At the beginning of Year 3 Omega Company had a $52,000 balance in its accounts receivable account and a $1,400 balance in allowance for doubtful accounts. During Year 3, Omega experienced the following events. (1) Omega eamed $220,000 of revenue on account. (2) Collected $230,000 cash from accounts receivable. (3) Wrote-off $1.000 of accounts receivable as uncollectible. Omega estimates uncollectible accounts to be 4% of receivables. Which of the following journal entries would be necessary to recognize uncollectible accounts expense at the end of Year 3? Multiple Choice Credit Account Titles Uncollectible Accounts Expense Allowance for Doubtful Accounts Debit 1,640 1,640 Credit Account Titles Uncollectible Accounts Expense Uncollectible Accounts Expense Debit 1,640 1.648 Account Titles Uncollectible Accounts Expense Allowance for Doubtful Accounts Debit 1,240 Credit 1,248 Credit Account Titles Uncollectible Accounts Expense Uncollectible Accounts Expense Debit 1,240 1,240 Blain Company has $10,000 of accounts receivable that are current, $3.000 that are between 30 and 60 days past due, and $800 that are more than 60 days past due. Blain estimates that 2% of the receivables that are current will be uncollectible, 10% of those between 1 and 60 days past due will be uncollectible, and 50% of those more than 60 days past due will be uncollectible. Just prior to recognizing uncollectible accounts expense, Blain's allowance for doubtful accounts account has a $100 positive (credit) balance. Assuming Blain uses the aging method to estimate uncollectible accounts expense, the amount of uncollectible expense will be O O O o The total amount of uncollectible accounts expense recognized over the life of a business will be the largest under the Multiple Choice 0 percent of revenue method. 0 percent of receivables method. 0 direct write-off method. 0 All methods produce the same amount of uncollectible accounts expense recognized over the life of a business. DeKalb Company made a loan of $6,000 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. Which of the following journal entries could be used to recognize accrued interest in Year 2? Multiple Choice Credit Account Titles Interest Receivable Interest Revenue Debit 270 270 Credit Account Titles Interest Revenue Interest Receivable Debit 2701 270 Credit Account Titles Interest Receivable Interest Revenue Debit 90 Account Titles Debit Credit 90 Interest Revenue Interest Receivable On September 1. Year 1 Western Company loaned $36.000 cash to Eastem Company. The one-year note carried a 5% rate of interest. The amount of interest revenue on the income statement and the amount of cash flow from operating activities shown on Western's December 31, Year 1 financial statements would be Multiple Choice O $600 interest revenue and $1,800 cash flow from operating activities $1.200 interest revenue and $1,800 cash flow from operating activities. 0 0 $600 interest revenue and zero cash flow from operating activities. 0 $1,200 interest revenue and zero cash flow from operating activities Barron Company accepts a credit card as payment for $1.200 of services provided to a customer. The credit card company charges a 5% handling fee for its collection services. Select the answer that shows how the entry to recognize the event would affect Barron's financial statements. Multiple Choice O Assets will increase by $1,140. O Revenue will increase by $1.200. O Expenses will increase by $60 O All of the answers describe effects that will occur as a result of recognizing this event. The accounts receivable turnover ratio is calculated by Multiple Choice dividing the amount of credit sales by the average balance of accounts receivable. 0 0 dividing the average balance of accounts receivable by the amount of credit sales. C) subtracting the average balance of accounts receivable from the amount of credit sales. 0 0 subtracting the amount of credit sales from the average balance of accounts receivable
