Accounting... ch8

Under the allowance method the write-off of an account receivable leaves the net realizable value of the accounts receivable unchanged. TRUE OR FALSE

true

Accounts receivable are reported on the balance sheet at their fair market value. TRUE OR FALSE

false

The Allowance for Doubtful Accounts is written off at the end of the fiscal year. TRUE OR FALSE

false

The maturity value of a $25,000, 9%, 4-month note receivable is:

$25,750

The maturity value of a $25,000, 12%, 90-day note receivable dated February 20 is

$25,750 Reread the section on Disposing of Notes Receivable on page 423 of the text

The interest on a $5,000, 8%, 9-month note receivable is:

300

Managing accounts receivable involves all of the following except: ESTABLISHING A PAYMENT PERIOD MONITORING COLLECTION DECIDING WHO TO EXTEND CREDIT TO ACCELERATING PAYMENTS TO SUPPLIERS

ACCELERATING PAYMENTS TO SUPPLIERS

The entry to record the dishonour of a note includes a debit to: ALLOWANCE FOR DOUBTFUL ACCOUNTS LOSS ON NOTES RECEIVABLE BAD DEBTS EXPENSE ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE

Ryan Leaf Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $100,000 at year-end and the total credit sales were $800,000. Management estimates that 4% of receivables will be uncollectible. What adjusting entry will have to be made if the Allowance for Doubtful Accounts has a credit balance of $800 before adjustment? BAD DEBTS EXPENSE 3200 ACCOUNTS RECIEVABLE 3200 BAD DEBTS EXPENSE 4000 ACCOUNTS RECIEVABLE 4000 BAD DEBTS EXPENSE 3200 ALLOWANCE FOR DOUBTFUL ACCOUNTS 3200 BAD DEBTS EXPENSE 4000 ALLOWANCE FOR DOUBTFUL ACCOUNTS 4000

BAD DEBTS EXPENSE 3200 ALLOWANCE FOR DOUBTFUL ACCOUNTS 3200

Managing receivables does not involve the following step: DETERMINE WHOM TO EXTEND CREDIT TO ESTABLISH PAYMENT PERIOD MONITOR COLLECTIONS DISPOSING OF RECEIVABLES

DISPOSING OF RECEIVABLES

Credit card sales using VISA are recorded as

Debit Cash and Service Charge Expense; credit Sales.

A note receivable is recorded at its: FACE VALUE PRESENT VALUE FAIR MARKET VALUE MATURITY VALUE

FACE VALUE

Butte Co. loaned $25,000 to Beavis Co. on June 1, at 12% interest for 3 months. What adjusting entry will Butte Co. have to make of June 30 before preparing the financial statements on June 30?

Interest Receivable 250, Interest Revenue 250 Reread the section on Calculating Interest on page 422 of the text

Accounts receivable are reported on the balance sheet at their: FAIR MARKET VALUE PRESENT VALUE NET REALIZABLE VALUE MATURITY VALUE

NET REALIZABLE VALUE

Wainwright Company receives a $3,000, 4-month, 10% note from Fulton Company as a payment of its account receivable. What entry will Wainwright Company make when it receives the note?

Notes Receivable 3,000, Accounts Receivable-Fulton 3,000.

When an account is written off under the allowance method, the: bad debts expense account is debited accounts receivable account is debited allowance for doubtful accounts is debited loss on accounts receivable account is debited

allowance for doubtful accounts is debited

Which of the following would be classified as another receivable? TRADE ACCOUNTS RECEIVABLE INTEREST RECEIVABLE ACCOUNTS RECEIVABLE NOTES RECEIVABLE

interest receivable

Receivables are sold for all the following reasons except: to assist in billing and collection to reduce cash payments to obtain reasonable source of cash

to reduce cash payments

Notes receivable are reported at their net realizable value. TRUE OR FALSE

true

The direct write-off method violates the matching principle. TRUE OR FALSE

true