ACCTG1 PRELIM QUIZ2

An entity provided the following information for the current year: Accounts receivable – January 1 =2,000,000; Credit sales 10,000,000; Collection from customers, excluding recovery of accounts written off 7,500,000; Accounts written off as worthless 100,000; Sales returns 400,000; Recovery of accounts written off 50,000; Estimated future sales returns on December 31= 300,000; Estimated uncollectible accounts on December 31 per aging 600,000 What is the “amortized cost” of accounts receivable on December 31?

• 4,000,000

• 3,700,000

• 3,450,000

• 3,100,000

An entity provided the following data for the current year: Allowance for doubtful accounts January 1 =180,000; Sales 9,500,000; Sales returns and allowances 800,000; Sales discount 200,000; Accounts written off as uncollectible 200,000; The entity provided for doubtful accounts expense at the rate of 5% of net sales. What amount should be reported as doubtful accounts expense for the current year?

• 435,000

• 425,000

• 475,000

• 415,000

An entity provided the following accounts abstracted from the unadjusted trial balance at year-end:

Debit: Accounts receivable 5,000,000; Allowance for doubtful accounts 100,000

Credit: Net credit sales 20,000,000

The entity estimated that 10% of the gross accounts receivable will become uncollectible. What amount should be recognized as doubtful accounts expense for the current year?

• 500,000

• 400,000

• 200,000

• 600,000

An entity used the net price method of accounting for cash discounts. In one of its transactions on December 26, 2021, the entity sold merchandise with a list price of P5,000,000 to a client who was given a trade discount of 20%, 10% and 5%. Credit terms were 4/10, n/30. The goods were shipped FOB destination, freight collect. Total freight charge paid by the client was P100,000. On December 27, 2021, the client returned damaged goods originally billed at P500,000. What is the net realizable value of the accounts receivable on December 31, 2021?

• 3,420,000

• 2,920,000

• 2,703,200

• 2,803,200

What amount should be reported as doubtful accounts expense for current year?

• 1,200,000

• 1,650,000

• 900,000

• 950,000

What amount was recognized as bad debt expense for the current year?

• 70,000

• 40,000

• 90,000

• 50,000

On January 1, 2021, an entity sold a building with carrying amount of P6,000,000 in exchange for a noninterest bearing note requiring ten annual payments of P1,000,000. The first payment was made on December 31, 2021. The market interest rate for similar notes at date of issuance was 8%. The present value of an ordinary annuity of 1 at 8% is 6.71 for ten periods. The present value of an annuity due of 1 at 8% is 7.25 for ten periods. What is the interest income for 2021?

• 500,000

• 580,000

• 536,800

• 376,800

On January 1, 2021, an entity sold a building with carrying amount of P6,000,000 in exchange for a noninterest bearing note requiring ten annual payments of P1,000,000. The first payment was made on December 31, 2021. The market interest rate for similar notes at date of issuance was 8%. The present value of an ordinary annuity of 1 at 8% is 6.71 for ten periods. The present value of an annuity due of 1 at 8% is 7.25 for ten periods. What is the carrying amount of note receivable on December 31, 2021?

• 6,246,800

• 7,246,800

• 6,830,000

• 6,750,000

Which is accepted in determining bad debt expense?

• A percentage of sales adjusted for the balance in the allowance

• A percentage of sales not adjusted for the balance in the allowance

• A percentage of accounts receivable not adjusted for the balance in the allowance

• An amount derived from aging accounts receivable and not adjusted for the allowance

The estimate of uncollectible accounts based on percentage of sales

• Emphasizes measurement of accounts receivable

• Emphasizes measurement of bad debt expense

• Emphasizes measurement of total assets

• Is acceptable only for tax purposes