4.

Oswego Clay Pipe Company sold $45,600 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts.

What entry would Oswego make on April 12?

a.

Accounts receivable	45,600
Sales		45,144
Sales discounts		456

b.

Accounts receivable	45,144
Sales discounts	456
Sales		45,600

c.

Accounts receivable	45,600
Sales		45,600

d.

Accounts receivable	45,144
Sales		45,144

5.

Oswego Clay Pipe Company sold $45,000 of pipe to Southeast Water District #45 on April 12 of the current year with terms 4/15, n/60. Oswego uses the gross method of accounting for cash discounts.

What entry would Oswego make on April 23, assuming the customer made the correct payment on that date?

a.

Cash	45,000
Accounts receivable		43,200
Sales		1,800

b.

Cash	43,200
Sales	1,800
Accounts receivable		45,000

c.

Cash	43,200
Sales discounts	1,800
Accounts receivable		45,000

d.

Cash	45,000
Sales discounts	1,800
Accounts receivable		45,000
Interest revenue		1,800

6.

Oswego Clay Pipe Company sold $45,100 of pipe to Southeast Water District #45 on April 12 of the current year with terms 2/15, n/60. Oswego uses the gross method of accounting for cash discounts.

What entry would Oswego make on June 10, assuming the customer made the correct payment on that date?

a.

Cash	45,100
Accounts receivable		44,198
Interest revenue		902

b.

Cash	45,100
Accounts receivable		45,100

c.

Cash	46,002
Accounts receivable		45,100
Interest revenue		902

d.

Cash	45,100
Accounts receivable		44,198
Discounts receivable		902

7.

The following information relates to Halloran Co.'s accounts receivable for 2016:

Accounts receivable balance, 1/1/2016	$ 841,000
Credit sales for 2016	3,340,000
Accounts receivable written off during 2016	68,000
Collections from customers during 2016	2,940,000
Allowance for uncollectible accounts balance, 12/31/2016	214,000

What amount should Halloran report for accounts receivable, before allowances, at December 31, 2016?

a.) $1,173,000.

b.) $1,241,000.

c.) $959,000.

d.) None of these answer choices are correct.

8.

Calistoga Produce estimates bad debt expense at 0.30% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $472,000 and $1,550, respectively, at December 31, 2015. During 2016, Calistoga's credit sales and collections were $331,000 and $317,000, respectively, and $1,720 in accounts receivable were written off. Calistoga's accounts receivable at December 31, 2016, are:

a.) $486,000.

b.) $470,280.

c.) $456,280.

d.) $484,280.

9.

As of January 1, 2016, Farley Co. had a credit balance of $532,000 in its allowance for uncollectible accounts. Based on experience, 1% of Farley's credit sales have been uncollectible. During 2016, Farley wrote off $636,000 of accounts receivable. Credit sales for 2016 were $18,400,000.

In its December 31, 2016, balance sheet, what amount should Farley report as allowance for uncollectible accounts? a.) $288,000. b.) $80,000. c.) $184,000. d.) $716,000.

10. Peecher accepted a three-year, noninterest-bearing note in exchange for merchandise sold. Which of the following is true?

a.) Peecher would credit a discount on note receivable when recording the sale.

b.) Peecher would debit interest revenue over the life of the note.

c.) Peecher would debit notes receivable when the note is collected.

d.) Peecher would multiply sales revenue by the effective interest rate to determine interest revenue each period