21. Brook Logan, Inc. uses the balance sheet approach for estimating bad debt expense. At year end, accounts receivable was valued at $200,000 and the allowance for doubtful accounts had a credit balance of $300. The allowance for doubtful accounts is estimated at 1% of accounts receivable. What is the bad debt expense for the year?
A) $1,700
B) $2,000
C) $2,300
D) some other amount
Ans: A
22. If net credit sales for a given year are $400,000 and the average accounts receivable are $20,000, What is the accounts receivable turnover?
A) 20
B) 80
C) 200
D) 50
Ans: A
23. If net credit sales for a given year are $600,000 and the average accounts receivable is $60,000, what is the average days to collect receivables?
A) 10
B) 60
C) 31
D) 36.5
Ans: D
24. Bath Industries follows a policy of writing off accounts receivable balances when they are more than 120 days old, and all normal collection efforts have failed to result in the collection of the balance owing. On November 30, Bath Industries wrote off an accounts receivable of $450 from Felicity's Feline Care Company. On December 3, Bath Industries received a cheque from Felicity's in full payment of the overdue account. Bath Industries will record the receipt by:
A) Debiting Cash, Crediting Accounts Receivable.
B) Debiting Cash, Crediting Allowance for Doubtful Accounts.
C) Debiting Cash and Accounts Receivable, Crediting Allowance for Doubtful Accounts and Accounts Receivable.
D) Debiting Cash, Crediting Uncollectible Accounts Expense.
E) None of the above.
Ans: C
25. Imperial Grocery had net credit sales of $3,150,000 in 1999. It began the year with an accounts receivable balance of $78,200 and ended the year with a balance of $78,700. The accounts receivable turnover is:
A) 40.15 times
B) 40.28 times
C) 40.03 times
D) 9.09 times
E) None of the above.
Ans: A
26. Catering Company borrowed $100,000 on December 5, 2000, by signing a 90-day note payable with annual interest of 9 percent. The amount of interest expense on this note for December 2000 is:
A) $750
B) $641.10
C) $665.75
D) $616.44
E) None of the above.
Ans: B
27. Meat Packers International Company is the sole employer in the only city in a small province. Recent changes in government subsidies have caused Meat Packers to consider relocating to a larger city in a larger province. Mel Mott, owner of Mel's Department Store, is concerned as to what will happen to the collectibility of the store's accounts receivable if Meat Packers relocates and puts most of his customers out of work. This situation is called:
A) A shared characteristic.
B) A concentration of credit risk.
C) The direct write off method.
D) Factoring of Accounts Receivable.
Ans: B
28. Eastern Trucks sold five trucks to Continental Loggers on November 1 for a total of $175,000. Continental paid $25,000 cash and signed a 12-month note receivable. The face amount of the note was $163,500, which included interest on the note for 12 months. Eastern Trucks prepares adjusting entries annually and plans to amortize straight-line amortization for discount. The adjusting entry made at December 31, by Eastern Trucks year-end, is:
A) Debit Interest Receivable $13,500; Credit Interest Earned $13,500.
B) Debit Interest Receivable $2,250; Credit Interest Earned $2,250.
C) Debit Discount on Notes Receivable $13,500; Credit Interest Earned $13,500.
D) Debit Discount on Notes Receivable $2,250; Credit Interest Earned $2,250.
Ans: D
29. The due date of a 60-day note receivable signed on April 17 is
A) June 16
B) June 17
C) June 15
D) June 18
E) None of the above.
Ans: A
30. Accounts receivable are shown on the balance sheet at their net realizable value, which is defined as the balance in the accounts receivable account less the balance in the allowance for doubtful accounts account. When a company writes off an individual's account as being uncollectible, the net realizable value on the balance sheet:
A) Increases by the amount of the write off.
B) Decreases by the amount of the write off.
C) Stays the same because accounts receivable and allowance for doubtful accounts are not affected by the write off.
D) Stays the same because accounts receivable and allowance for doubtful accounts both decrease by the amount of the write off.
E) None of the above.
