Chapter 9XX (Protected View) Word (Unlicensed Product) yout References Mailings Review View Help Tell me what you want to do 1)Claims for which formal instruments of credit are issued as proof of the debt are a. accounts receivable. b. interest receivable. C. notes receivable. d. other receivables. 2) Interest is usually associated with a. accounts receivable b notes receivable. c. doubtful accounts. d. bad debts. The receivable that is usually evidenced by a formal instrument of credit is a(n) a. trade receivable. b. note receivable. c, accounts receivable d. income tax receivable. 3) 4) Which of the following receivables would not be classified as an "other receivable"? a. Advance to an employee b. Refundable income tax C. Notes receivable d. Interest receivable 5) Notes or accounts receivables that result from sales transactions are often called a. sales receivables. b. non-trade receivables c. trade receivables. d. merchandise receivables. 6) The term "receivables" refers to a. amounts due from individuals or companies b. merchandise to be collected from individuals or com panies c. cash to be paid to creditors d. cash to be paid to debtors t References Mailings Review View HelpTell me what you want to do c. cash to be paid to creditors. d. cash to be paid to debtors. 7) A cash discount is usually granted to all of the following except a. retail customers. b. retailers C. wholesalers. d. All of these are granted discounts. 8) Which one of the following is not a primary problem associated with accounts receivable? a. Depreciating accounts receivable b. Recognizing accounts receivable c. Valuing accounts receivable d. Disposing of accounts receivable 9) Trade accounts receivable are valued and reported on the balance sheet a. in the investment section b. at gross amounts less sales returns and allowances c. at net realizable value d. only if they are not past due. 4o 8 4 5 6 8 RayMan2798 Cm Chapter 9x0x (Protected View) - Word (Unlicensed Product) Layout References Mailings Review View Help Tell me what you want to do A customer charges a treadmill at Sports Equipment Shop. The price is $5,000 and the financing charge is 6% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. 10) What is the amount of the finance charge? b. $25 C. $90 d. $300 11). A customer charges a treadmill at Sports Equipment Shop. The price is $4,000 and the financing charge is 8% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. The accounts affected by the journal entry made by Sports Equipment Shop to record the finance charge are a. Accounts Receivable Cash b. Cash Finance Receivable c. Accounts Receivable Interest Payable Accounts Receivable Interest Revenue d. 12) Which of the following practices by a credit card company results in lower interest charges to the cardholder? card company states interest as a monthily percentage rather than an annual percentage b. The card company allows a grace period belore interest is accrued. card company allows cardholders to skip payments on their cards. d. The card company calculates finance charges from the date of purchase to the date the amount is paid 13), If a department store fais to make the entry to accrue the finance charges due from to 5 6 8 9 RayMan2798 Cim Chapter 9X0X (Protected View) - Word (Unlicensed Product) Mailings Raview View Help References Tell me what you want to do ayout d. The card company calculates finance charges from the date of purchase to the date the amount is paid. 13). If a department store fails to make the entry to accrue the finance charges due from customers a. accounts receivable will be overstated b. interest revenue will be understated c. interest expense will be overstated. d. interest expense will be understated 14). Homeplate sells softball equipment. On November 14, they shipped $4,000 worth of softball uniforms to Bonita Middle School, terms 2/10, n/30 On November 21, they received an order from Vista High School for $1,500 worth of custom printed bats to be produced in December. On November 30, Bonita Middle School returned $200 of defective merchandise. Homeplate has received no payments from either school as of month end What amount will be recognized as net accounts receivable on the balance sheet as of November 30? a. $3,800 b. $4,00o c. $5,300 d. $5,500 3 5 6 8 9 RayMan2798 Cim Chapter 9XX (Protected View)- Word (Unlicensed Product) t References Mailings Review View Help Tell me what you want to do C. $5,300 d. $5,500 15). Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6,000, terms 2/10, n/30. On July 20 Cajon Co. returns merchandise worth $1,000 to Cosmos Company On July 24 payment is received from Cajon Co. for the balance due. What is the amount of cash received? a. $4,800 b. $4,900 c. $5,000 d. $6,000 16) The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the a. direct write-off method b. percentage of receivables basis. c. percentage of sales basis d. percentage of receivables and percentage of sales basis 17). When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when a. a sale is made b. an account becomes bad and is written off C. management estimates the amount of uncollectibles. d. a customer's account becomes past-due 18) An aging of a company's accounts receivable indicates that $13,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a a. debit to Bad Debt Expense for $13,000 b. debit to Allowance for Doubtful Accounts for $11,800 c debit to Bad Debt Expense for $11,800 d credit to Allowance for Doubtful Accounts for $13,000. 