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A trade discount is recognized

by reducing the revenue amount recorded.

The allowance for uncollectible accounts is a contra account to

accounts receivable.

The amount of cash owed to a company by its customers from the sale of goods or services is referred to as

accounts receivable.

When merchandise is returned for a refund or for credit to be applied to other purchases, the situation is called a(n)

sales return

Accounts receivable are typically classified as current assets because

they will be converted to cash within 1 year.

A company that expects that some of its customers will not pay the agreed upon sales price must utilize the

allowance method

The estimated expense for accounts that may not be collected is referred to as

bad debt expense.

Under the allowance method, companies estimate _____ uncollectible amounts and report those estimates in the _____ year.

future; current

When the allowance method is used, the write-off of an uncollectible account:

has no effect on net income

The list price in Boyton's catalog indicates that Product A sells for $3,000, with a trade discount of 5%. Boyton sells the goods to a customer who qualifies for the trade discount. At what amount should Boyton record the sale and related account receivable?

$2,850

Pine Corporation provides $1,000 of services on account with terms 2/10, n/30. If the customer takes the discount and pays within 10 days, Pine will receive

980

When an account previously written off is collected in full, the entry to reverse the previous write-off would require which of the following?

Credit Allowance for Uncollectible Accounts. Debit Accounts Receivable.

Warner Corp. sells goods on account for $10,000 on April 2. On April 20, the customer returns $3,000 of the merchandise. The customer has not yet paid for any of the goods. What is the entry Warner will make on April 20 when the goods are returned?

Debit Sales Returns; credit Accounts Receivable.

Adrian Corp. sells goods on account for $100,000 on May 1. On May 15, the customer returns $40,000 of the merchandise. The customer has not yet paid for any of the goods. What will Adrian record on May 15? (Select all that apply.)

Debit to Sales Returns. Credit to Accounts Receivable.

The allowance method is required by

GAAP

Where is a note receivable reported in the balance sheet?

In either current or noncurrent assets, as appropriate.

When a company has earned interest in the current period but has not yet recorded the interest, what type of adjustment is the company required to make?

Make an adjusting entry at the end of the current period to accrue the interest earned.

A sales return occurs when a customer returns a product for a full refund, whereas a sales is when the customer keeps the product and obtains a partial refund.

allowance

A partial adjustment to the amount owed by the customer for goods that were not returned, but did not fully meet the customer's expectations is referred to as a sales

allowance.

"Net credit sales" refers to credit sales net of:

allowances returns discounts

Sales Returns and Sales Allowances are accounts and require a debit entry to increase the account.

contra revenue

The Sales Returns and Sales Allowances accounts are classified as

contra revenue accounts.

Allowance for Uncollectible Accounts has a credit balance because it is a(n) _____ account.

contra-asset

Adrian Corp. sells goods on account for $100,000 on May 1. The customer paid for the goods on May 10. On May 15, the customer returns $40,000 of the merchandise. The entry Adrian makes on May 15 will include the following: (Select all that apply.)

credit to Cash debit to Sales Returns credit to Accounts Receivable

Abby Fashions sells a suit to a customer for $600 on account. The day after the sale, the customer discovers that the jacket has a small stain on the back. Abby Fashions grants the customer a $60 credit. Abby Fashions will record:

credit to accounts receivable $60, debit to Sales Allowances $60

The journal entry to record bad debt expense includes: (Select all that apply.)

credit to allowance for uncollectible accounts debit to bad debt expense

On June 1, Tulip Corp. provided services on account to Daffodil. Tulip agreed to accept a $40,000, 10%, 3-month interest-bearing note from Daffodil in payment for the services. The entry required on Tulip's books on June 1 would include a

debit to Notes Receivable, $40,000.

Gwendolyn uses the allowance method to account for uncollectible receivables. Gwendolyn should record _____ bad debt expense ______.

estimated; at the end of the year

True or false: Accounts receivable not expected to be collected should be counted in the assets of the company until they are later written off.

false

Bad debt expense is reported on the

income statement

Bad debt expense is reported on the and is classified as an operating expense.

income statement

The direct write-off method is required for

income tax purposes.

An aging schedule classifies accounts receivable based on

length of time outstanding.

Total revenues less discounts, returns, and allowances are referred to as revenues. (Enter only one word.)

net

The financial statement effects of recording an allowance for estimated sales returns are that: (Select all that apply.)

net income decreases,equity decreases,assets decrease

Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will _____ net income.

not affect

Two important ratios that help in understanding a company's effectiveness in managing receivables are the:

receivable turnover ratio average collection period

The _____ ratio shows the number of times during a year that the average receivable balance is collected.

receivables turnover

A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as a(n)

sales

For accounts receivable, the longer an account is outstanding,

the more likely it will prove uncollectible.

is the legal right to receive cash from a credit sale and represents an asset of the company.

trade recievable

is the legal right to receive cash from a credit sale and represents an asset of the company.

trade, receivable

Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance?

