ACC 201 Ch 5 Quiz
Data for the year ended December 31 are presented below: Sales (credit)$2,500,000Sales returns and allowances50,000Accounts Receivable (December 31)640,000Allowance for Doubtful Accounts (Before adjustment at December 31)20,000Estimated amount of uncollected accounts based on aging analysis45,000Refer to AT&U Company. If the company estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense?
a. $24,500
Data for the year ended December 31 are presented below. Sales (100% on credit)$2,100,000Sales returns150,000Accounts Receivable (December 31)420,000Allowance for Doubtful Accounts (Before adjustment at December 31)25,000Estimated amount of uncollected accounts based on an aging analysis75,000Refer to A&B Foods. If the company estimates its bad debts at 4% of net credit sales, what amount will be reported as bad debt expense?
a. $78,000
Action Signs recorded credit sales of $10,000 on the gross method. Terms are 2/20, n/30. Select the correct statement about the entry to record this sale.
a. Accounts receivable increases $10,000
The company sold merchandise to a customer on December 1, 2019, for $120,000. The company accepted a promissory note as payment. The note has a term of three months and an annual interest rate of 10%. The company's accounting period ends on December 31. Refer to Absolute Appliances. What is the maturity date of the note?
a. March 1, 2020
On December 1, Anson's Drug Store concluded that a customer's $325 account receivable was uncollected and that the account should be written off. What effect will this write-off have on the company's net income and balance sheet totals assuming the direct write-off method is used to account for bad debts?
a. decrease in net income; decrease in total assets
The principal amount of a note receivable plus the interest due is referred to as the note's
a. maturity value.
A company needs to record 6 months of accrued interest on a 4-year, 12%, $12,000 promissory note payable. How much interest expense should be accrued?
b. $720
A company receiving payment of a $20,000 accounts receivable within 10 days with terms of 2/10, n/30, would record a sales discount of:
b. 2% of $20,000
What is the distinguishing characteristic between accounts receivable and notes receivable?
b. Notes receivable generally specify an interest rate and a maturity date at which any interest and principle must be repaid.
How will the lender of the promissory note record the note on its books?
b. The promissory note will be recorded as an asset.
The company received a promissory note from a customer on March 1, 2019. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest. Refer to the information for Accent Flooring. What is the total amount of interest the company will receive when the note is collected?
c. $450
Which one of the following is an accurate description of the Allowance for Doubtful Accounts?
c. Contra Account
The Allowance for Doubtful Accounts represents:
c. The difference between the recorded value of accounts receivable and the net realizable value of accounts receivable
The following data are from the company's records for the year ended December 31:Credit sales during the year$2,400,000Accounts Receivable--December 31410,000Allowance for Doubtful Accounts--December 3155,000Bad debt expense for the year70,000Refer to A2Z Events. What amount will the company show on its year-end balance sheet for the net realizable value of its accounts receivable?
d. $355,000
A company uses the direct write-off method to account for bad debts. What are the effects on the accounting equation of the entry to record the write-off of a customer's account balance?
d. Assets and Stockholders' equity decrease