4o 4 5 6 8 9 ARayMan2798 Cimigliaro Chapter 9XX (Protected View) - Word (Ublicensed Product) Layout References Mailings Review View Help Tell me what you want to do A debit balance in the Allowance for Doubtful Accounts a is the normal balance for that account. b. indicates that actual bad debt wnite-offs have exceeded previous provisions for bad debts 19) c. indicates that actual bad debt write-offs have been less than what was estimated d. cannot occur if the percentage of sales method of estimating bad debts is used 20 Valli Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $700,000 and credit sales are $2.500,000. Management estimates that 1% is the sales percentage to use what adjusting entry wil Vali Company make to record the bad debts expense? a. Bad Debt Expense 32,000 Allowance for Doubtful Accounts Bad Debt Expense 32,000 b. 25,000 Allowance for Doubttul Accounts Bad Debt Expense Accounts Receivabke 25,000 C. 25,000 25,000 d. Bad Debt Expense 32,000 Accounts Receivable 32,000 de 3 5 6 8 9 RayMan2 798 Ciniglian Chapter 9XX (Protected View)-Word (Unlicensed Product) References Mailings Review ViewHelp Tell me what you want to do 32,000 d. Bad Debt Expense Accounts Receivable 32,000 21). The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts .a is relevant when using the percentage of receivables basis b. is relevant when using the percentage of sales basis c. is relevant to both bases of adjusting for uncollectible accounts, d. will never show a debit balance at this stage in the accounting cycle. 22) An aging of a company's accounts receivable indicates that $6,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record bad debts for the period will require a a. debit to Bad Debt Expense for $6,000 b. debit to Allowance for Doubtful Accounts for $5,200 c. debit to Bad Debt Expense for $5,200 d. credit to Allowance for Doubtful Accounts for $6,000 23). An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $700 debit balance, the adjustment to record bad debts for the period will require a a. debit to Bad Debt Expense for $3,300 b. debit to Bad Debt Expense for $4.000 c. debit to Bad Debt Expense for $4,700 d. credit to Allowance for Doubtful Accounts for $700 24) Using the percentage-of-receivables method for recording bad debts expense, estimated uncollectible accounts are $23,000, If the balance of the Allowance for Doubttuil Accounts is $2,000 debit before adjustment, what is the amount of bad debt expense for that period? a. $2,000 b. $21,000 c. $23,000 d. $25,000 5 6 8 9 Chapter 9XX (Protected View) - Word (Unlicensed Product) ARayMan2798 Cirnig Layout Raferences Mailings Review View Help Tell me what you want to do Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $12,000. If the balance of the Allowance for Doubtful Accounts is $2,500 credit before adjustment, what is the amount of bad debt expense for that period? a. $2,500 b. $9,500 C$12,000 d. $14,500 25). 26) Using the percentage of receivables method for recording bad debt expense, estim uncollectible accounts are $11,000, If the balance of the Allowance for Doubtful Accounts is $2,800 debit before adjustment, what is the baiance after adjustment? a. $2,800 b. $8,200 c. $11,000 Using the percentage-of receivables basis, the uncollectible accounts for the year is estimated to be $33,000. If the balance for the Allowance for Doubtful Accounts is a $5,000 credit before adjustment, what is the amount of bad debt expense for the period? a, $5,000 b $28,000 C. $33,000 d. $38,000 arch 3 5 Mailings Review View Help Tell me what you want to do $3,000 prior to adjustment, its balance after adjustment ill be a credit o a. $19,500 b. $22,500 c. $22,560. d. $25,500 In 2016, Winslow Company had net credit sales of $1,250,000. On January 1, 2016, 31). Allowance for Doubtful Accounts had a credit balance of $25,000. During 2016, $32,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $360,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2016? a. $29,000 b. $36,000 c. $43,000 d. $6,000 32). Using the following information Accounts receivable $525,000 (40 000) S485 000 Cash realizable value 40 5 6 8 9 Chapter 9XX (Protected View)-Word (Unlicensed Product) A RayMan279 erences Mailings Review View HelpTell me what you want to do b $36,000 c. $43,000 d. $6,000 32) Using the following information: 12/31/15 $525,000 (40,000) $485,000 Accounts receivable Allowance Cash realizable value During 2016, sales on account were $145,000 and collections on account were $100,000. Also during 2016, the company wrote off $5,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45,000. The change in the cash realizable value from the balance at 12/31/15 to 12/31/16 was a a. $35,000 increase. b. $41,000 increase. c. $30,000 increase. d. $45,000 increase. 4 5 6 9