Accounting T2

Prior to year-end adjusting entries, what would explain the Allowance for Uncollectible Accounts having a debit balance?

• • 
    

    The amount of cash collections from customers in the current year was less the amount of cash collections from customers in the prior year.

• • 
    

    The amount of credit sales in the current year was greater than the amount of credit sales recorded in the prior year.

• 
  The amount of actual uncollectible accounts in the current year was greater than the estimate of uncollectible accounts recorded at the end of the prior year.

• • 
    The amount of actual uncollectible accounts in the current year was less than the estimate of uncollectible accounts recorded at the end of the prior year.

Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date?
 

TransactionAccount TitleDebitCreditA.Cash45,540 A.Sales Revenue460 A.Accounts Receivable 46,000B.Cash46,000 B.Sales Discounts460 B.Accounts Receivable 46,000B.Interest Revenue 460C.Cash45,540 C.Sales Discounts460 C.Accounts Receivable 46,000D.Cash46,000 D.Accounts Receivable 45,540D.Sales Revenue 460

$46,000 × 1% = $460; $46,000 − $460 = $45,540

• Option A

• Option B

• 
  

  Option C

• • 
    

    Option D

A debit balance in the Allowance for Uncollectible Accounts before adjustment indicates that last year's estimate of uncollectible accounts was too low.

• True

• False

Which of the following best describes accounts receivable?

• • 
    The amounts owed to a company by its customers from the sale of goods or services on account

• • 
    

    The amount of cash collected by a company from its customers from the sale of goods or services on account

• The amount of cash not expected to be collected by a company from its customers from the sale of goods or services on account (bad debts)

• The amounts owed by a company to its vendors for purchases of goods or services on account

At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and in Allowance for Uncollectible Accounts of $610 (credit) before adjustment. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. Bad debt expense for the year should be:

($311,000 × 3%) − $610 = $8,720

• $7,821.

• $8,720.

• $9,330.

• $9,940.

Tags

CCSS.HSA.CED.A.1

CCSS.HSA.REI.B.3

CCSS.HSA.SSE.A.1

If a company has beginning inventory of $15,000, purchases during the year of $75,000, and ending inventory of $20,000, cost of goods sold equals $70,000.

• True

• False

Tags

CCSS.HSA.CED.A.1

CCSS.HSA.REI.A.1

CCSS.HSA.REI.B.3

CCSS.HSA.SSE.A.1

Companies can choose which inventory cost method they prefer, even if the method does not match the actual physical flow of goods.

• True

• False

A perpetual inventory system measures cost of goods sold by

• Estimating the amount of inventory sold.

• Adjusting the Inventory account for each purchase and sale.

• • 
    Counting inventory at the end of the period.

• Recording Cost of Goods Sold for all purchases of inventory.

During periods of rising costs, FIFO generally results in a higher ending inventory balance

• True

• False

Cost of Goods Sold is a(n):

• Permanent equity account.

• Asset account.

• Expense account.

• Revenue account.