Gleim 0130

The following information relates to Jay Co.'s accounts receivable for the year just ended: Accounts receivable, 1/1 $ 650,000 Credit sales for the year 2,700,000 Sales returns for the year 75,000 Accounts written off during the year 40,000 Collections from customers during the year 2,150,000 Estimated uncollectible accounts at 12/31 110,000 What amount should Jay report for accounts receivable, before allowance for credit losses, at December 31? $1,200,000 $1,085,000 $1,125,000 $1,165,000

$1,085,000

Orr Co. prepared an aging of its accounts receivable at December 31 and determined that the net carrying amount of the receivables was $250,000. Additional information is available as follows: Allowance for credit losses at 1/1 $ 28,000 Accounts written off as uncollectible during the year 23,000 Gross accounts receivable at 12/31 270,000 Collections of accounts that were previously written off and not expected to be recovered 5,000 For the year ended December 31, Orr's credit loss expense is $23,000 $10,000 $20,000 $15,000

$10,000

Foster Co. adjusted its allowance for credit losses at year end. The general ledger balances for the accounts receivable and the related allowance account were $1,000,000 and $40,000, respectively. Foster uses the percentage-of-receivables method to estimate its allowance for credit losses. Accounts receivable were estimated to be 5% uncollectible. What amount should Foster record as an adjustment to its allowance for credit losses at year end? $50,000 increase. $10,000 increase. $10,000 decrease. $50,000 decrease.

$10,000 increase.

Inge Co. determined that the net value of its accounts receivable at December 31, based on an aging of the receivables, was $325,000. Additional information is as follows: Allowance for credit losses at 1/1 $ 30,000 Uncollectible accounts recovered during the year 18,000 Collection of accounts previously written off that were not expected to be recovered 2,000 Gross amount of accounts receivable at 12/31 350,000 For the year, what would be Inge's credit loss expense? $5,000 $11,000 $15,000 $21,000

$11,000

At January 1, Jamin Co. had a credit balance of $260,000 in its allowance for uncollectible accounts. Based on past experience, 2% of Jamin's credit sales have been uncollectible. During the year, Jamin wrote off $325,000 of uncollectible accounts. Credit sales for the year were $9 million. In its December 31 balance sheet, what amount should Jamin report as allowance for uncollectible accounts? $115,000 $440,000 $245,000 $180,000

$115,000

West Retailers purchased merchandise with a list price of $20,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. West should record the cost of this merchandise as $14,000 $20,000 $15,600 $14,400

$14,400

Hall Co.'s allowance for credit losses had a credit balance of $24,000 at December 31, Year 1. During Year 2, Hall wrote off uncollectible accounts of $96,000. The aging of accounts receivable indicated that a $100,000 allowance for credit losses was required at December 31, Year 2. What amount of credit loss expense should Hall report for Year 2? $172,000 $120,000 $96,000 $100,000

$172,000

Tinsel Co.'s balances in allowance for credit losses were $70,000 at the beginning of the current year and $55,000 at year end. During the year, receivables of $35,000 were written off as uncollectible. What amount should Tinsel report as credit loss expense at year end? $50,000 $20,000 $35,000 $15,000

$20,000

Ward Co. estimates its uncollectible accounts expense to be 2% of credit sales. Ward's credit sales for the current year were $1 million. During the year, Ward wrote off $18,000 of uncollectible accounts. Ward's allowance for uncollectible accounts had a $15,000 balance on January 1. In its December 31 income statement, what amount should Ward report as uncollectible accounts expense? $17,000 $20,000 $23,000 $18,000

$20,000

The following information has been compiled by Able Manufacturing Company: Sale of company products for the period to customers with net 30-day terms amounting to $150,000. Sale of company products for the period to a customer, supported by a note for $25,000, with special terms of net 180 days. Balance of trade receivables at the end of the last period was $300,000. Collections of open trade receivables during the period was $200,000. Rental income for the period, both earned and accrued but not yet collected, from the Able Employees' Credit Union for use of company facilities was $2,000. The open trade receivables balance to be shown on the statement of financial position for the period is $275,000 $252,000 $277,000 $250,000

$250,000

The following accounts were abstracted from Roxy Co.'s unadjusted trial balance at December 31: Debit Credit Accounts receivable $1,000,000 Allowance for credit losses 8,000 Net credit sales $3,000,000 Roxy estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, the allowance for credit losses should have a credit balance of $90,000 $30,000 $82,000 $38,000

