Which of the following occurs due to the reinstatement of accounts?

a.Operating income decreases, and return on sales increases.

b.Operating income is not affected, but return on sales increases.

c.Both operating income and return on sales increase.

d.Both operating income and return on sales decrease.

Which of the following statements about notes receivable is true?

a.Notes receivable are calculated as a percentage of net sales.

b.Notes receivable are prepared by the payee.

c.Notes receivable are a stronger legal claim than a normal account receivable.

d.Notes receivable are generally classified as a long-term asset.

What is the operating income of a company if its return on sales is 10% and total sales for the year is $10,610,000?

a.$106,100

b.$9,283,750

c.$132,625

d.$1,061,000

Shangrov Company prepared a promissory note with a face value of $85,000, payable after 90 days, at a rate of 19%. Calculate the interest amount of the promissory note. Assume 365 days in a year. (Round to the nearest dollar.)

a.$1,195

b.$16,592

c.$3,982

d.$1,754

The _____ method records bad debt expense only when an account is determined to be worthless.

a.double-declining-balance

b.allowance

c.indirect

d.direct write-off

Notes receivable that are expected to be collected within a year are classified on the balance sheet as a

a.long-term liability.

b.long-term asset.

c.current asset.

d.current liability.

Bagsy Co. has an Accounts Receivable balance of $411,000. It estimates that $68,000 will be uncollectible. Calculate the net realizable value of the receivables.

a.$128,625

b.$514,500

c.$343,000

d.$1,004,990