FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Receivables, Bad Debt Expense, and Interest Revenue

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

On average,5% of total accounts receivable has been uncollectible in the past.At the end of the year,the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has an unadjusted credit balance of $500.Credit sales during the year were $150,000.Using the aging of accounts receivable method,the estimated bad debt expense would be:

A) $4,500.
B) $5,000.
C) $7,000.
D) $7,500.

E) C) and D)
F) A) and D)

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following is true?

A) Accounts receivable decline as companies sell on credit.
B) Accounts receivable increase as companies receive payment.
C) Receivables turnover refers to how fast receivables are collected.
D) Days to Collect will increase as the receivables turnover increases.

E) None of the above
F) C) and D)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

When the direct write-off method is used,the entry to write-off a specific account would

The Grass is Greener Corporation uses the allowance method and learns that a customer who owes $350 has gone bankrupt and payment will not be made.The Grass is Greener Corporation should:

The Grass is Greener Corporation provides $6,000 worth of lawn care on account during the month.Experience suggests that about 2% of net credit sales will not be collected.According to the revenue recognition principle and the matching principle,the company should:

When the allowance method is used,the entry to record the write-off of specific uncollectible accounts would decrease

Purrfect Pets,Inc. ,had the following transactions.Prepare the required journal entries. a.October 1: Sold $10,000 of merchandise on account,1/10,n/30 to Fabulous Felines. b.November 1: Accepted a $10,000,90-day,10% promissory note from Fabulous Felines in exchange for its account receivable. c.December 31: Accrued interest on the note.Round to the nearest whole dollar amount. d.January 31: Received payment in full of principal and interest on the note from Fabulous Felines.

Allowance for doubtful accounts is a temporary account which is closed to retained earnings at the end of the accounting period.

Bad Debt Expense is classified as

The direct write-off method:

Use the information above to answer the following question.Assuming the entry to record bad debt expense was $8,250,what is the balance in the allowance for doubtful accounts after this entry was made?

Use the information above to answer the following question.Assuming the company uses the aging of receivables method and estimates the uncollectible amount at 5% of accounts receivable,what is the required adjusting entry to record bad debt expense for the year?

In reviewing the accounts receivable,the net receivables value is $17,000 before writing off a $1,500 account.What is the net receivables value after the write-off?

The percentage of credit sales method is simpler but less accurate than the aging method for calculating bad debts.

A company reported a receivables turnover ratio of 8.0.Cost of goods sold was $350,000 and net sales were $480,000.The average accounts receivable must have been

Companies A and B both report net income growth of 12% per year.Company A has a receivables turnover ratio of 5.6,which is smaller than its previous year.Company B has a receivables turnover ratio of 11.3,which is higher than its previous year.All other things being equal:

A high accounts receivable turnover ratio indicates:

The accounts receivable account for each customer is called a subsidiary account.

Which of the following statements is true concerning the allowance for doubtful accounts?

Geisel,Inc had credit sales for 2014 of $510,000.and sales returns of $10,000.Credit sales for 2013 were $610,000 and sales returns were $10,000.Accounts receivable on December 31,2014 were $148,000.The allowance for doubtful accounts at December 31,2014 before adjustment had a debit balance of $1,000.Bad debt expense of $6,000 was recorded for 2014. a.Calculate the accounts receivable turnover ratio and the days to collect for 2013 and 2014 (round each calculation to one decimal place). The net receivables balance reported on the company's 12/31/12 financial statements was $120,000.The net receivables balance reported on the 12/31/13 financial statements was $130,000. b.Discuss the implications of the receivables turnover ratio and days to collect as calculated in part (a).Discuss possible reasons for any changes in the values for these ratios,and implications for the provision for uncollectible accounts.