Chapter 3 acc

Seth Corp. sold merchandise to Kelly Corp. on November 1st, for $150,000, and accepted a promissory note for payment in the same amount. The note has a term of 3 months and a stated interest rate of 8%. Seth' accounting period ends on December 31st. What amount should Seth recognize as interest revenue on the maturity date of the note, which is January 31st of the following year?

1000

Wolf Inc. made a sale of $10,000 on August 1, accepting a 6-month 12% note. Wolf makes annual adjusting entries. On December 31st, Wolf will make an adjusting entry accruing how much Interest Receivable?

500

On October 1, 2017, Frank Underwood received a 6%, $500,000 note from Claire Barry, a customer. The note is due on March 31, 2018. Frank Underwood's entry on March 31, 2018 to record the payoff of the note would include a debit to Cash for $ [a].

51500

On April 1, 2017, Clare Barry received a 5%, $600,000 note from John Edwards, a customer. The note is due on September 30, 2017. Clare Barry's entry on September 30 2017 to record the payment received would include a debit to Cash for $ [a]

615000

On April 1, 2016, Clare Barry received a 5%, $600,000 note from John Edwards, a customer. The note is due on March 31, 2017. Clare Barry has a December 31st year-end. Clare Barry's entry on March 31, 2017 to record the payment received would include a credit to interest revenue of

7,500

Which of the following accounts normally has a credit balance? a. Sales returns. b. Sales discounts. c. Allowance for uncollectible accounts (aka Allowance for doubtful accounts). d. Purchases. e. Transportation-in.

Allowance for uncollectible accounts (aka Allowance for doubtful accounts).

ending inventory=

Beginning Inventory + Purchases - COGS

COGP=

COGS+Ending Invi.- Beg Invi.

The Clooney Co. has an account called Sales Returns and Allowances with a balance of $24,058. What type of account is Sales Returns and Allowances and what is its normal balance? a. Contra-Asset, Debit balance. b. Contra-Revenue, Debit balance. c. Contra-Revenue, Credit balance. d. Revenue, Credit balance. e. Asset, Debit balance.

Contra-Revenue, Debit balance.

On July 1, 2017, Nathan Company received a $20,000 promissory note from Dylan Company. The annual interest rate is 8%. Principal and interest are paid in cash at the maturity date of June 30, 2018. If Nathan's fiscal year ends September 30, 2017, the adjusting entry needed is:

Debit Interest Receivable Credit interest Revenue

Rick Inc. uses an allowance method to account for their Bad Debts. On September 30th, Rick had a balance in Accounts Receivable of $432,000 and a balance of $25,400 in Allowance for doubtful accounts. During October, Rick decided to write off the account of Carl, Inc. of $3,400. The journal entry to recognize this write-off would be

Debit: Allowance for doubtful accounts Credit: AR

In times of rising prices, which inventory cost method (LIFO or FIFO) reflects the highest: Ending Inventory Cost [a] Cost of Good Sold [b] Net Income [c] Taxes [d]

Fifo Lifo Fifo Fifo

An allowance method of accounting for bad debts expense: a. Is a suggested method for the financial report. b. Will increase the cost of goods sold. c. Will result in a contra asset account with a debit balance. d. Can result in reporting higher accounts receivable. e. Is the required method when the uncollectible amounts are expected to be material.

Is the required method when the uncollectible amounts are expected to be material.

In times of declining prices, which inventory cost method (LIFO or FIFO) reflects the highest: Ending Inventory Cost [a] Cost of Good Sold [b] Net Income [c] Taxes [d]

Lifo Fifo Lifo Lifo

What amount will Juan report as Bad Debt Expense on the income statement?

Net credit sales * % = bad debt expense

The net realizable value of Accounts Receivable on the Balance Sheet will be:

Net sales * % = bad debt expense accounts rec- bad debt expense= net realizable value

FOB destination

Owner is responsible for shipping

Net purchases for the year=

Purchases+transportation in- purchase returns &allowance

At Dec. 31, 2018, Ending Inventory for ABC, Inc. was overstated by $8,000. What are the effects on the following accounts? Revenue [a] Expenses [b] Net Income [c] Assets [d] Liabilities [e] Equity [f] (Overstated, Understated, or Correct)

Revenue [a] Correct Expenses [b] Understated Net Income [c] Overstated Assets [d] Overstated Liabilities [e] Correct Equity [f] Overstated

Gap, Inc. received a request from a customer to reduce the invoice price of goods because the goods were damaged in shipment. This type of request is recorded as credit to Accounts Receivable and a debit to: a. Cash b. Sales Discounts c. Retained Earnings d. Sales Returns and Allowances e. Sales Revenues

Sales Returns and Allowances

Which of the following accounts normally has a debit balance? a. Sales Revenues b. Purchase Discounts c. Sales Returns and Allowances d. Purchase Returns and Allowances e. Retained Earnings

Sales Returns and Allowances

The Frodo Co. offers their customers a reduction in price for early payment. Frodo would refer to this reduction in price as a: a. Purchase allowance. b. Quantity discount. c. Sales discount. d. Sales return. e. Sales allowance.

Sales discount.

The dollar amount for the bad debt adjustment will be

Sales on account * %= bad debt adjustment

Raider sold goods costing $35,000 to Texas Company FOB Shipping Point on September 1. The goods shipped on September 7. The goods arrived at Texas Company on September 15. Texas paid on September 20. When should Texas Company record the purchase?

Sep 7

Which of the following is TRUE about the accounting for bad debts? a. Bad debt expense is a prepaid expense like Prepaid Rent. b. The direct-write-off method for bad debts is acceptable for financial reporting when material write-offs of accounts are expected. c. Bad debt expense is normally a contra-revenue account similar to Sales Discounts. d. The allowance method for bad debts is acceptable for financial reporting. e. The Allowance for Doubtful Accounts normally has a debit balance.

The allowance method for bad debts is acceptable for financial reporting.

COGS=

beginning inventory + purchases - ending inventory- Purchase returns & allowance

FOB shipping point

the buyer is responsible for the freight cost