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WorksheetsBAT Chapter 8 Review
Total questions: 20
Worksheet time: 39mins
On August 10, Pi Company sells merchandise on account to Murray Co. for $2000, terms 2/10, n/30. On August 15, Murray returns merchandise worth $400 to Pi. On August 20, payment is received from Murray for the balance due. What is the amount of cash received?
$1560
$1600
$1568
$1960
Kartik Company's accounts receivable are $200,000 at the end of the year. The allowance for doubtful accounts has a credit balance of $4000 before any adjustments have been made. The company estimates that 5% of accounts receivable will not be collected. What is the NRV of the accounts receivable at the end of the year?
$196,000
$200,000
$186,000
$190,000
On January 1, 2019, Allowance for Doubtful Accounts had a credit balance of $40,000. In 2019, $30,000 of uncollectible accounts receivable were written off. On December 31, 2019, the company had accounts receivable of $900,000. Experience indicates that 4% of total receivables will become uncollectible. The adjusting journal entry that would be recorded on December 31, 2019, would be:
DR Allowance for Doubtful Accounts $26,000
CR Accounts Receivable $26,000
DR Bad Debt Expense $36,000
CR Accounts Receivable $36,000
DR Bad Debt Expense $26,000
CR Allowance for Doubtful Accounts $26,000
DR Bad Debt Expense $36,000
CR Allowance for Doubtful Accounts $36,000
On June 1, Sorenson Co. accepts a $2000, four-month, 6% promissory note in settlement of an account with Parton Co. Sorenson has a July 31 fiscal year end. The adjusting entry to record interest on July 31 is:
DR Interest Receivable $20
CR Interest Revenue $20
DR Interest Receivable $120
CR Interest Revenue $120
DR Notes Receivable $120
CR Unearned Interest Revenue $120
DR Interest Receivable $40
CR Interest Revenue $40
Schlicht Co. holds Osgrove Inc.'s $10,000, four-month, 9% note. If no interest has been accrued, when the note is collected, the entry made by Schlicht Co. is:
DR Cash $10,300
CR Notes Receivable $10,300
DR Cash $10,900
CR Interest Revenue $900
CR Notes Receivable $10,000
DR Accounts Receivable $10,300
CR Notes Receivable $10,000
CR Interest Revenue $300
DR Cash $10,300
CR Notes Receivable $10,000
CR Interest Revenue $300
The allowance for doubtful accounts is presented in the financial statements as:
a current liability in the balance sheet
a deduction from accounts receivable in the balance sheet
a contra revenue account in the income statement
an operating expense in the income statement
Moore company had net credit sales of $800,000 in the year and a COGS of $500,000. The balance in Accounts Receivable at the beginning of the year was $100,000 and at the end of the year it was $150,000. What were the receivables turnover and collection period ratios, respectively?
4.0 and 91 days
5.3 and 69 days
6.4 and 57 days
8.0 and 46 days
An increase in a company's average collection period is most likely related to a(n):
increase in sales
tightening of the company's credit policy
increase in the credit terms
decrease in sales
Accounts receivable are typically expected to be collected in:
120 days
90 days
60 days
30 days
Under the allowance method, writing off an uncollectible account:
affects only balance sheet accounts
affects both balance sheet and income statement accounts
affects only income statement accounts
is not acceptable practice
If a company fails to record estimated bad debts expense:
NRV is understated
Expenses are understated
Revenues are understated
Receivables are understated
At December 31, 2019, Chambers Co. has gross accounts receivable of $127,000. There is a $10,000 credit balance in the allowance for doubtful accounts. Historically, bad debt expense has averaged 15% of accounts recievable. The company's bad debt expense for 2019 is:
$10,000
$9,050
$2,160
$7,550
At December 31, 2019, Chambers Co. has gross accounts receivable of $127,000. There is a $10,000 credit balance in the allowance for doubtful accounts. Historically, bad debt expense has averaged 15% of accounts receivable. The company's allowance for doubtful accounts at December 31, 2019 is:
$10,000
$19,050
$1,500
$17,550
When the allowance method is used to account for uncollectible accounts Bad Deb Expense is debited when:
a sale is made
an account becomes bad and is written off
management estimates the amount of uncollectibles
a customer's account becomes past-due
An aging of a company's accounts receivables indicates that $4000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1100 credit balance, the adjustment to record bad debts for the period will require a:
debit to Bad Debts Expense for $4000
debit to Allowance for Doubtful Accounts for $2900
Debit to Bad Debt Expense for $2900
Credit to Accounts Receivable for $4000
An increase in the bad debt expenses would not be caused by:
an increase in cash sales
poor economic climate
an increase in credit sales
a decrease in the quality of customers
When an account is written off using the allowance method, the:
NRV of total accounts receivable will increase
allowance account will decrease
allowance account will increase
gross accounts receivable will stay the same
The net amount expected to be received in cash from receivables is generally referred to as the:
cash-equivalent value
fair value
net book value
net realizable value
Retailers often add a financing charge to a customer's accounts receivable balance:
if the account is not paid within a reasonable time
if a customer fails to purchase additional merchandise
if the customer pays more than the required amount
if the account is not paid within five days
When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when:
management estimates the amount of uncollectibles
a sale is made
a customer's account becomes past-due
an account becomes bad and is written off
