ACCT 2810 - Chapter 6

Allowance for Doubtful Accounts has an unadjusted negative balance of -$500 at the end of the year, and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000. Compute the adjusted balance in the allowance for doubtful accounts?*

$15,000

A 90-day, 8% note for $10,000 dated May 1 is received from a customer on account. The maturity value of the note is (Assume 360 days in a year) (face amount x interest rate x (terms/360))*

$10,200.

A 60-day, 12% note for $15,000 dated May 1 is received from a customer on account. The maturity value of the note is (Assume 360 days in a year) (face amount x interest rate x (terms/360))*

$15,300.

After the accounts are adjusted at the end of the fiscal year, Accounts Receivable has a balance of $430,000 and Allowance for Doubtful Accounts has a negative balance of -$30,000. What is the net realizable value of the receivables?*

$400,000

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net realizable value of the accounts receivable?*

$475,000

A 60-day, 10% note for $6,000 dated April 15 is received from a customer on account. The face value of the note is*

$6,000.

If the cost of an item of inventory is $60 and the current replacement cost is $65, the amount included in inventory according to the lower of cost or market is*

$60.

Using the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?*

$640

If the cost of an item of inventory is $70, the current replacement cost is $65, and the sales price is $85, the amount included in inventory according to the lower of cost or market is*

$65.

What type of account is Allowance for Doubtful Accounts?*

Contra asset account

The two most widely used methods for determining the cost of inventory are

FIFO and LIFO.

If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is*

FIFO.

Under which method of inventory costing is the ending inventory assumed to be composed of the most recent costs?*

First-in, first-out

During a period of consistently rising prices, the method of inventory costing that will result in reporting the greatest cost of merchandise sold is:

LIFO.

The inventory costing method that assigns the most recent costs to cost of good sold is:*

LIFO.

Allowance for Doubtful Accounts has an unadjusted negative balance of -$1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900. Which of the following records the proper provision for doubtful accounts?*

Record Bad Debt Expense, $11,800; increase Allowance for Doubtful Accounts by -$11,800

Allowance for Doubtful Accounts has an unadjusted negative balance of -$800 at the end of the year, and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000. Which of the following records the proper provision for doubtful accounts?*

Record Bad Debt Expense, $14,200; increase Allowance for Doubtful Accounts by -$14,200

When an account is written off under the allowance method*

accounts receivable decreases.

A note receivable due in 90 days is listed on the balance sheet under*

current assets.

Allowance for Doubtful Accounts is listed on the balance sheet under the caption*

current assets.

Merchandise inventory is reported on the balance sheet in the section entitled*

current assets.

The two methods of accounting for uncollectible receivables are the allowance method and the*

direct write-off method.

The process of a company selling its accounts receivable to another company is referred to as*

factoring.

A note receivable due in 18 months is listed on the balance sheet under the caption

investments.

A note receivable due in five years is listed on the balance sheet under the caption*

investments.

In reference to a promissory note, the person who makes the promise to pay is called the*

maker.

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

maturity value.

Inventory refers to the:

merchandise held for sale in the normal course of business.

In reference to a promissory note, the person who is to receive payment is called the*

payee.

A written promise to pay a sum of money on demand or at a definite time is called a(n)*

promissory note.

Receivables are usually a significant portion of*

total current assets.

One of the weaknesses of the direct write-off method is that it*

violates the matching principle.