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Exam 5: Receivables and Sales

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Question 81

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Fleming Corp.provided services on account.The transaction would be recorded with a credit to:

A) Accounts Payable.
B) Service Revenue.
C) Accounts Receivable.
D) Cash.

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Question 82

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Under the direct write-off method,recording an estimate of future uncollectible accounts includes a debit to Bad Debt Expense and a credit to the Allowance for Uncollectible Accounts.Under the direct write-off method,future uncollectible accounts are not estimated.

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Question 83

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The amount of cash that is actually expected to be collected on accounts receivable is referred to as:

Hughes Aircraft sold a four-passenger airplane for $380,000,receiving a $50,000 down payment and a 12% note for the balance.This transaction would include a:

Accounts receivable are reported at their net realizable value.

The account "Allowance for Uncollectible Accounts" is classified as a(n) :

Compared to other methods of estimating uncollectible accounts,the aging of accounts receivables method tends to:

Trade discounts represent a discount offered to the purchasers for quick payment.Trade discounts represent a reduction in the listed price of a product or service.

A company collects a customer's account within the discount period.Indicate how this transaction would affect (1) assets, (2) stockholders' equity,and (3) revenues.

A company provides services on account.Indicate how this transaction would affect (1) assets, (2) stockholders' equity,and (3) revenues.

At the end of 2018,Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (debit) before any adjustment.The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.Murray State's adjustment on December 31,2018,to record its estimated uncollectible accounts included a:

On December 31,2018,Andy Inc.has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment.Andy Inc.also has the following information for its accounts receivable and the estimated percentages of bad debts for different past-due amounts: What is the amount of bad debt expense to be reported on Andy Inc.'s financial statements for 2018 using the aging method? $\begin{array} { | c | r | c | } \hline \begin{array} { c } \text { Age Group } \\\text { (days past } \\\text { due) }\end{array} & \begin{array} { r } \text { Accounts } \\\text { Receivable }\end{array} & \begin{array} { c } \text { Estimated Percent } \\\text { Uncollectble }\end{array} \\\hline 0 - 30 & \$ 50,000 & 5 \% \\\hline 31 - 60 & \$ 20,000 & 10 \% \\\hline 61 - 90 & \$ 10,000 & 20 \% \\\hline\end{array}$

For accounts receivable,the longer an account is outstanding,the:

A company's adjustment for uncollectible accounts at year-end would include a:

A sale on account for $1,000 offered with terms 2/10,n/30 means that the customers will get a $2 discount if payment is made within 10 days;otherwise,full payment is due within 30 days.2/10 indicates a 2% discount (or $20 in this example)if payment is made within 10 days.

The aging method for estimating uncollectible accounts considers that a higher percentage of "older" accounts will not be collected compared to "newer" accounts.

The direct write-off method is used for tax purposes but is generally not permitted for financial reporting.

At the time of a credit sale,a company would record an increase in assets and an increase in revenues.

Identify the condition(s) that must exist for a sale and the related receivable to be recognized.

Under the direct write-off method,bad debt expense is recorded at the time accounts are known to be uncollectible.