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 31

Multiple Choice

Review LaterAdd Note

Review Later

The amount of uncollectible accounts at the end of the year is estimated to be $25,000 using the aging of accounts receivable method.The balance in the Allowance for Doubtful Accounts account is an $8,000 credit before adjustment.Assuming no accounts are written off during the period,what will be the amount of bad debt expense for the period?

A) $8,000.
B) $17,000.
C) $25,000.
D) $33,000.

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

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following statements regarding the receivables turnover ratio is true?

A) The receivables turnover ratio indicates how many times,on average,the process of selling to and collecting from customers occurs during the accounting period.
B) Companies of similar size in different industries tend to have similar receivables turnover ratios.
C) A high turnover ratio may suggest the company is allowing too much time for customers to pay.
D) The days to collect ratio is found by dividing the receivables turnover ratio by 365 days.

E) B) and C)
F) C) and D)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Generous Inc.lends Blue Inc.$40,000 on April 1,accepting a four-month,4.5% interest-bearing note.Generous Inc.prepares financial statements on April 30.What adjusting entry should be made by Generous Inc.before its financial statements are prepared?

Over the past five years,a company had average annual credit sales of $320,000 and this year had write-offs of $2,000.Credit sales in the current year are $300,000.The balance in the Allowance for Doubtful Accounts is a $500 credit.Using the percentage of credit sales method and an estimate of 1%,what amount should the company record as an estimate of bad debt expense?

Which of the following is not true about the net realizable value of receivables?

The amount of uncollectible accounts at the end of the year is estimated to be $25,000,using the aging of accounts receivable method.The balance in the Allowance of Doubtful Accounts account is an $8,000 credit before adjustment.What should the account balance in the Allowance for Doubtful Accounts be after adjustment?

Assume the Mirtha Company had the following balances at year-end. Assume the company recorded no write-offs or recoveries during 2015.What was the amount of bad debt expense reported in 2015?

The beginning credit balance in the allowance for doubtful accounts is $12,656 and the ending credit balance is $14,348.If bad debt expense was $3,879,which of the following statements is true?

The receivables turnover ratio is calculated using the total net receivables.

If a company factors its receivables,its receivables turnover ratio will be lower than it would have been if the receivables had not been factored.

On December 1,2013,a company accepted a $6,000,9%,3-month note from a customer in payment of his overdue account.The company prepares year-end financial statements on December 31.What entry should the company make on March 1,2014,when the note and interest are paid?

Companies are concerned about the cost of extending credit for all the following reasons except:

A company's unadjusted trial balance at the end of the year includes the following: The company uses the allowance method and has completed the aging schedule which indicates $5,800 of accounts are estimated uncollectible.What is the amount of bad debt expense to be recorded for the year?

Under the allowance method for uncollectible accounts,writing off a specific account will not affect the net accounts receivable.

Use the information above to answer the following question.What is the total amount of interest on this note?

At the end of the first year,the Treadwell Tire Company had net accounts receivable of $67,900 and at the end of the second year the company had net accounts receivable of $72,400.If the company's net sales revenue during the second year was $876,875,the receivables turnover ratio for the second year was:

A company lends a major client $90,000 for one year at a 7% annual interest rate.Interest payments are to be made twice a year,and interest is accrued monthly.In July,the company receives an interest payment for January through June.The company would record receipt of the interest payment in which of the following ways?

A company uses the direct write-off method and discovers a customer's account in the amount of $3,000 will not be paid because the customer has declared bankruptcy.What is the journal entry that would be made to record this write-off?

Adventure Company uses the aging of accounts receivable method to estimate bad debt expense.The balance of each account receivable is aged on the basis of three categories as follows: (1)1-30 days old, (2)30-90 days old,and (3)more than 90 days old.Experience has shown that for each age group,the average loss rate on the amount of the receivable due to uncollectibility is (1)1%, (2)15%,and (3)40%,respectively.At December 31,2014,the unadjusted balance in the Allowance for Doubtful Accounts was $100 (credit),and the total amounts receivable in each category were: (1)1-30 days old,$65,000, (2)30-90 days old,$10,000,and (3)more than 90 days old,$4,000.Calculate the balance that should be reported in the Allowance for Doubtful Accounts at December 31,2014,and prepare the appropriate bad debt expense adjusting entry at December 31,2014.

The direct write-off method for uncollectible accounts is required