Accounting exam 2

On March 17, Jackal Lumber sold building materials to Fredo Limited for $15,000 with terms of 3/10, net 20. What amount did Jackal record as revenue on March 25 when Fredo paid for the building materials? $15,000. $14,550. $15,450. $0.

$0 (already recorded revenue when sold on March 17) Trick Question!

The current year's beginning and ending balances for Allowance for Uncollectible Accounts is $23,000 and $27,000, respectively. If the amount of Bad Debt Expense for the year is $18,000, what is the amount of actual bad debts for the year? $14,000. $10,000. $18,000. $22,000.

$14,000

On September 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2016? $20. $40. $30. $60.

$20.

What was Lewis Inc.'s net revenues in 2015? ($) Sales discounts 41 Unearned Rev. 32 Total sales 459 Purchase discounts 15 Sales allowances 35 Accounts Rec. 205 368 434 383 437

$383

On September 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2015? $20. $40. $30. $60.

$40

On February 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2015? $120. $240. $100. $60.

$60

On December 31, 2015, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $48,400 and $940, respectively. During 2016, Coolwear wrote off $820 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,140 at December 31, 2016. Bad debt expense for 2016 would be:

1,020

On December 31, 2015, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $53,600 and $1,325, respectively. During 2016, Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2016. Bad debt expense for 2016 would be:

1,420

Allowance for Uncollectible Accounts is: An expense account. A contra asset account. A contra revenue account. A liability account.

A contra asset account.

When $2,500 of accounts receivable are determined to be uncollectible, which of the following should the company record to write off the accounts using the allowance method? A debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts. A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense. A debit to Bad Debt Expense and a credit to Accounts Receivable. A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable.

A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable.

The primary difference between a note receivable and an account receivable is: A note receivable cannot be classified as a current asset. Borrowers have the option of not paying a note receivable. An account receivable is more likely to be collected. A note receivable is evidenced by a written debt instrument.

A note receivable is evidenced by a written debt instrument.

Collections of accounts receivable that previously have been written off are credited to: A Gain account. Accounts Receivable. Bad Debt Expense. Retained Earnings.

Accounts Receivable.

Under the allowance method, which of the following does not change the balance in the Accounts Receivable account? Returns on credit sales. Collections on customer accounts. Bad debt expense adjustment. Write-offs.

Bad debt expense adjustment.

On July 8, Ray Inc. sold 100 printers to Office Rental Company and offered a discount for payment within 10 days. On July 15, Office Rental Company paid the full amount in cash. What should Ray Inc. record on July 15? (No #s, just accounts)

Cash Sales Discounts Accts. Rec.

At the beginning of 2015, the balance in Jackson Enterprises' Allowance for Uncollectible Accounts was $31,800. During 2015, the company wrote off $38,000 of accounts receivable. Writing off the individual bad debts would include a: Debit to Bad Debt Expense. Credit to Accounts Receivable. Credit to the Allowance for Uncollectible Accounts. Debit to Bad Debt Expense; credit to the Allowance for Uncollectible Accounts.

Credit to Accounts Receivable.

Using the allowance method, writing off an actual bad debt would include a: Debit to Bad Debt Expense. Credit to Accounts Receivable. Debit to Accounts Receivable. Credit to Allowance for Uncollectible Accounts.

Credit to Accounts Receivable.

On December 31, 2015, Mark Inc. estimates future bad debts to be $6,500. The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment. What adjustment should Mark Inc. record for the estimated bad debts on December 31, 2015? Debit Bad Debt Expense, $6,500; credit Allowance for Uncollectible Accounts, $6,500. Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000. Debit Allowance for Uncollectible Accounts, $9,000; credit Bad Debt Expense, $9,000. Debit Bad Debt Expense, $9,000; credit Allowance for Uncollectible Accounts, $9,000.

Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000.

(Disregard cash amounts) At the end of 2015, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2015, to record its estimated uncollectible accounts included a: Credit to Allowance for Uncollectible Accounts of $12,000. Debit to Bad Debt Expense of $7,500. Credit to Allowance for Uncollectible Accounts of $7,500. Debit to Bad Debt Expense of $7,500; credit to Allowance for Uncollectible Accounts of $7,500.

Debit to Bad Debt Expense of $7,500; credit to Allowance for Uncollectible Accounts of $7,500.

A company's adjustment for uncollectible accounts at year-end would include a: Debit to Bad Debt Expense. Credit to Accounts Receivable. Debit to Accounts Receivable. Debit to Allowance for Uncollectible Accounts.

