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Exam 5: Receivables and Revenue

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Question 51

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A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: Before the year-end adjustment,the credit balance in Allowance for Uncollectible Accounts was $1,300.Under the aging-of-receivables method,the Uncollectible-Account Expense at year-end is:

A) $1,950.
B) $9,000.
C) $10,300.
D) $11,600.

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Question 52

Multiple Choice

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If a company wants to increase its quick ratio,it should consider:

A) buying equipment on account.
B) paying off long-term notes payable.
C) issuing long-term notes payable.
D) collecting an accounts receivable.

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Question 53

Multiple Choice

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When a merchant sells merchandise and lets the customer pay with a VISA credit card:

At December 31 of the current year,Accounts Receivable has a balance of $900,000,the Allowance for Uncollectible Accounts has a debit balance of $1,000 and net credit sales for the year are $3,000,000.Using the aging-of-receivables method,the balance of Allowance for Uncollectible Accounts is estimated at $30,000. Required: 1.Journalize the adjusting entry.Omit the explanation. 2.Determine the net realizable value of accounts receivable at the end of the year.

To satisfy a performance obligation means that:

Bird's Nest had net credit sales for the current period of $510,000 and average net receivables were $55,000.What is the days' sales outstanding? (Round any intermediary calculations to two decimal places and your final answer to the nearest day. )

Smith and Son's Department Store has a policy that allows customers to return merchandise for up to 45 days for a full refund.Based on prior experience,approximately 8% of merchandise sold will be returned. In November,the store's total sales were $2,500,000,all for cash.The cost of the merchandise sold was $1,600,000. On November 30,the company prepared the adjusting entries for sales returns. In December,within the allowable return period,customers returned merchandise that retailed for $100,000 and that cost $66,000 for a refund. Prepare the journal entries for these transactions.Omit explanations.

The Daisy Company had net credit sales of $830,000 for the year.Cash sales for the year were $1,170,000.Its receivables at the beginning of the year were $45,000 and at the end of the year they had increased to $90,000.The Daisy Company has credit terms of net 30 days.Compute the days' sales outstanding and evaluate the ratio as strong or weak.(Round any intermediary calculations to two decimal places and your final answer to the nearest day. )

The balance in Accounts Receivable was $650,000 at the beginning of the year and $760,000 at the end of the year.Credit sales for the year totaled $4,130,000.During the year,$410,000 in customer accounts were written off.How much cash was collected from customers during the period?

An aging-of-accounts-receivable indicates that the amount of uncollectible accounts is $3,410.The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $300.The Accounts Receivable balance is $44,720.The amount of the adjusting entry for uncollectible accounts should be for:

Days' sales outstanding tells a company how long it takes to collect its average level of receivables.

The percent-of-sales method of computing uncollectible accounts for Accounts Receivable is used by some companies because:

The maturity value of a $55,000 note at 10% for 7 months is: (Round your final answer to the nearest dollar. )

Which balance sheet account shows the amount of accounts receivable that the business does NOT expect to collect?

On December 31,2017,the lender on a $5,700,120-day,10% note dated November 5,2017,will recognize: (Use a 365 day year and round your final answer to the nearest dollar. )

The direct write-off method for uncollectible accounts receivable:

With regard to notes receivable,which of the following statements is CORRECT?

The two major types of receivables are accounts receivable and trade receivables.

The direct write-off method records Uncollectible-Account Expense:

On October 11,Younger Company sold merchandise with a selling price of $6,000 on account to Main Street Office Supplies,with terms 2/10,n/30.No sales returns are expected.On October 20,Younger received the full amount due from Main Street. Ignoring cost of goods sold,prepare the journal entries for Younger Company using the gross method.Omit explanations.