1. Similar to your Chapter 7 Connect work, which one of the following is not an accurate description of the Allowance for Doubtful Accounts account?

a. This account is a contra-revenue income statement account.

b. The amount in the Allowance for Doubtful Accounts decreases the net realizable Value of a company's accounts receivables.

c. This account is a contra-asset balance sheet account.

d. This account is increased when mgmt estimates uncollectible accounts expense.

2. Under the allowance method, recording the actual write-off of an identified uncollectible Account (i.e. Smith, Jones, etc.), will have what effect on the accounting equation?

a. Liabilities will increase and total equity will decrease.

b. Total assets and equity will remain unchanged.

c. Total assets will decrease and total equity will increase.

d. Total assets will increase and total equity will decrease.

3. Kubitz & Brownell, Inc. uses the allowance method to account for uncollectible accounts. An account, which had been previously written-off as uncollectible, was reinstated when the customer unexpectedly paid their balance due. How would the recovery event (itself) affect the company's accounting equation?

a. Increase assets and increase equity.

b. Increase assets and decrease liabilities.

c. Decrease assets and increase equity.

d. The recovery event would have no effect on the accounting equation.

* Use the following to answer questions 4 through 6 *

On January 1, 2017, Crist, Evans & Hlivko, Inc. had a $4,000 normal balance in their accounts receivable account and a $100 normal balance in their allowance for doubtful accounts account. During the year, the company provided $25,000 of services (all on account). The company collected $24,000 cash from accounts receivable during the year and wrote-off $80 of unpaid customer accounts. Bad debts for the year are estimated by management to be 2% of total credit sales.

Note: Setup T-Accts, Journal entries and consider the acct equation in your analysis.

4. The amount of Uncollectible Accounts (Bad Debts) expense to be recognized on the 2017 income statement would be:

a. $80 b. $420 c. $500 d. $580

5. The year-end 2017 balance in the Accounts Receivable account (itself) would be:

a. $1,000 b. $4,500 c. $4,920 d. $5,000 e. $5,080

6. The Net Realizable Value (NRV) of Accounts Receivable, appearing on the company's ending 12/31/17 Balance Sheet, (after all activity has been recorded) would be:

a. $ 500 b. $4,400 c. $4,900 d. $5,400 e. $5,900

7. Fleischman & Banziger Restaurants, Inc. provides gourmet dinners to demanding students.During a recent group study session, a group member graciously paid the entire group $125 dinner bill with a VISA credit card! The credit card service charge fee was 3%. What journal entry should the restaurant record on its books to recognize this event?

a. Accounts Receivable from VISA $121.25

Sales Revenue $121.25

b. Accounts Receivable from VISA $121.25

VISA Card Service Expense 3.75

Sales Revenue $125.00

c. Sales Revenue $125.00

Accounts Receivable from VISA $125.00

d. Sales Revenue $125.00

Accounts Receivable from VISA $121.25

Cash 3.75

8. The higher (greater) the accounts receivable turnover ratio is, the longer it takes the company to collect its accounts receivable.

A) TRUE B) FALSE

9. Similar to your Chp 7 Connect work, the following information is available for Falcon, Inc., at December 31, 2017. All sales were credit sales made on account: Accounts Receivable	$35,000
Sales Revenue	$240,000

What was Falcon's (possibly rounded) average days to collect receivables for 2017?

a. 6.86 b. 14.58 c. 24.07 d. 38.02 e. 53.21

10. Falcon, Inc. purchased a new production machine with a list price of $48,000. The company paid cash for the machine. Therefore, it was allowed a 3% discount. Other costs associated with the new production machine were:

1) Insurance, related to the machine, was obtained at a cost of $500 for the upcoming year.

2) Freight Costs Terms were FOB Shipping-Point: $1,100

3) Sales tax paid: $3,360

4) Platform installation costs for the machine: $900

5) Routine maintenance performed during the first year of operations: $1,000

6) Annual salary of new production worker hired to run the equipment: $35,000

Falcons capitalized asset cost of this machine would be:

a. $47,560 b. $50,820 c. $51,920 d. $52,420 e. None of the above is within $50 of the correct amount.

11. Clemens & Chaney, Inc., paid $375,000 for a basket purchase of assets that included office furniture, a building and some land. A professional appraiser, Zeigler, provided the following market value estimates of the assets as if they had been purchased separately:

Market Values: Office furniture: $75,000; Building: $320,000, Land: $36,000.

Based on this information, the amount of cost that would be allocated to the building is:

a. $235,255 b. $249,326 c. $309,745 d. $320,000 e. None of the above is within $50 of the correct amount.

USE THE FOLLOWING INFORMATION FOR 12-14

On April 1, 2018, Money Company loaned $5,000 to Needy Company. This Note Receivable had a 12 percent interest rate and was to be repaid, with all interest, on April 1, 2019.

12. At the time of the note issuance (April 1, 2018), this transaction would:

a. Affect both companies Balance Sheet.

b. Affect the Income Statement for both companies.

c. Increase total liabilities for Money Company (the lender).

d. Increase total equity for Needy Company (the borrower).

13. The balance in the Interest Receivable account that Money Company would present on their December 31, 2018 Balance Sheet would be:

a. $0 b. $600 c. $300 d. $450

14. The total amount of Interest Revenue that Money Company would record (recognize) for this Note Receivable in year 2019 would be:

a. $600 b. $450 c. $0 d. $150

15. Which method of depreciation does not consider salvage value when calculating the first year of depreciation expense?

a. Straight-Line method.

b. Units of Production method.

c. Double Declining Balance method.

d. All of the above consider salvage value when calculating first-year depreciation.

16. For the first year, and assuming no expected salvage value, which of the following would occur if a company used the Straight-Line method of depreciation, as compared to the Double Declining Balance (DDB) method, to allocate (depreciate) the cost of a long-term asset?

a. higher net income would result if the Straight-Line method is used.

b. a lower annual depreciation expense would result using the DDB method.

c. lower net assets would be reported if the straight-line method is used.

d. a higher book value would exist for the asset if the DDB method is used.

* Use the following information to answer questions 17 & 18 *

The athletic firm of Shaw, Wenig & Sommerkamp, Inc. was started on January 1, 2016 when it issued common stock for $25,000 cash. On that date, the company used $16,000 of the cash proceeds to purchase a significant amount of volleyball workout equipment (to toughen-up all employees). The equipment had a five-year useful life and a $1,200 expected salvage value.

17. Using straight-line depreciation, determine the amount of depreciation expense and the amount of accumulated depreciation, respectively, that would appear on the December 31, 2018 (year 3) financial statements.

a. $2,960 / $2,960 b. $2,608 / $7,824 c. $2,960 / $8,880 d. $3,200 / $9,600

18. IF the Company had originally used the double-declining balance depreciation method, instead of Straight-Line, the amount of depreciation expense appearing on the 2018 (year 3) income statement would have been:

a. $ - 0 - b. $2,131 c. $2,304 d. $3,840 e. $6,400

19. On January 1, 2018, Boyd & Asperger, Inc. paid $17,000 to buy a stump grinder. Management estimates a useful life of 10 years, a salvage value of $4,500 and total stump production of 25,000 stumps. The amount of depreciation expense for the year 2018 using the Units-of-Production method, assuming 2,500 stumps were removed, will be:

a. $2,380 b. $1,700 c. $1,400 d. $1,250 e. None of the above is within $100 of the correct answer.