Answer

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -Selling all or a portion of accounts receivable to a finance company or bank.

Correct AnswerverifiedShow Answer

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNone...View AnswerShow Answer

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
1.
2.Orwell should include t...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
$26,000 * .04 * 90/3...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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None...
View Answer

Correct Answer
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