ch 8 quiz acctng

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31 balance in Bad Debt Expense will be a.$3,000 b.$3,600 c.$1,200 d.$7,200

a.$3,000

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? a.Allowance for Doubtful Accounts will be credited b.Bad Debt Expense will be credited c.Accounts Receivable will be debited d.Cash will be debited

a.Allowance for Doubtful Accounts will be credited

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a a.debit to Bad Debt Expense for $7,700. b.debit to Bad Debt Expense for $6,400. c.credit to Allowance for Doubtful Accounts for $1,300. d.debit to Bad Debt expense for $5,100.

a.debit to Bad Debt Expense for $7,700.

The term "receivables" includes all a.money claims against other entities b.cash to be paid to creditors c.merchandise to be collected from individuals or companies d.cash to be paid to debtors

a.money claims against other entities

On the balance sheet after adjusting entries are made, the amount shown for the Allowance for Doubtful Accounts is equal to the a.total estimated uncollectible accounts as of the end of the year b.total of the accounts receivable written off during the year c.uncollectible accounts expense for the year d.sum of all accounts that are past due

a.total estimated uncollectible accounts as of the end of the year

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited a.when an account is determined to be worthless b.at the end of each accounting period c.when a credit sale is past due d.whenever a predetermined amount of credit sales have been made

a.when an account is determined to be worthless

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.) a.$544,500 b.$525,000 c.$575,000 d.$550,000

b.$525,000

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is a.debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060. b.debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120. c.debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120. d.debit Cash, $6,120; credit Notes Receivable, $6,120.

b.debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120.

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense? a.debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800 b.debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 c.debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 d.debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800

b.debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000

Indications that an account may be uncollectible include all of the following except a.the customer closes its business b.the customer is making small but regular payments c.the customer files for bankruptcy d.the customer cannot be located

b.the customer is making small but regular payments

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts a.liabilities decrease b.net income is unchanged c.total assets decrease d.total assets are unchanged

c. total assets decrease

Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account a.is not an acceptable practice b.affects both balance sheet and income statement accounts c.affects only balance sheet accounts d.affects only income statement accounts

c.affects only balance sheet accounts

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on this estimate, which of the following adjusting entries should be made? a.debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800 b.debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800 c.debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200 d.debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800

c.debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200

The amount for which a promissory note is written is called the a.realizable value b.proceeds c.face value d.maturity value

c.face value

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. Cash 200 Interest Revenue 200 b. Interest Receivable 800 Interest Revenue 800 c. Note Receivable 40,00 Cash 40,000 d. Interest Receivable 200 Interest Revenue 200

d. Interest Receivable 200 Interest Revenue 200

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note? a. Notes Receivable—Dame Company 6,090 Accounts Receivable—Dame Company 6,090 b. Notes Receivable—Dame Company 6,090 Accounts Receivable—Dame Company 6,000 Interest Revenue 90 c. Notes Receivable—Dame Company 6,090 Interest Revenue 90 Accounts Receivable—Dame Company 6,000 Interest Receivable 90 d. Notes Receivable—Dame Company 6,000 Accounts Receivable—Dame Company 6,000

d. Notes Receivable—Dame Company 6,000 Accounts Receivable—Dame Company 6,000

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? a.Uncollectible accounts receivable b.Allowance for doubtful accounts c.Accounts receivable d.Bad debt expense

d. Bad debt expense

The receivable that is usually evidenced by a formal, written instrument of credit is a(n) a.accounts receivable b.income tax receivable c.trade receivable d.note receivable

d.note receivable

Interest on a note can be calculated without knowledge of the

fair value of the note