accounting test 3

The total interest that is due at maturity on a $1,500, 12 percent, 120-day note is

$60

A _________________ is an amount due from another party.

receivable

The allowance for doubtful accounts is a contra asset account that equals:

total uncollectable accounts

On August 21, Alix Company receives a $2,000, 60-day, 6% note from a customer as payment on her account. How much interest will be due on October 20—the due date?

20

On March 14, Zest Co. accepted a 120-day, 6% note in the amount of $5,000 from AZC Co., a customer. On the due date of the note, AZC dishonors the note and fails to pay. The journal entry that Zest would make to record the failure to pay this note on the due date would include a debit to:

Accounts Receivable - AZC for $5,100

On January 1, JC Co. accepted a 60-day, 6%, note in the amount of $10,000 from a customer. On March 2, the due date of the note, the customer honors the note and pays in full. The journal entry that JC would make to record the receipt of payment of this note would include a debit to:

Cash in the amount of $10,100

On July 18, Jerry Pope signed a note when he borrowed $1,200 at 12 percent for 30 days from Second National Bank. In this situation:

Pope is the maker of the note

The supplementary record providing information on each customer is called the _____.

accounts receivable ledger

Ace Company sells merchandise to a customer in the amount of $200 on credit, terms n/30. The entry to record this sale would include a debit to the ____________ account:

accounts recivable

A(n) ____________ is a supplementary record created to maintain a separate account for each customer.

accounts recivable ledger

At year-end, Avis Company estimates that $2,000 of its accounts receivable balance is uncollectible. Avis uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a credit to:

allowance for doubtful accounts

A 60-day, 11 percent, promissory note dated June 10 matures on

august 9

At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible. Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a:

debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts

On November 1, Eli Co. received a $6,000, 60-day, 6% note from a customer as payment on his $6,000 account. Eli's journal entry to record this transaction on November 1, would include a: (Check all that apply.)

debit to Notes Receivable for $6,000.

DonCo, Inc. sold merchandise on January 14, and accepted a 90-day, 5% promissory note in the amount of $5,000. On January 14, the entry to record this transaction would include a debit to:

notes recivable 5000

On January 15, Ross Furniture, Inc., accepts a $5,000, 180-day, 10 percent note from a customer at the time of a product sale. Prepare the January 15 entry for Ross Furniture by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

notes recivable debit 5000, sales credit 5000

To compute interest due on a maturity date, use the formula:

principal x interest rate x time expressed in fraction of year

The --------- method of accounting for bad debts matches the estimated loss from uncollectible accounts receivables against the sales they helped produce.

allowance

On December 1, after making a concerted effort, management determines that it will be unable to collect $1,200 owed to it by one of its customers. This company uses the allowance method to account for uncollectible accounts. Prepare the necessary December 1 journal entry to write off this $1,200 uncollectible account journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

allowance for doubtful accounts debit 1200, and accounts receivable credit 1200

Cosmo Company reported credit sales of $345,000 for the calendar year in its first year of operations. At December 31, customers buying on credit owed $35,000 to the company. Based on the experience of similar businesses, management estimates that $3,500 of its accounts receivable will be uncollectible.

bad debt expense debit 3500, allowance for doubtful accounts credit 3500

On March 15, Viking Office Supply agrees to accept $1,200 in cash along with a $2,800, 60-day, 15 percent note from one of its customers to settle his $4,000 past-due account. Prepare the March 15 entry for Viking Office Supply by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

cash debit 1200, notes receivables debit 2800, and accounts receivable 4000

When a note's maker is unable or refuses to pay at maturity, the note is considered

dishonored