On October 12, 2014, Neptune Corporation invested $700,000 in short-term available-for-sale marketable securities. The market value of this investment was $730,000 at December 31, 2014, but had slipped to $725,000 by December 31, 201

Refer to the information above. In financial statements prepared on December 31, 2014, Neptune Corporation reports:

A. The asset Investments in Marketable Securities at $700,000 with footnote disclosure of the market value of $730,000.

B.The asset Investments in Marketable Securities at $730,000, and a $30,000 Unrealized Holding Gain included in total stockholders' equity

C.The asset Investments in Marketable Securities at $730,000, and a $30,000 gain recognized in the income statement.

D.The asset Investments in Marketable Securities at $700,000, and a $30,000 Unrealized Holding Gain includedin total stockholders' equity.

2.Refer to the information above. Assuming Neptune does not sell this investment, the fair value accounting adjustment necessary at December 31, 2015, includes:

A.A $5,000 debit to Unrealized Holding Gain on Investments.

B.A $25,000 credit to Unrealized Holding Gain on Investments.

C.A $5,000 debit to Investments in Marketable Securities.

D.A $725,000 debit to Investments in Marketable Securities.

3.Refer to the information above. Assuming Neptune does not sell this investment, the financial statements prepared at December 31, 2015 will report:

A.Investments in Marketable Securities of $700,000, reduced by a $30,000 Unrealized Holding Gain on Investments, in the asset section of the balance sheet.

B.The asset Investments in Marketable Securities of $700,000 in the balance sheet, and a $25,000 Unrealized Holding Loss on Investments in the income statement.

C.The asset Investments in Marketable Securities of $725,000, and a $5,000 Unrealized Holding Loss deducted from total stockholders' equity.

D.Investment in Marketable Securities of $725,000 in the asset section of the balance sheet, with a $25,000 Unrealized Holding Gain on Investments included in the stockholders' equity section.

4.The Allowance for Doubtful Accounts will appear on the:

A.Income statement.

B.Balance sheet.

C.Cash flow statement.

D.Owners' equity statement.

5.The Allowance for Doubtful Accounts represents:

A. Cash set aside to make up for bad debt losses.

B. The amount of uncollectible accounts written off to date.

C. The difference between total credit sales and collections on credit sales.

D. The difference between the face value of accounts receivable and the net realizable value of accounts receivable.

6.When the account Allowance for Doubtful Accounts is used, writing off of an uncollectible accounts receivable will:

A.Reduce income.

B.Reduce an expense.

C.Not change income or total assets.

D.Increase total assets.

7.Uncollectible accounts expense:

A.Should not occur if the credit department properly investigates prospective customers who wish to purchase merchandise on credit.

B.Is the amount of cash a business must pay each time a credit customer fails to pay his or her account.

C.Is the amount a business must pay to a collection agency to recover amounts on overdue accounts receivable.

D.Represents the loss in value of accounts receivable that are estimated to be uncollectible.

8.The aging of the accounts receivable approach to estimating uncollectible accounts does not:

A.Take into consideration the existing balance in the Allowance for Doubtful Accounts.

B.Utilize a percentage of probable uncollectible accounts for each age group of accounts receivable.

C.Stress the relationship between uncollectibleaccounts expense and net sales.

D.Tend to give a reliable estimate of uncollectible accounts because of the consideration given to the collectability of specific accounts receivable.

9.If a company uses a percentage of net sales in computing the amount of uncollectible accounts expense:

A.No valuation allowance will be required.

B.The relationship between revenue and expenses is being stressed more than the valuation of receivables at the balance sheet date.

C.The existing balance in the Allowance for Doubtful Accounts will be increased sufficiently to equal the probable loss indicated by the percentage of net sales computation.

D.Any past-due accounts will be listed as a separate item in the balance sheet.

10.The direct write-off method of recognizing uncollectible accounts expense:

A.Is acceptable only when most of the company's sales are on credit.