93000

When an account previously written off is collected in full, which is required to ensure the accounting for the complete payment history of the customer?

An entry to reinstate the account receivable and an entry to record payment.

Raven receives a 3-year note receivable from a customer for goods sold. How should Raven report this note receivable in its financial statements?

As a noncurrent asset

Amend Inc. debited Accounts Receivable and credited Allowance for Doubtful Accounts to reestablish an account previously written off. Amend Inc. should also debit _______ and credit _______.

Cash; Accounts Receivable

The percentage-of-receivables method of estimating bad debt applies ____ to _____.

a single percentage; accounts receivable

An informal credit arrangement with a customer for payment to be received after the sale is classified as a(n)

account receivable.

At the beginning of the year, Gerta Company's allowance account has a credit balance of $10,000. This may indicate that the

estimate of uncollectible accounts was too high.

At the beginning of the year, Blocker Company's allowance account has a debit balance of $10,000. This may indicate that the

estimate of uncollectible accounts was too low.

A trade discount is a reduction from the list price, which is used to: (Select all that apply.)

give quantity discounts to customers change prices without publishing a new catalog disguise real prices from competitors

Accounts receivable are normally classified

in the balance sheet as assets.

A formal credit arrangement between a creditor and debtor is called a(n)

note receivable.

When a customer returns a product for a refund, in which account is the entry recorded?

sales return

The allowance method estimates

uncollectible accounts.

To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to

allowance for uncollectible accounts.

With the allowance method, bad debt expense is recorded

at the end of the period when bad debts are estimated.

The normal balance of notes receivable is:

debit

Kilroy Corporation provides services to a customer for $1,000. The customer complained that there was a slight defect in the service. Kilroy granted the customer a $50 credit. Kilroy will record this adjustment to the sales price with a

debit to Sales Allowances $50.

A calendar-year-end company that accepts a 3-month interest-bearing note on December 1 must accrue

interest

Assume Company X is in its fifth year of operation. Analyze the following schedule. What conclusion can be drawn from the following schedule?

the target amount in allowance for uncollectible accounts is $25,500.

On March 5, Oak Corp. provided services on account to Pine. Oak agreed to accept a $100,000, 8%, 6-month interest-bearing note from Pine in payment for the services. The entry required on Oak's books on March 5 would require which of the following entries?

Debit Notes Receivable $100,000; credit Service Revenue $100,000.

Net revenues is calculated as total revenues minus which of the following items?

Sales returns Sales discounts Sales allowances

A company makes a sale on terms 2/10, n/30. What does this mean? (Select all that apply.)

The customer may take a 2% discount off the price if paid within 10 days. If payment is not made in 10 days, the net amount is due in 30 days.

The percentage-of-receivables approach to measuring bad debt expense is referred to as _____ method.

a balance sheet

The account "Allowance for Uncollectible Accounts" is classified as

a contra asset to accounts receivable.

A trade discount is

a percentage reduction from list price.

Accounts receivable should be classified as a(n)

asset

An account receivable is normally classified as

asset

York Inc. records a year-end adjustment for estimated sales returns and allowances. As a result of this entry, York's financial statements will change as follows: (Select all that apply.)

assets decrease equity decreases

Receivables not expected to be collected should

not be counted in assets of the company.

receivable typically yields interest revenue and possesses a fairly high probability of collectibility.

note

Which of the following is a discount in the amount to be paid if the customer pays within a specified time period?

sales discount

The direct write-off method is used when

uncollectible accounts are not anticipated or are immaterial.

(Face value x annual interest rate x fraction of the annual period) is the formula for

interest on a note.

What comparative advantages do notes receivables possess compared to other receivables? (Select all that apply.)

interest-bearing higher likelihood of collectibility

When the direct write-off method is used, an entry for bad debt expense is required

when the account receivable is determined to be uncollectible.

Tudor Corp. has an ending balance in the accounts receivable account of $20,000. Tudor recorded bad debt expense of $1,000. Tudor has an ending balance in the allowance for uncollectible accounts of $2,000. What is the net accounts receivable balance?

18,000

The account "Allowance for Uncollectible Accounts" normally has a balence

credit

balance before adjustment indicates that the estimate of uncollectible accounts at the beginning of the year may have been too high.

credit

When a business provides services to a customer, and the customer promises to pay later, this is referred to as

credit sales.

A sales allowance ____ the amount owed by the customer for merchandise that is _____ by the customer.

decreases; retained

The receivables turnover ratio and the average collection period provide information about a company's

effectiveness in managing receivables

Sales to customers in which the customers pay within 30 to 60 days are referred to as (Select all that apply.)

sales on account credit sales

Notes receivable normally has a(n) balance because it is classified as a(n)

debit, asset

The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the

ages