Select all that apply

1) Diaz Industries determined that a $12,500 receivable from Sarge Company cannot be collected. Which of the following would be included in the journal entry to account for the uncollectible account?

Multiple select question.

Credit to Accounts receivableSarge Company for $12,500.

Debit to Allowance for credit losses for $12,500.

Credit to Allowance for credit losses for $12,500.

Debit to Accounts receivableSarge Company for $12,500.

2) The Allowance for sales returns and allowances is

Multiple choice question.

- deducted from Sales.

- added to Sales.

- deducted from Accounts receivable.

- added to Accounts receivable.

3) Brinkman Corporation sold a machine to Hughes Company for $2,500,000. Hughes signs a two-year, $2,500,000 interest-bearing note with 12% per year to be paid in quarterly installments. 12% approximates prevailing borrowing rates. Which of the following are journal entries associated with this transaction?

Multiple select question.

Select all that apply

- Debit to Interest income for $75,000 and a credit to Interest expense for $75,000.

- Debit to Note receivable for $2,500,000 and a credit to Sales revenue for $2,500,000.

- Debit to Sales revenue for $2,500,000 and a credit to Note receivable for $2,500,000.

- Debit to accrued interest receivable for $75,000 and a credit to Interest income for $75,000.

4) All of following could cause net accounts receivable to grow more quickly than sales, except

Multiple choice question.

- making customers pay their bills more quickly.

- underestimating the Allowance for uncollectibles.

- selling more merchandise on credit instead of for cash.

- recording fictitious credit sales.

5) Under the revenue recognition standards effective for 2018, the expected credit losses are shown as a (an)

Multiple choice question.

reduction of revenue because the revenue should not have been recognized originally.

increase to cost of sales and disclosed if material.

reduction of accounts receivable.

expense and included with other impairment losses.

6) Holmes Company accepts a 4-year 2% note as payment for its merchandise. The prevailing interest rate at the time is 9%. Holmes should

Multiple choice question.

- debit Notes receivable for the face amount of the note.

- debit Notes receivable for the present value computed using 2%.

- debit Sales revenue for the face amount of the note.

- debit Notes receivable for the present value computed using 9%.