1-Richmond Hill Company had accounts receivable of $770,000 and an allowance for doubtful accounts of the $23,500 just prior to writing off as worthless an account receivable for Vaughan Company of $8,000. The net realizable value of accounts receivable as shown by the accounting record before and after the write-off was as follows:

a-Before $738,500, After $762,000

b-Before $ 770,000, After $ 762,000

c-Before $746,500, After $746,500

d-Before $770,000, After $770,000

e-Before $746,500, After $738,500

2-Choose the term that best matches the following description: Bases bad debt expense on the historical perspective of credit sales that result in bad debts

a-Percentage of Credit Sales Method

b-Sales Returns and Allowances

c-Bad debt Expense

d-Allowance Method

e-None of the other alternatives are correct

3-Hopeful Company is a new company. During its first year of operation:

Customers ordered $50,000 of goods on account

$40,000 of the goods ordered were delivered

Customers paid $34,000 on account (taking advantage of a cash discounts of $1,000 from the invoiced amounts recorded originally in accounts receivable)

Customers returned damaged goods and were refunded $2,000

The balance of Account Receivable at the end of the year is:

a-$5,000

b-$4,000

c-$3,000

d-$16,000

e-None of the other alternatives are correct

4-Company ABC Inc. has a balance of accounts receivable of $111,000. The balance of Allowance for Doubtful Accounts is $900 in a normal credit position. Two thirds of the accounts receivable are current and one third are overdue. ABC Inc. estimates that 1% of of the current accounts receivable and 6% of the overdue accounts receivable will be uncollectible. The adjusting entry for uncollectible accounts receivables should be in the amount of:

a-$2,960

b-None of the other alternatives are correct

c-$2,060

d-$2,160

e-$2,220

5-A company makes silly clerical errors and in the annual financial statements for the year ended December 31, 2010 understates it beginning inventory for the year by $5,000 and in the same accounting period overstates its ending inventory by $9,000. As a result of these two errors, Cost of Goods Sold reported in the 2010 Income Statement will be:

a-none of the above

b-overstated by $9,000

c-overstated by $5,000

d-understated by $14,000

e-understated by $9,000