Ans: D
More Questions & Answers:
Page1 Page2 Page3 Page4 Page5 Page6 Page7 Page 8 Page9 Page10
A) $1,700
B) $2,000
C) $2,300
D) some other amount
Ans: A
22. If net credit sales for a given year are $400,000 and the average accounts receivable are $20,000, What is the accounts receivable turnover?
A) 20
B) 80
C) 200
D) 50
Ans: A
23. If net credit sales for a given year are $600,000 and the average accounts receivable is $60,000, what is the average days to collect receivables?
A) 10
B) 60
C) 31
D) 36.5
Ans: D
24. Bath Industries follows a policy of writing off accounts receivable balances when they are more than 120 days old, and all normal collection efforts have failed to result in the collection of the balance owing. On November 30, Bath Industries wrote off an accounts receivable of $450 from Felicity's Feline Care Company. On December 3, Bath Industries received a cheque from Felicity's in full payment of the overdue account. Bath Industries will record the receipt by:
A) Debiting Cash, Crediting Accounts Receivable.
B) Debiting Cash, Crediting Allowance for Doubtful Accounts.
C) Debiting Cash and Accounts Receivable, Crediting Allowance for Doubtful Accounts and Accounts Receivable.
D) Debiting Cash, Crediting Uncollectible Accounts Expense.
E) None of the above.
Ans: C
25. Imperial Grocery had net credit sales of $3,150,000 in 1999. It began the year with an accounts receivable balance of $78,200 and ended the year with a balance of $78,700. The accounts receivable turnover is:
A) 40.15 times
B) 40.28 times
C) 40.03 times
D) 9.09 times
E) None of the above.
Ans: A
26. Catering Company borrowed $100,000 on December 5, 2000, by signing a 90-day note payable with annual interest of 9 percent. The amount of interest expense on this note for December 2000 is:
A) $750
B) $641.10
C) $665.75
D) $616.44
E) None of the above.
Ans: B
27. Meat Packers International Company is the sole employer in the only city in a small province. Recent changes in government subsidies have caused Meat Packers to consider relocating to a larger city in a larger province. Mel Mott, owner of Mel's Department Store, is concerned as to what will happen to the collectibility of the store's accounts receivable if Meat Packers relocates and puts most of his customers out of work. This situation is called:
A) A shared characteristic.
B) A concentration of credit risk.
C) The direct write off method.
D) Factoring of Accounts Receivable.
Ans: B
28. Eastern Trucks sold five trucks to Continental Loggers on November 1 for a total of $175,000. Continental paid $25,000 cash and signed a 12-month note receivable. The face amount of the note was $163,500, which included interest on the note for 12 months. Eastern Trucks prepares adjusting entries annually and plans to amortize straight-line amortization for discount. The adjusting entry made at December 31, by Eastern Trucks year-end, is:
A) Debit Interest Receivable $13,500; Credit Interest Earned $13,500.
B) Debit Interest Receivable $2,250; Credit Interest Earned $2,250.
C) Debit Discount on Notes Receivable $13,500; Credit Interest Earned $13,500.
D) Debit Discount on Notes Receivable $2,250; Credit Interest Earned $2,250.
Ans: D
29. The due date of a 60-day note receivable signed on April 17 is
A) June 16
B) June 17
C) June 15
D) June 18
E) None of the above.
Ans: A
30. Accounts receivable are shown on the balance sheet at their net realizable value, which is defined as the balance in the accounts receivable account less the balance in the allowance for doubtful accounts account. When a company writes off an individual's account as being uncollectible, the net realizable value on the balance sheet:
A) Increases by the amount of the write off.
B) Decreases by the amount of the write off.
C) Stays the same because accounts receivable and allowance for doubtful accounts are not affected by the write off.
D) Stays the same because accounts receivable and allowance for doubtful accounts both decrease by the amount of the write off.
E) None of the above.
Ans: D
More Questions & Answers:
Page1 Page2 Page3 Page4 Page5 Page6 Page7 Page 8 Page9 Page10
No comments:
Post a Comment