$30,000

Based on the industry average, Davis Corporation estimates that its bad debts should average 3% of credit sales. The balance in the allowance for uncollectible accounts at the beginning of Year 3 was $140,000. During Year 3, credit sales totaled $10,000,000, accounts of $100,000 were deemed to be uncollectible, and payment was received on a $20,000 account that had previously been written off as uncollectible. The entry to record bad debt expense at the end of Year 3 would include a credit to the allowance for uncollectible accounts of $300,000 $160,000 $240,000 $260,000

$300,000

At the end of Year 1, Boller Co. had an ending balance in allowance for credit losses of $30,000. During Year 2, Boller wrote off $40,000 of accounts receivable. At the end of Year 2, Boller had $300,000 in accounts receivable and determined that 8% of these would be uncollectible. What amount should be reported as credit loss expense on Boller's Year 2 income statement? $64,000 $34,000 $14,000 $24,000

$34,000

Wren Company had the following account balances at December 31: Accounts receivable $ 900,000 Allowance for credit losses (before any provision for credit loss expense) 16,000 Credit sales for the year 1,750,000 Wren is considering the following methods of estimating credit loss expense for the year: Based on credit sales at 2% Based on accounts receivable at 5% What amount should Wren charge to credit loss expense under each method? Percentage of/Percentage of Credit Sales/Accounts Receivable $35,000/$45,000 $51,000/$29,000 $51,000/$45,000 $35,000/$29,000

$35,000/$29,000

On March 31, Vale Co. had an unadjusted credit balance of $1,000 in its allowance for credit losses. An analysis of Vale's trade accounts receivable at that date revealed the following: Estimated Age/Amount/Uncollectible 0-30 days/$60,000/5% 31-60 days/4,000/10% Over 60 days/2,000/70% What amount should Vale report as allowance for credit losses in its March 31 balance sheet? $4,000 $3,800 $3,000 $4,800

$4,800

Marr Co. had the following sales and accounts receivable balances, prior to any adjustments at year end: Credit sales $10,000,000 Accounts receivable 3,000,000 Allowance for credit losses 50,000 Marr uses 3% of accounts receivable to determine its allowance for credit losses at year end. By what amount should Marr adjust its allowance for credit losses at year end? $140,000 $0 $90,000 $40,000

$40,000

At December 31, Year 1, Gasp Co.'s allowance for credit losses had a credit balance of $30,000. During Year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, Year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, Year 2, receivables may be uncollectible. What amount of allowance for credit losses should Gasp report in its December 31, Year 2, balance sheet? $20,000 $25,000 $35,000 $50,000

$50,000

For the year ended December 31, Beal Co. estimated its allowance for credit losses using the year-end aging of accounts receivable. The following data are available: Allowance for credit losses, 1/1 $42,000 Uncollectible accounts written off, 11/30 46,000 Estimated uncollectible accounts per aging, 12/31 52,000 After year-end adjustment, the credit loss expense should be $56,000 $46,000 $52,000 $48,000

$56,000

Mill Co.'s allowance for credit losses was $100,000 at the end of Year 2 and $90,000 at the end of Year 1. For the year ended December 31, Year 2, Mill reported credit loss expense of $16,000 in its income statement. What amount did Mill debit to the appropriate account in Year 2 to write off actual bad debts? $10,000 $26,000 $6,000 $16,000

$6,000

The following information pertains to Oro Corp.: Credit sales for the year ended December 31 $450,000 Credit balance in allowance for uncollectible accounts at January 1 10,800 Bad debts written off during the year 18,000 According to past experience, 3% of Oro's credit sales have been uncollectible. After provision is made for bad debt expense for the year ended December 31, the allowance for uncollectible accounts balance would be $13,500 $31,500 $6,300 $24,300

$6,300

An internal auditor is deriving cash flow data based on an incomplete set of facts. Credit loss expense was $2,000. Additional data for this period follows: Credit sales $100,000 Gross accounts receivable -- beginning balance 5,000 Allowance for credit losses -- beginning balance (500) Accounts receivable written off 1,000 Increase in net accounts receivable (after subtraction of allowance for credit losses) 30,000 How much cash was collected this period on credit sales? $64,000 $70,000 $68,000 $68,500

$68,000

In its December 31, Year 3, balance sheet, Fleet Co. reported accounts receivable of $100,000 before allowance for credit losses of $10,000. Credit sales during Year 4 were $611,000, and collections from customers, excluding recoveries, totaled $591,000. During Year 4, accounts receivable of $45,000 were written off and $17,000 were recovered. Fleet estimated that $15,000 of the accounts receivable at December 31, Year 4, were uncollectible. In its December 31, Year 4, balance sheet, what amount should Fleet report as accounts receivable before allowance for credit losses? $67,000 $58,000 $75,000 $82,000

