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20 Cards in this Set
- Front
- Back
Accounts receivable are valued and reported on the balance sheet |
at cash realizable value. |
|
The direct write-off method of accounting for uncollectible accounts |
is not generally accepted as a basis for estimating bad debts. |
|
When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded |
in the same year as the credit sale. |
|
Allowance for Doubtful Accounts on the balance sheet |
is deducted from accounts receivable |
|
When an account is written off using the allowance method, accounts receivable |
x |
|
Using the allowance method, the uncollectible accounts for the year is estimated to be $40,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 debit before adjustment, what is the amount of bad debt expense for the period? |
$49,000 |
|
An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data: Accounts receivable $2,400,000 Allowance for doubtful accounts per books before adjustment (credit) 150,000 Amounts expected to become uncollectible 195,000
|
$2,205,000 |
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During 2014 Wheeler Inc. had sales on account of $528,000, cash sales of $216,000, and collections on account of $336,000. In addition, they collected $5,800 which had been written off as uncollectible in 2013. As a result of these transactions the change in the accounts receivable indicates a |
$192,000 increase |
|
Smithson Corporation's unadjusted trial balance includes the following balances (assume normal balances): • Accounts Receivable $3,357,000 • Allowances for Doubtful Accounts $63,900
|
$137,520 |
|
The interest on a $6,000, 6%, 90-day note receivable is |
$90.
|
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Rosen Company receives a $5,000, 3-month, 6% promissory note from Bay Company in settlement of an open accounts receivable. What entry will Rosen Company make upon receiving the note? |
x |
|
Barber Company lends Monroe Company $30,000 on April 1, accepting a four-month, 6% interest note. Barber Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?
|
Interest Receivable 150
Interest Revenue 150 |
|
Nance Co. holds Gant Inc.'s $25,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is: |
Cash 25,750
Notes Receivable 25,000
Interest Revenue 750 |
|
A high accounts receivable turnover ratio indicates |
customers are making payments very quickly. |
|
Leary Corporation had net credit sales during the year of $900,000 and cost of goods sold of $540,000. The balance in receivables at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover? |
6.0 |
|
Windsor Corporation sells its goods on terms of 2/10, n/30. It has an accounts receivable turnover of 8. What is its average collection period (days)? |
x |
|
Simonic Retailers accepted $90,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $90,000 and a debit(s) to |
Cash $86,400 and Service Charge Expense $3,600. |
|
The sale or transfer of accounts receivable in order to raise funds is called |
factoring |
|
The retailer considers Visa and MasterCard sales as |
cash sales. |
|
Bad Debt Expense is reported on the income statement as |
an operating expense. |