Financial Accounting Chapter 7

Espat Corp. reported net sales (all on credit) of $1,600,000 and cost of goods sold of $1,100,000 for 2016. Its beginning balance of Accounts Receivable was $150,000. The accounts receivable balance decreased by $10,000 during 2016. Rounded to two decimal places, what is Espat's accounts receivable turnover rate for 2016?

11.03

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

Contra account

Bad Debts expense is debited and Accounts Receivable is credited at the end of the period to recognize bad debts under the allowance method.

False

The party to a promissory note that agrees to repay money on the maturity date of the note is called the

Maker of the note

The following information was presented in the balance sheet of Gloria Company as of December 31, 2016: Trade accounts receivable, net of allowance for uncollectibles of $100,000 $1,600,000 Which one of the following statements is true?

The net realizable value of Gloria's accounts receivable is $1,600,000.

Accounts receivable are shown on the balance sheet at the net realizable value.

True

Under the allowance method of accounting for bad debts, the company estimates the amount of bad debts before those debts actually occur.

True

What is the distinguishing characteristic between accounts receivable and notes receivable?

Notes receivable result from a written promise to pay within a specified amount of time.

The data presented below is for Falconi, Inc. for 2016. Credit sales during the year$2,100,000Accounts receivable—December 31, 2016395,000Allowance for doubtful accounts—December 31, 201620,000Bad debt expense for the year17,000 What amount will Falconi show on its year-end balance sheet for the net realizable value of its accounts receivable?

$375,000

Which one of the approaches for the allowance method of accounting for bad debts emphasizes matching bad debts expense with revenue on the income statement?

the percentage of net credits sales approach