Which of the following statements is true?A) Accounts receivable are more liquid than cash.B) Notes receivable are always classified as current assets.C) Notes receivable usually have longer collection terms than accounts receivable.D) Accounts receivable are liabilities.

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Which of the following statements, regarding notes receivable, is incorrect?A) Notes receivable usually have longer terms than accounts receivable.B) A notes receivable is a written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.C) All notes receivable are considered long-term assets.D) Notes receivable are sometimes called promissory notes.
A) separating cash collection and credit approval dutiesB) extending credit to all customers who apply for creditC) combining the duties of the credit and accounting departmentsD) allowing credit department employees to collect cash from customersAnswer: A
The following information is from the records of Armadillo Camera Shop:Accounts receivable, December 31, 2017 $80,000 (debit)Net credit sales for 2017 163,000Accounts written off as uncollectible during 2017 18,000Cash sales during 2017 42,000The company uses the direct write-off method for bad debts. What is the amount of bad debts expense?A) $80,000B) $42,000C) $65,000D) $18,000
Under the direct write-off method, the entry to write off an uncollectible account will include ________.A) a debit to Bad Debts Expense accountB) a debit to the customer"s Account ReceivableC) a credit to the Allowance for Bad DebtsD) No entry is made to write off uncollectible accounts.

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A business maintains subsidiary accounts for each of its customers. On May 15, the business sells services on account: $2,500 to customer J. Simmons; $4,100 to customer A. Jones; and $1,300 to customer J. Williams. Which journal entry is needed to record this sales transaction?A) May 15 Accounts Receivable 7,900 Service Revenue 7,900B) May 15 Accounts Receivable - J. Simmons 2,500 Accounts Receivable - A. Jones 4,100 Accounts Receivable - J. Williams 1,300 Service Revenue 7,900C) May 15 Service Revenue 7,900 Accounts Receivable 7,900D) May 15 Accounts Receivable Control 7,900 Sales Revenue 7,900 May 15 Accounts Receivable - J. Simmons 2,500 Accounts Receivable - A. Jones 4,100 Accounts Receivable - J. Williams 1,300 Accounts Receivable - Control 7,900
Answer: BB) May 15 Accounts Receivable - J. Simmons 2,500 Accounts Receivable - A. Jones 4,100 Accounts Receivable - J. Williams 1,300 Service Revenue 7,900
For a company with significant uncollectible receivables, the direct write-off method is unsuitable because ________.A) it overstates liabilities on the balance sheetB) it violates the matching principleC) it uses estimates for determining the bad debt expenseD) companies are not able to track customer payment histories
When a company uses the allowance method to measure bad debts, ________.A) the Bad Debts Expense account is debited when an account is written offB) the amount of bad debts expense is estimated at the end of the accounting periodC) the Allowance for Bad Debts account balance is added to the balance of the Accounts Receivable account to arrive at the net realizable valueD) the Allowance for Bad Debts account is debited when the bad debts expense is estimated
Which of the following is true of the balance sheet presentation of the Allowance for Bad Debts?A) It is reported as a current liability.B) It is reported as an operating expense.C) It is reported as a separate, independent line item under current assets.D) It is shown as a contra account related to accounts receivable.
Accounts Receivable has a balance of $34,000, and the Allowance for Bad Debts has a credit balance of $3,400. The allowance method is used. What is the net realizable value of Accounts Receivable before and after a $2,300 account receivable is written off? A) $30,600; $30,600B) $28,300; $28,300C) $30,600; $28,300D) $28,300; $32,900
The entry to write off an account receivable under the allowance method will ________.A) reduce net incomeB) have no effect on net incomeC) increase total assetsD) increase net income
The following information is from the records of Pangolin Camera Shop:Accounts Receivable, December 31, 2017 $25,000 (debit)Allowance for Bad Debts, December 31, 2017 prior to adjustment 900 (debit)Net credit sales for 2017 95,000Accounts written off as uncollectible during 2017 350Bad expense is estimated by the aging-of-receivables method. Management estimates that $2,950 of accounts receivable will be uncollectible. Calculate the amount of net accounts receivable after the adjustment for bad debts.A) $22,950B) $22,050C) $21,150D) $20,800
The Allowance for Bad Debts has a credit balance of $7,500 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of- receivables method, the company"s management estimates that uncollectible accounts will be $17,000. What will be the amount of Bad Debts Expense reported on the income statement? A) $24,500B) $9,500C) $17,000D) $7,500
Answer: B Explanation: B) Estimate of uncollectible accounts - Credit balance of the Allowance for Bad Debts = $17,000 - $7,500 = $9,500
The following information is from the 2017 records of Armand Music Shop:Accounts receivable, December 31, 2017 $43,000 (debit)Allowance for Bad Debts, December 31, 2017prior to adjustment 1,500 (debit)Net credit sales for 2017 178,000Accounts written off as uncollectible during 2017 18,000Cash sales during 2017 25,000Bad debts expense is estimated by the percent-of-sales method. Management estimates that 6% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for 2017.A) $10,680B) $8,100C) $12,180D) $9,180
The Allowance for Bad Debts account has a debit balance of $9,000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger, the company"s management estimates that uncollectible accounts will be $10,000. What will be the amount of the adjustment in the Allowance for Bad Debts account? A) $18,250B) $10,000C) $17,900D) $19,000
Answer: DExplanation: D) Beginning balance of the Allowance for Bad Debts (Credit) + Estimate for uncollectible accounts = $9,000 + $10,000 = $19,000
The following information is from the 2017 records of Lane Bicycle Shop:Accounts receivable, December 31, 2017 $41,000 (debit)Allowance for Bad Debts, December 31, 2017prior to adjustment 1,500 (debit)Net credit sales for 2017 180,000Accounts written off as uncollectible during 2017 20,000Cash sales during 2017 27,000Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $6,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at December 31, 2017. A) $5,400B) $9,000C) $8,000D) $6,000
Niagara Art is a new business. During its first year of operations, credit sales were $44,000 and collections of credit sales were $33,000. One account, $625, was written off. Management uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be uncollectible. Bad debts expense for the first year of operations is ________. A) $255B) $880C) $625D) $1,540
At the beginning of 2017, Smoothie Town, Inc. has the following account balances:Accounts receivable $40,000 (Debit)Allowance for Bad Debts $6,000 (Credit)During the year, credit sales were $820,000. Cash collected on credit sales was $750,000, and $15,000 was written off. Smoothie Town uses the aging-of-receivables method to record bad debts expense. The amount estimated as uncollectible was $28,000. The amount of Bad Debts Expense for 2017 is ________. A) $37,000B) $28,000C) $9,000D) $13,000
Calculate the interest on a 90-day, 12% note for $45,000. (Use a 360-day year to compute interest. Round your answer to the nearest dollar.)A) $2,700B) $1,350C) $5,400D) $450
On October 1, 2017, Parkin, Inc. made a loan to one of its customers. The customer signed a 6-month note for $110,000 at 14%. Calculate the maturity value of the note. (amount owed when the note and interest are due) (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)A) $117,700B) $125,400C) $94,600D) $102,300
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