The following is the Aged Accounts Receivable Listing for XYZ Inc. at January 31, 2016:

Customer Name Current 0 - 30 Days 30 - 60 Days 60+ Days

% Uncollectible 1% 2% 4% 5%

AAA 20,000 42,000 39,000 4,000

BBB 19,000 19,000 19,000 22,000

CCC 5,000 5,000 7,000 9,000

DDD 12,000 5,000 5,000 9,000

3.The balance in the Allowance for Doubtful Accounts $2,500 debit. What is the appropriate adjustment XYZ Inc. needs to make at January 31, 2016 to update its provision for credit losses?

$4,480

$6,980

Can be calculated, but none of the other alternatives are correct

$9,480

Cannot be computed since there is an error in the opening Allowance balance

7.Assume Cain lends $1,000 to Abel and takes back a Note which matures in 1 year and the borrowing rate is 4% per annum.

If Cain prepares financial statements prior to the maturity date of the note, he will have to make an adjusting entry to set up the interest expense incurred

If the note is dishonoured on maturity then Abel will set up a receivable for more than $1,000

None of the above statements are correct

If the note is paid on maturity then Abel will record $40 in interest expense

If the note is paid on maturity then Abel will record $40 in interest income

8.

Which of the following is a valid alternative action for an organization to take to minimize credit losses?

None of the other alternatives are correct

Induce collection with sales discounts.

Implement a system of formal naming and shaming for customers making late payments.

Review accounts receivables once per year, preferably at the beginning of the accounting period.

Never sell on credit.

10.The balance of Total Assets for Hoop Co. is $800,000 on October 31, 2012. During October 2012, the following took place:

Sold $70,000 of inventory for $70,000 cash

Purchased a $150,000 machine for cash

Increased accounts payable $80,000 from acquisitions of inventory on account

Wrote off accounts receivable of $40,000

Total Assets for Hoop Co. on October 1 2012 is therefore:

$700,000

None of the above

$720,000

$790,000

$830,000