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Exam 8: Receivables

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Question 61

Multiple Choice

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Harper Company lends Hewell Company $40,000 on March 1,accepting a four-month,6% interest note.Harper Company prepares financial statements on March 31.What adjusting entry should be made before the financial statements can be prepared?

A)
B)
C)
D)

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

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Question 62

Multiple Choice

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The amount of the promissory note plus the interest earned on the due date is called the

A) interest value
B) maturity value
C) face value
D) issuance value

E) All of the above
F) C) and D)

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Question 63

Multiple Choice

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Indications that an account may be uncollectible include all of the following except

When a company uses the allowance method of accounting for uncollectible receivables,the entry to reinstate a previously written off account would include a

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments.Assuming you use the allowance method,the entry you make is to

In computing the maturity date of a note,the date the note is issued is included but the due date is omitted.

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment,and an analysis of customers' accounts indicates uncollectible receivables of $19,700.Which of the following entries records the proper adjustment for bad debt expense?

The number of days' sales in receivables

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year before adjustment,and bad debt expense is estimated at 3% of net credit sales.If net credit sales are $300,000,the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Jefferson uses the percent of method of estimating uncollectible expenses.Based on past history,2% of credit sales are expected to be uncollectible.Sales for the current year are $5,550,000.Which of the following is correct?

What is the type of account and normal balance of Allowance for Doubtful Accounts?

If a promissory note is dishonored,the payee should still record interest revenue.

The following are the current assets of Barnes Co.as of December 31: $\begin{array}{|l|r|}\hline \text { Accounts Receivable } & \$ 38,000 \\\hline \text { Allowance for Doubtful Accounts } & 5,000 \\\hline \text { Cash } & 45,000 \\\hline \text { Interest Receivable } & 5,500 \\\hline \text { Merchandise Inventory } & 88,000 \\\hline \text { Notes Receivable } & 100,000 \\\hline\end{array}$ Prepare the current assets section of the balance sheet.

Jefferson uses the percent of sales method of estimating uncollectible expenses.Based on past history,2% of credit sales are expected to be uncollectible.Sales for the current year are $5,550,000.Which of the following is correct regarding the entry to record estimated uncollectible receivables?

The balance in Allowance for Doubtful Accounts will directly impact the end-of-period adjustment for the bad debt expense when using which of the following methods?

Discuss the two methods for recording bad debt expense.What type of company uses each method?

Other receivables include nontrade receivables such as loans to company officers.

Trade receivables occur when two companies trade or exchange notes receivables.

After the accounts are adjusted and closed at the end of the fiscal year,Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000.What is the net realizable value of the accounts receivable?

A 60-day,12% note for $7,000,dated April 15,is received from a customer on account.The face value of the note is