Debit to Bad Debt Expense.

Hughes Aircraft sold a four-passenger airplane for $380,000, receiving a $50,000 down payment and a 12% note for the balance. This transaction would include a: Credit to Cash. Debit to Sales Discount. Debit to Notes Receivable. Credit to Notes Receivable.

Debit to Notes Receivable.

Shupe Inc. estimates uncollectible accounts based on the percentage of accounts receivable. What effect will recording the estimate of uncollectible accounts have on the accounting equation? Increase liabilities and decrease stockholders' equity. Decrease assets and decrease liabilities. Decrease assets and decrease stockholders' equity. Increase assets and decrease stockholders' equity.

Decrease assets and decrease stockholders' equity.

Accounts receivable are normally reported at the: Present value of future cash receipts. Current value plus accrued interest. Expected amount to be received. Current value less expected collection costs.

Expected amount to be received.

On January 1, 2015, Alice & Co. lends $5,000 to an employee and accepts a 24-month, 10% note. At the end of 2015, what effect will the adjustment for accrued interest revenue have on the Alice & Co.'s financial statements? Decreases assets. Decreases revenue. Increases expense. Increases stockholders' equity.

Increases stockholders' equity.

Richard LLC accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation? Increases assets and increases stockholders' equity. Decreases assets and decreases stockholders' equity. Decreases assets and decreases liabilities. No effect on the accounting equation.

No effect on the accounting equation.

Lail Inc. accounts for bad debts using the allowance method. On June 1, Lail Inc. wrote off Andrew Green's $2,500 account. Based on Lail's estimation, Andrew Green will never pay any portion of the balance in his account. What effect will this write-off have on Lail Inc.'s balance sheet at the time of the write-off? An increase to stockholders' equity and a decrease to liabilities. No effect. An increase to assets and an increase to stockholders' equity. A decrease to assets and a decrease to stockholders' equity.

No effect.

When using an aging method for estimating uncollectible accounts: Older accounts are considered less likely to be collected. The number of days the account is past due is not considered. Older accounts are considered more likely to be collected. No estimate of uncollectible accounts is made.

Older accounts are considered less likely to be collected.

A trade discount results in: A contra revenue account being recorded. A contra asset being recorded. Customers delaying cash payment. Revenue being recorded for the discounted price.

Revenue being recorded for the discounted price.

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting Accounts Receivable and debiting: Sales Revenue. Sales Discounts. Sales Returns. Sales Allowances.

Sales Allowances.

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a:

Sales Return

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit Accounts Receivable and debit: Sales Revenue. Sales Discounts. Sales Returns. Sales Allowances.

Sales Returns.

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a: Sales revenue. Sales discount. Sales return. Sales allowance.

Sales allowance.

Which of the following statements is true with respect to the percentage-of-credit-sales method for estimating uncollectible accounts? The amount recorded for bad debt expense does not depend on the balance of the allowance for uncollectible accounts. This method is referred to as the balance sheet approach. This method does not allow for future uncollectible accounts. Under this method, bad debt expense is recorded at the time of an actual bad debt.

The amount recorded for bad debt expense does not depend on the balance of the allowance for uncollectible accounts.

The percentage-of-credit-sales method for estimating uncollectible accounts is sometimes described as: The balance sheet method. The method most used by companies. The income statement method. The percentage-of-receivables method.

The income statement method.

A company collects an account receivable previously written off. Indicate how this transaction would affect the following five financial statement items: Assets, Liab., SE, Rev., Exp.

This has no effect on any of the following accounts.

Which of the following is recorded by a credit to Accounts Receivable? Sale of inventory on account. Estimating the annual allowance for uncollectible accounts. Estimating annual sales returns. Write-offs of bad debts.

Write-offs of bad debts.

A company performs $1,000 worth of services account on March 1, with the terms 2/10, n/30. The customer makes the payment on March 27. The receipt of payment will involve a: credit to Accounts Receivable for $1,000 debit to cash for $980, credit to Sales Discounts for $20 credit to Service Revenue for $1,000

credit to Accounts Receivable for $1,000

A company performs $1,000 worth of services on account on March 1, with the terms 2/10, n/30. The customer makes the payment on March 7. The receipt of payment will involve a: debit to cash for $1,000 credit to Accounts Receivable for $980 debit to Sales Discounts for $20 credit to Service Revenue for $980

debit to Sales Discounts for $20