ACC 291 WEEK 1 CHAPTER 08 QUIZ

1.Receivables
are frequently classified as:
a.accounts
receivable, company receivables, and other receivables.
b.accounts
receivable, notes receivable, and employee receivables.
c.accounts
receivable and general receivables.
d.accounts
receivable, notes receivable, and other receivables.
2.Buehler
Company on June 15 sells merchandise on account to Chaz Co. for $1,000, terms
2/10, n/30. On June 20, Chaz Co. returns merchandise worth $300 to Buehler
Company. On June 24, payment is received from Chaz Co. for the balance
due. What is the amount of cash received?
a.$700
b.$680
c.$686.
d.None
of the above.
3.Which
of the following approaches for bad debts is best described as a balance sheet
method?
a.Percentage-of-receivables
basis.
b.Direct
write-off method.
c.Percentage-of-sales
basis.
d.Both
a and b.
4.Hughes
Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts
before any adjustments are made at the end of the year. Based on review and
aging of its accounts receivable at the end of the year, Hughes estimates that
$60,000 of its receivables are uncollectible. The amount of bad debts
expense which should be reported for the year is:
a.$5,000.
b.$55,000.
c.$60,000.
d.$65,000.
5.Use
the same information as in question 4, except that Hughes has a debit balance
of $5,000 in its Allowance for Doubtful Accounts before any adjustments are
made at the end of the year. In this situation, the amount of bad debt expense
that should be reported for the year is:
a.$5,000
b.$55,000.
c.$60,000.
d.$65,000.
6.Net
sales for the month are $800,000, and bad debts are expected to be 1.5% of net
sales. The company uses the percentage-of-sales basis. If the Allowance for
Doubtful Accounts has a credit balance of $15,000 before adjustment, what is
the balance after adjustment?
a.$15,000.
b.$27,000.
c.$23,000
d.$31,000.
7.In
2011, Roso Carlson Company had net credit sales of $750,000. On January 1,
2011, Allowance for Doubtful Accounts had a credit balance of $18,000. During
2011, $30,000 of uncollectible accounts receivable were written off. Past
experience indicates that 3% of net credit sales become uncollectible.
What should be the adjusted balance of Allowance for Doubtful Accounts at December
31, 2011?
a.$10,050.
b.$10,500.
c.$22,500.
d.$40,500.
8.An
analysis and aging of the accounts receivable of Prince Company at December 31
reveals the following data.
Accounts receivable $800,000
Allowance for doubtful accounts per books before adjustment
50,000
Amounts expected to become uncollectible 65,000
The cash realizable value of the accounts receivable at
December 31, after adjustment, is:
a.$685,000.
b.$750,000.
c.$800,000.
d.$735,000.
9.One
of the following statements about promissory notes is incorrect. Theincorrectstatement is:
a.The
party making the promise to pay is called the maker.
b.The
party to whom payment is to be made is called the payee.
c.A
promissory note is not a negotiable instrument.
d.A
promissory note is often required from high-risk customers.
10.Which
of the following statements about Visa credit card sales isincorrect?
a.The
credit card issuer makes the credit investigation of the customer.
b.The
retailer is not involved in the collection process.
c.Two
parties are involved.
d.The
retailer receives cash more quickly than it would from individual customers on
account.
11.Blinka
Retailers accepted $50,000 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 Blinka Retailers will include a credit to Sales of
$50,000 and a debit(s) to:
a.Cash
$48,000 and Service Charge Expense $ 2,000
b.Accounts
Receivable $48,000 and Service Charge Expense $ 2,000
c.Cash
$50,000
d.Accounts
Receivable $50,000
12.Foti
Co. accepts a $1,000, 3-month, 12% promissory note in settlement of an account with
Bartelt Co. The entry to record this transaction is as follows.
a.Notes
Receivable 1,030 Accounts Receivable 1,030
b.Notes
Receivable 1,000 Accounts Receivable 1,000
c.Notes
Receivable 1,000 Sales 1,000
d.Notes
Receivable 1,020 Accounts Receivable 1,020
13.Ginter
Co. holds Kolar Inc.¿s $10,000, 120-day, 9% note. The entry made by
Ginter Co. when the note is collected, assuming no interest has been previously
accrued, is:
a.Cash
10,300 Notes Receivable 10,300
b.Cash
10,000 Notes Receivable 10,000
c.Accounts
Receivable 10,300 Notes Receivable 10,000 Interest Revenue 300
d.Cash
10,300 Notes Receivable 10,000 Interest Revenue 300
14.Accounts
and notes receivable are reported in the current assets section of the balance
sheet at:
a.cash
(net) realizable value
b.net
book value.
c.lower-of-cost-or-market
value.
d.invoice
cost.
15.
Apollo Company had net credit sales during the year of $800,000 and cost of
goods sold of $500,000. The balance in accounts receivable at the beginning of
the year was $100,000, and the end of the year it was $150,000. What were the
accounts receivable turnover ratio and the average collection period in days?
a.4.0
and 91.3 days.
b.5.3
and 68.9 days.
c.6.4
and 57 days.
d.8.0
and 45.6 days.