Chapter 5: Receivables and Sales

On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What is the amount of net revenues (sales minus sales discount) as of March 23? a. $0 b. $11,760 c. $12,000 d. $12,240

$11,760

On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What amount would Fox record as revenue on March 17? a. $12,400 b. $11,760 c. $12,000 d. $2,240

$12,000

A company has the following account balances as the end of the year: - Credit Sales = $400,000 - Accounts receivable = $80,000 - Allowance for Uncollectible Accounts = $400 CREDIT The company estimates future uncollectible accounts to be 4% of accounts receivable. At what amount would Bad Debt Expense be reported in the current year's income statement? a. $400 b. $2,800 c. $3,200 d. $3,600

$2,800

A company has the following account balances as the end of the year: - Credit Sales = $400,000 - Accounts receivable = $80,000 - Allowance for Uncollectible Accounts = $400 DEBIT The company estimates future uncollectible accounts to be 4% of accounts receivable. At what amount would Bad Debt Expense be reported in the current year's income statement? a. $400 b. $2,800 c. $3,200 d. $3,600

$3,600

A company has the following account balances as the end of the year: - Credit Sales = $400,000 - Accounts receivable = $80,000 - Allowance for Uncollectible Accounts = $400 CREDIT The company estimates 1% of credit sales will be uncollectible. At what amount would Allowance for Uncollectible Accounts be reported in the current year's balance sheet? a. $4,000 b. $4,400 c. $3,600 d. $800

$4,400

On January 1, 2024, Nees Manufacturing lends $10,000 to Robertson Supply using a 9% note due in eight months. Calculate the amount of Interest revenue Need will record on September 1, 2024, the date that the note is due. a. $300 b. $600 c. $900 d. $1,000

$600

On May 1, 2024, Nees Manufacturing lends $10,000 to Robertson Supply using a 9% note due in 12 months. Nees has a December 31 year-end. Calculate the amount of interest revenue Nees will report in its 2024 and 2025 income statements. a. 2024= $300; 2025= $600 b. 2024= $600; 2025= $300 c. 2024= $900; 2025= $0 d. 2024= $0; 2025= $900

2024= $600; 2025= $300

At the beginning of 2024, Clay Ventures has total accounts receivable of $100,000. By the end of 2023, Clay reports net credit sales of $900,000 and total accounts receivable of $200,000. What is the receivables turnover ratio for Clay Ventures? a. 2.0 b. 4.5 c. 6.0 d. 9.0

6.0

At the end of its first year of operations, a company estimates future uncollectible accounts to be $4,500. The company's year-end adjusting entry would include: a. A credit to Accounts Receivable fro $4,500 b. A credit to Allowance for Uncollectible Accounts for $4,500 c. A debit to Allowance for Uncollectible Accounts fro $4,500 d. No adjusting Entry is Necessary because the accounts are not yet actual bad debts

A credit to Allowance for Uncollectible Accounts for $4,500

Using the allowance method, the entry to record a write-off of accounts receivable will include: a. A debit to Bad Debt Expense b. A debit to Allowance for Uncollectible Accounts c. no entry because an allowance for uncollectible accounts was established in an earlier period d. A debit to Service Revenue

A debit to Allowance for Uncollectible Accounts

During the year, a company provides services to customers on account and expects to receive cash in the future. the company records these services on account to which of the following accounts? a. Cash b. Accounts Receivable c. Allowance for uncollectible accounts d. services on account are not recorded until the cash is collected

Accounts Receivable

Which of the following is reported in the balance sheet as a contra (or negative) asset account equal to the amount of estimated future uncollectible accounts? a. Bad Debt Expense b. Accounts Receivable c. Accounts for Uncollectible Accounts d. Service Revenue

Accounts for Uncollectible Accounts

The direct write-off method is generally not permitted for financial reporting purposes because: a. Compared to the allowances method, it would allow greater flexibility to managers in manipulating reported net income b. This method is primarily used for tax purposes c. It is too difficult to accurately estimate future bad debts d. Accounts receivable are not stated for the amount of cash expected to be collected

Accounts receivable are not stated for the amount of cash expected to be collected

The allowance method for uncollectible accounts: a. Is required by generally accepted accounting principles b. Allows for the possibility that some accounts will not be collected c. Reports net accounts receivable for the amount of cash expected to be collected d. All of the above are correct

All of the above are correct

At the end of the year, an adjusting entry is recorded to estimate future uncollectible accounts. The adjusting entry involves: a. Debit Bad Debt Expense; credit Allowance for Uncollectible Accounts b. Debit Bad Debt Expense; credit Accounts Receivable c. Debit Service Revenue; credit Accounts Receivable d. debit Allowance for Uncollectible Accounts; credit Accounts Receivable

Debit Bad Debt Expense; credit Allowance for Uncollectible Accounts

The balance of Bad Debt Expense from estimating future uncollectible accounts has what effect on the income statement in the current year? a. Increases net income b. Decreases net income c. no effect

Decreases net income

A company that provides credit salves or services to customers and then more effectively collects cash from those credit customers would report a _______ receivables turnover ratio. a. Higher b. Lower

Higher

Using the allowance method, the effect on the current year's financial statements of writing off an account receivable generally is to: a. Decrease total assets b. Decrease net income c. Both a and b d. Neither a nor b

Neither a nor b

Accounts receivable are best describes as: a. Liabilities of the company that represent the amount owed to suppliers b. Amounts that have previously been received from customers c. assets of the company representing the amount owed by customers d. amounts that have previously been paid to suppliers

assets of the company representing the amount owed by customers