Decrease under allowance er direct write off method a. I only b. Both I and II 20. When an accounts receivable aging schedule is prepared, a series of computations is made to determine the estimated uncollectible accounts. The resulting amount for this aging schedule C. Neither I nor II d. II only a. When added to the total accounts written off during the year is the desired credit balance of the allowance for doubtful accounts at year end b. Is the amount of doubtful accounts expense for the year 26. On July 1, 2011, an entity obtained a two-year 8% note receivable for services rendered. At that time, C. Is the amount that should be added to the beginning allowances for doubtful accounts expense for the market rate of interest was 10%. The face amount of the note and the entire amount of interest are the year due on June 30, 2013. Interest receivable on December 31, 201 1 was d. ) Is the amount of desired credit balance of the allowance for doubtful accounts to be reported at year n. 5% of the face value of the note b. 4% of the face value of the note end c. 5% of the July 1, 2011 present value of the amount due on June 30, 2013. 21. On October 1 of the current year, an entity received a one-year note receivable bearing interest at the d. 4%of the July 1, 201 1 present value of the amount due on June 30, 2013. market rate. The face amount of the note receivable and the entire amount of the interest are due on September 30 of next year. The interest receivable account on December 31 of the current year would 27. An entity uses the instalment sales method to recognize revenue. Customers pay the instalment notes in consist of an amount representing 24 equal monthly amounts which include 12% interest. What is the instalment notes receivable balance six months after the sale? a. Three months of accrued interest income . Nine months of accrued interest income a 75% of the original sales price . Twelve months of accrued interest income b. Less than 75% of the original sales price d. The excess at October 1 of the present value of the note receivable over its face value. The present value of the remaining monthly payments discounted at 12%. d. Less than the present value of the remaining monthly payments discounted at 12%. 22. On July I of the current year, an entity received a one-year note receivable bearing interest at the market 28. The interest on a noninterest bearing note is equal to rate. The face amount of the note receivable and the entire amount of the interest are due on June 30 of a. The excess of the face value over the present value next year. The interest receivable account would show a balance on b. The excess of the present value over the face value a. July 1 but not December 31 of the current year c. The excess of the market value over the present value of the note b. December 31 but not July 1 of current year c. July I and December 31 of the current year d. Neither July 1 nor December 31 of the current year 29. The interest for the interest in a noninterest bearing note receivable is an example of what aspect of accounting theory? 23. On August 15 of the current year, an entity sold goods for which it received a note bearing the market a. Matching rate of interest on that date. The four-month note was dated July 15 of the current year. Note principal, b. Verifiability together with all interest, is due November 15 of the current year. When the note was recorded on c. Substance over form August 15, which of the following accounts increased? d. Form over substance a. Unearned discount Interest receivable 30. In the April 30, 201 1 statement of financial position, a note receivable was reported as a noncurrent Prepaid interest asset and the accrued interest receivable for eight months was reported as a current asset. Which of the Interest revenue following terms would fit the note receivable? a. Both principal and interest are payable on August 31, 201 1 and August 31, 2012 24. On July 1 of the current year, an entity received a one-year note receivable bearing interest at the market Principal and interest are due December 31, 201 1 rate. The face amount of the note receivable and the entire amount of the interest are due on June 30 of . Both principal and interest are payable on December 31, 2011 and December 31, 2012 next year. On December 31 of the current yea, the entity should report in its statement of financial d. Principal is due August 31, 2012, and interest is due August 31, 201 1 and August 31, 2012. position a. A deferred credit for interest applicable to next year 31. Present value is No interest receivable a. the value now of a future amount. C. Interest receivable for the entire amount of the interest due on June 30 of next year b. the amount that must be invested now to produce a known future value. d. Interest receivable for the interest accruing this year c. always smaller than the future value. d. all of these. 25. On July 1 of the current year, an entity received a one-year note receivable bearing interest at the market rate. The face amount of the note receivable and the entire amount of the interest are due in one year. 32. Which of the following factors would show the largest value for an interest rate of 12% for six period When the note receivable was recorded on July 1, which of the following was debited? a. Present value of 1 Interest receivable b. Present value of an ordinary annuity of 1 Unearned discount on note receivable C. Present value of an annuity due of 1