Quiz 6 : Accounts Receivables and Payables

The River Hotel's Dividends Payable account at the beginning and end of 20X3 totaled $40,000 and $35,000, respectively. Assume that dividends declared during 20X3 totaled $65,000. The dividends paid by the River Hotel during 20X3 totaled:

$70,000

An interest-bearing note receivable dated April 14 matures on July 23. The principal amount is $10,000, the annual interest rate is 10 percent, and the total interest income for the note is _____________. (Assume that a year has 360 days for the purpose of calculating interest.)

277.78

Net credit sales for the Breakeven Diner for the past year stands at $4,500. If the diner's manager uses the percentage of sales method of estimating bad debt and uses 1.5 percent for this purpose, the amount of bad debt for the year would be:

67.5

Identify the types of following accounts: Allowance for Doubtful Accounts Provision for Doubtful Accounts Accounts Receivable Accounts Payable

Allowance for Doubtful Accounts - Contra Asset Provision for Doubtful Accounts - Expense Accounts Receivable - Current Asset Accounts Payable - Current Liability

Your Cash T-account shows a Credit record of $1,500. Your Accounts Payable T-account shows a Debit record of $1,500. Provide the impact of the transaction on the company described above by indicating the Increase (+) or Decrease (-) of Assets, Liabilities, and Equity (separately provide Revenues and/or Expenses).

Assets: Decrease Liabilities: Decrease Equity: No Change

Your Cash T-account shows a Credit record of $1,500. Your Accounts Payable T-account shows a Debit record of $1,500. Which one of the followings describes this transaction correctly?

Company paid cash of $1,500 to pay back their existing current debt

An aging of a company's accounts receivable indicates that $8,000 are estimated to be uncollectible. If allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record Provision for Doubtful Accounts (Bad Debts Expense) for the period will require a

Debit for Provision for Doubtful Accounts for $6,900

Leftown is a former guest who owes the Munchies Restaurant $750 for a banquet. Restaurant managers have determined that this debt is now uncollectible. If the restaurant uses the allowance method for bad debt expense, the journal entry to recognize this bad debt would be a debit to ___________ and a credit to _________________.

Debit: Allowance for Doubtful Accounts Credit: Accounts Receivable

Carson Catering caters a party for Mary Smith for $1,000. Mary pays $300, and Carson Catering allows Mary to pay the remainder in two weeks. Which Carson Catering accounts are affected? Specify whether the account is debited or credited, and for what amount.

Debit: Cash $300 & Accounts Receivable $700 Credit: Service Revenue $1,000

Leftown is a former guest who owes the Munchies Restaurant $750 for a banquet. Restaurant managers have determined that this debt is now uncollectible. If the restaurant uses the direct write-off method of accounting for bad debt expense, the journal entry to recognize this bad debt would be

Debit: Provision for Doubtful Accounts Credit: Accounts Receivable

The Wayside Hotel uses the direct write-off method of accounting for bad debts. If the general manager of the hotel determines that a $700 debt is uncollectible, the journal entry to recognize this bad debt would involve:

Debit: Provision for Doubtful Accounts Credit: Accounts Receivable

An aging schedule shows required balance in Allowance for Doubtful Accounts of $9,600. If there is a credit balance in the allowance account of $3,500 prior to adjustment, the adjustment amount is $6,100.

True

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash

True

Direct write-off method is a violation of matching principle.

True

A company that has either an account receivable or a note receivable on its books is called a:

creditor