1. Which of the following statements is true of the direct write-off method? A) GAAP requires public companies to follow the direct write-off method. B) It provides better matching of revenues with expenses. C) It results in more accurate net income than any other method. (D) It is only suitable for small companies that have very few uncollectible receivables. 2. When a company uses the allowance method to measure bad debts, (A) the Bad Debts Expense account is debited when an account is written off B) the amount of bod debts expense is estimated at the end of the accounting period C) the Allowance for Doubtful Accounts account balance is added to the balance of the Accounts Receivable account to arrive at the net realizable value D) the Allowance for Doubtful Accounts account is debited when the bod debts expense is estimated 3. When using the allowance method, after a company has previously written off an account, A) the company continues to send monthly statements to the customers whose accounts have been written off B) the company cannot collect from these customers because their accounts have been written off (C) when a customer pays on an account that has been written off, the company needs to reverse the write-off to the Allowance for Doubtful Accounts account and then record the receipt of cash D) the company does not need to re-establish the receivable account 4. The Allowance for Doubtful Accounts account has a credit balance of $2,000 before the adjusting entry for bad debts expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2024. Net eredit sales for the year amounted to $270,000. What will be the balance of Allowance for Doubtful Accounts on the December 31, 2024 balance sheet? A) $5,400 B) $2,000 C) 57,400 D) $5,360 5. The accounts receivable tumover ratio measures A) a company's ability to pay its current liabilities with its current assets B) how many days it takes, on average, to collect receivables C) how many days it takes, on average, to sell the inventory (D) the number of times a company collects the average accounts receivable balance in a year 6. Days' sales in receivables measures Wh hany days it takes to order and receive inventory B) how many days it takes to collect the average level of accounts receivable C) how many days it takes to sell imventory D) the number of times a company collects the average accounts receivable balance in one year manufacturer are: 8. ( 8 points) A company has net credit sales of $1,200,000, beginning net accounts receivable of $260,000, and ending net accounts receivable of $220,000. What are the days' sales in accounts receivable? (Round any intermediate calculations to two decimal places, and your final answer to the nearcst whole day.). 9. (10 points) ABC Co. loans $60,000 cash to XYZ Co. on March 1. The loan plus interest of 6% is due in 9 months. a. Record the journal entry for the loan made at March 1. Note Reccivable 1e0,000 cash $40,000 b. Record the journal entry for the receipt of the payment for the principal and interest earned at maturity. cash"Co,000noteRecicvable40,000020,0000,064/3=4,200 10. (8 points) The Income Statement for ABC Co for the year ended 12/31/2024 is reporting Cost of Goods Sold of $2,550,000. The balance sheet is reporting lnventory at 12/31/2023 of $400,000 and 12/31/2024 of $450,000. a. What is the Inventory Tumover Ratio for 2024? 6 400,000850,000/2450,000425,000 b. What were the Days Sales in Inventory for 2024 ? b) days 420,0002,550,000 11. (4 points) ABC Co management determines that they will not be able to colfect $500 that is owed by their customer BJ Johnsoz, Record the journal entry to write-off the account using the allowance method. 13. (28 points) ABC Co. purchases a truck costing 560,000 and pays cash on July 1,2023 , The vehicle has no residual value and management cutimates that if has a 5 -year useful life. a. Record the journal entry for the purchase of the truck. (4) equipment ' 60,000 cash 160000 b. Record the joumal entry for the first year's depreciation on December 31, 2023. Refer to the purchase date for the period of time to depreciate. c. What is the book value of the truck after the 12/31/2023 depreciation? 14100 d. Record the joumal entry for depreciation for 12/31/2024. c. What is the book value after the 12/31/2024 depreciation? f. Assume that the useful life is 100,000 miles. Record the journal entry for the first year's deprociation on December 31,2023 if the truck is driven 6,000 miles. ? x , g. What is the book value of the truck after the 1231/2023 depreciation? 600000.01=4/5=800 h. Record the joumal entry for depreciation on Decenter 31,2024 if the truck ts deiven 12,000 miles. i. What is the book value afler the 12/31/2024 depreciation? 14. (24 points) ABC Co sells equipment that it purchased in 2019 for 5120,000 . The equipment has a usefut life of 6 years and has becn depreciated annually. ABC Co reconded depreciation for the equipment last on December 31, 2022 so the balance in Accumutated Depreclation on that date is 580,000 . ABC sells the equiprnent on March 31, 2024 for $45,000 cash. a. Reord the necessary journal entry to update depreciation if ecceded and to record the sale of the equipenent. dequipment 4spge b. Assume the same information as above but ABC sells the equipenent for on March 31,2024 and receives 525,000 cash. Record the necessary journal entry to update depreciation if needed and to record the sale of the equipment