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Exam 5: Receivables and Sales

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Question 31

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Discuss the differences between the allowance method and the direct write-off method for recording uncollectible accounts.Which of the two is acceptable under financial accounting rules?

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The allowance method requires companies ...

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Question 32

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On September 1,2015,Middleton Corp.lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months.How much interest revenue will Middleton Corp report during 2016?

A) $20.
B) $40.
C) $30.
D) $60.

E) A) and B)
F) A) and C)

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Question 33

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Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -_____ Sale on account to customers.

At the end of the year,a company reports a balance in its Allowance for Uncollectible Accounts of $1,400 (debit)before any year-end adjustment.The company estimates future uncollectible accounts to be 3% of credit sales for the year.Credit sales for the year total $280,000.Record the adjustment for the allowance for uncollectible accounts using the percentage-of-credit-sales method?

The Sales Discounts account is an expense account.

If a company is owed $10,000 by its customers,but it expects that $1,000 will not be collected,accounts receivable in the balance sheet are reported at the net amount of $9,000.

Interest on a note receivable is calculated as the face value of the note times the annual interest rate stated on the note times the fraction of the year the note is outstanding.

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -_____ Deducted from list price.

Boynton Jewelers reported the following amounts at the end of the year: total sales = $550,000;sales discounts = $12,000;sales returns = $44,000;sales allowances = $17,000.What was the company's net revenues for the year?

On February 1,2015,a company loans one of its employees $20,000 and accepts a nine-month,8% note receivable.Calculate the amount of interest revenue the company will recognize in 2015.

Which of the following is recorded upon receipt of a payment on April 7,2015,by a customer who pays a $900 invoice dated March 3,2015,with terms 2/10,n/60?

How is the receivables turnover ratio measured? What does this ratio indicate? Is a higher or lower receivables turnover preferable?

Using the allowance method,writing off an actual bad debt would include a:

Which accounting principle does the direct write-off method violate?

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ The effect of writing off an account receivable as a bad debt under the allowance method.

Allowance for Uncollectible Accounts is:

What does it mean to report accounts receivable at their net realizable value.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Considers that the longer past due the account receivable is,the less likely it is to be collected.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ The procedure using an adjustment for future uncollectible accounts.

From a balance sheet perspective,the percentage-of-receivables method is typically preferable because assets (net accounts receivable)are reported closer to their net realizable value.