B.Records uncollectible accounts expense when individual accounts receivablearedetermined to be worthless.

C.Records uncollectible accounts expense when customers exceed their credit limits.

D.Uses a valuation account to record specific customer accounts deemed uncollectible.

11.Taylor, Inc. had accounts receivable of $310,000 and an allowance for doubtful accounts of $19,500 just before writing off as worthless an account receivable from Burton Company of $1,300. The net realizable value of the accounts receivable before and after the write-off were:

A.$290,500 before and $289,200 after.

B.$290,500 before and $290,500 after.

C.$310,000 before and $308,700 after.

D.$329,500 before and $328,200 after.

12.Bert had accounts receivable of $280,000 and an allowance for doubtful accounts of $10,800 just before writing off as worthless an account receivable from Ernie Company of $1,600. After writing off this receivable what would be the balance in Bert's Allowance for Doubtful Accounts?

A.$10,800 credit balance.

B.$12,400 credit balance.

C.$9,200 credit balance.

D.$9,200 debit balance.

13.At December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Seaboard Corporation showed a debit balance of $3,200. An aging of the accounts receivable indicated the amount probably uncollectible to be $2,100. Under these circumstances, a year-end adjusting entry for uncollectible accounts expense would include a:

A.Debit to the Allowance for Doubtful Accounts for $1,100.

B.Credit to the Allowance for Doubtful Accounts for $1,100.

C.Debit to Uncollectible Accounts Expense of $2,100.

D.Debit to Uncollectible Accounts Expense of $5,300.

14.Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. Its Allowance for Doubtful Accounts has a $1,200 credit balance prior to adjusting entries. It has just completed an aging analysis of accounts receivable at December 31, 2015. This analysis disclosed the following information:

What is the appropriate balance for Oceanside's Allowance for Doubtful Accounts at December 31, 2015?

A. $95,000.

B.$960.

C. $3,360.

D. $2,160.

15.At the start of the current year, Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $1,800. During the year a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $600,000, and $5,600 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:

A. Uncollectible accounts expense of $13,800.

B. Allowance for Doubtful Accounts with a credit balance of $8,200.

C. Allowance for Doubtful Accounts with a credit balance of $6,400.

D. Uncollectible accounts expense of $5,600.

Dynamic, Inc. had credit sales of $675,000 for March. Accounts receivable of $6,000 were determined to be worthless and were written off during March. Accounts receivable total $575,000 at March 31. Management feels that based on past experience, approximately 2% of net credit sales will prove to be uncollectible.

22.Refer to the information above. Assuming Dynamic, Inc. uses the direct write-off method of accounting for uncollectible accounts, uncollectible accounts expense for March is:

A. $13,500.

B.$6,000.

C. $11,500.

D. $17,500.

16.Refer to the information above. Assuming Dynamic, Inc. uses the income statement approach (an allowance method) to account for uncollectible accounts, uncollectible accounts expense for March is:

A. $11,500.

B. $17,500.

C. $19,500.

D.$13,500.

At the end of March, the unadjusted trial balance of Tutor, Inc. included the following accounts:

17.Refer to the information above. Tutor uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $8,600. What is the amount of uncollectible accounts expense recognized in Tutor's income statement for March?

A.$8,600.B.$6,800C.$10,400.D.$1,800.

18.Refer to the information above. Tutor uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $7,400. The net realizable value of Tutor's accounts receivable in the March 31 balance sheet is:

A.$247,400.B.$240,000.C.$232,600.D.$352,600.

19.Refer to the information above. Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. What is the amount of uncollectible accounts expense recognized in Tutor's income statement for March?

A.$13,500.B.$18,000.C.$8,600.D.$7,200.

20.Refer to the information above. Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. The net realizable value of Tutor's accounts receivable in the March 31 balance sheet is:

A.$251,800.

B.$253,500.

C.$224,700.

D.$255,300.