$75,000

An analysis and aging of Jay Co.'s accounts receivable at December 31 disclosed the following: Accounts receivable $900,000 Allowance for credit losses, per books 50,000 Amounts deemed uncollectible 64,000 The net carrying amount of the accounts receivable at December 31 should be $786,000 $836,000 $850,000 $886,000

$836,000

Rue Co.'s allowance for credit losses had a credit balance of $12,000 at December 31, Year 1. During Year 2, Rue wrote off uncollectible accounts of $48,000. The aging of accounts receivable indicated that a $50,000 allowance for credit losses was required at December 31, Year 2. What amount of credit loss expense should Rue report for Year 2? $48,000 $86,000 $60,000 $50,000

$86,000

The following information pertains to Tara Co.'s accounts receivable at December 31, Year 2: Days Estimated Outstanding Amount % Uncollectible 0 - 60 $120,000 1% 61 - 20 90,000 2% Over 120 100,000 6% $310,000 During Year 2, Tara wrote off $7,000 in receivables and recovered $4,000 that was written off in prior years and was not expected to be recovered. Tara's December 31, Year 1, allowance for credit losses was $22,000. Under the aging method, what amount of allowance for credit losses should Tara report at December 31, Year 2? $13,000 $10,000 $9,000 $19,000

$9,000

Gibbs Co. uses the allowance method for recognizing credit losses on accounts receivable. Ignoring deferred taxes, the entry to record the write-off of a specific uncollectible account Decreases both net income and working capital. Affects neither net income nor gross accounts receivable. Affects neither net income nor working capital. Decreases both net income and net carrying amount of accounts receivable.

Affects neither net income nor working capital.

A method of estimating the allowance for credit losses on accounts receivable that emphasizes asset valuation rather than income measurement is the allowance method based on Direct write-off. Gross sales. Credit sales less returns and allowances. Aging the receivables.

Aging the receivables.

When the allowance method of recognizing credit losses on accounts receivable is used, the entry to record the write-off of a specific account Decreases accounts receivable and increases the allowance for credit losses. Increases the allowance for credit losses and decreases net income. Decreases both accounts receivable and net income. Decreases both accounts receivable and the allowance for credit losses.

Decreases both accounts receivable and the allowance for credit losses.

Bee Co. uses the direct write-off method to account for uncollectible accounts receivable. During an accounting period, Bee's cash collections from customers equal sales adjusted for the addition or deduction of the following amounts: Accounts/Increase in Accounts Written Off/Receivable Balance Addition/Addition Deduction/Deduction Deduction/Addition Addition/Deduction

Deduction/Deduction

Under the allowance method of recognizing credit losses on accounts receivable, the entry to write-off an uncollectible account Decreases net income. Has no effect on the allowance for credit losses. Increases the allowance for credit losses. Has no effect on net income.

Has no effect on net income.

When the allowance method of recognizing uncollectible accounts is used, the entries at the time of collection of a small account previously written off that was not expected to be collected Increase net income. Increase the allowance for credit losses. Decrease the allowance for credit losses. Have no effect on the allowance for credit losses.

Increase the allowance for credit losses.

When the allowance method of recognizing credit losses on accounts receivable is used, how would the collection of an account previously written off affect gross accounts receivable and the allowance for credit losses? Gross Accounts/Allowance for Receivable/Credit Losses Increase/No effect Increase/Decrease No effect/Decrease No effect/Increase

No effect/Increase

During the year, Hauser Co. wrote off a customer's account receivable. Hauser used the allowance method for credit losses on accounts receivable. What impact would the write-off have on net income and total assets? Net Income /Total Assets Decrease/No effect Decrease/Decrease No effect/No effect No effect/Decrease

No effect/No effect

Johnson Company uses the allowance method to account for credit losses on accounts receivable. After recording the estimate of credit loss expense for the current year, Johnson decided to write off in the current year the $10,000 account of a customer who had filed for bankruptcy. What effect does this write-off have on the company's current net income and total current assets, respectively? Net Income/Total Current Assets Decrease/No effect No effect/Decrease No effect/No effect Decrease/Decrease

No effect/No effect

When the allowance method of recognizing bad debt expense is used, the allowance would decrease when a(n) Specific uncollectible account is written off. Account previously written off is collected. Provision for uncollectible accounts is recorded. Account previously written off becomes collectible.

Specific uncollectible account is written off.

Which method of recording credit loss expense accounts receivable is consistent with accrual accounting? Allowance/Direct Write-Off No/Yes Yes/Yes No/No Yes/No

Yes/No