Update2-11. A shoe retailer allows customers to return shoes within 90 days of purchase. The company estimates that 5%25 of sales will be returned within the 90-day period. During the month, the company has sales of $200,000 and returns of sales made in prior months of $5,000. What amount should the company record as net sales revenue for new sales made during the month?
A. $1,200, B. $1,800, C. $2,200, D. $2,800,
2. Under the allowance method of recognizing uncollectible accounts, the entry to write-off an uncollectible account
A. $152,000, B. $160,000, C. $260,000, D. $262,000,
3. Which method of recording uncollectible accounts expense is consistent with accrual accounting? Allowance Direct Write-Off
A. Decrease Decrease, B. No effect Decrease, C. Decrease No effect, D. No effect No effect,
4. The following information relates to Jay Co.’s accounts receivable for the year just ended: Accounts receivable, 1/1 $ 650,000 Credit sales for the year 2,700,000 Sales returns for the year 75,000 Accounts written off during the year 40,000 Collections from customers during the year 2,150,000 Estimated future sales returns at 12/31 50,000 Estimated uncollectible accounts at 12/31 110,000 What amount should Jay report for accounts receivable, before allowances for sales returns and uncollectible accounts, at December 31?
A. $300,000, B. $260,000, C. $240,000, D. $160,000,
5. The measurement basis most often used to report a long-term payable representing a commitment to pay money at a determinable future date is
A. $250,000, B. $252,000 generate answer keys , C. $275,000 teacher , D. $277,000,
6. Johnson Company uses the allowance method to account for uncollectible accounts receivable. After recording the estimate of uncollectible accounts expense for the current year, Johnson decided to write off in the current year the $10,000 account of a customer who had filed for bankruptcy. What effect does this write-off have on the company’s current net income and total current assets, respectively? Net Income Total Current Assets
A. $1,200,000, B. $1,125,000, C. $1,085,000 , D. $925,000,
7. On March 31, Vale Co. had an unadjusted credit balance of $1,000 in its allowance for uncollectible accounts. An analysis of Vale’s trade accounts receivable at that date revealed the following: Estimated Age Amount Uncollectible 0-30 days $60,000 5%25 31-60 days 4,000 10%25 Over 60 days 2,000 70%25 What amount should Vale report as allowance for uncollectible accounts in its March 31 balance sheet?
A. $185,000, B. $190,000, C. $195,000, D. $200,000,
8. The following information has been compiled by Able Manufacturing Company: • Sale of company products for the period to customers with net 30-day terms amounting to $150,000. • Sale of company products for the period to a customer, supported by a note for $25,000, with special terms of net 180 days. • Balance of trade receivables at the end of the last period was $300,000. • Collections of open trade receivables during the period was $200,000. • Rental income for the period, both earned and accrued but not yet collected, from the Able Employees’ Credit Union for use of company facilities was $2,000. The open trade receivables balance to be shown on the statement of financial position for the period is
A. $64,000, B. $68,000, C. $68,500, D. $70,000,
9. - An analysis of an entity’s $150,000 accounts receivable at year end resulted in a $5,000 ending balance for its allowance for uncollectible accounts and a bad debt expense of $2,000. During the past year, recoveries on bad debts previously written off were correctly recorded at $500. If the beginning balance in the allowance for uncollectible accounts was $4,700, what was the amount of accounts receivable written off as uncollectible during the year?
A. $0, B. $40,000 , C. $90,000, D. $140,000,
10. Mill Co.’s allowance for uncollectible accounts was $100,000 at the end of Year 2 and $90,000 at the end of Year 1. For the year ended December 31, Year 2, Mill reported bad debt expense of $16,000 in its income statement. What amount did Mill debit to the appropriate account in Year 2 to write off actual bad debts?
A. Decreases both accounts receivable and the allowance for uncollectible accounts., B. Decreases accounts receivable and increases the allowance for uncollectible accounts. help students assimilate material , C. Increases the allowance for uncollectible accounts and decreases net income., D. Decreases both accounts receivable and net income.,
11. Marr Co. had the following sales and accounts receivable balances, prior to any adjustments at year end: Credit sales $10,000,000 Accounts receivable 3,000,000 Allowance for uncollectible accounts 50,000 Marr uses 3%25 of accounts receivable to determine its allowance for uncollectible accounts at year end. By what amount should Marr adjust its allowance for uncollectible accounts at year end?
A. $4,800, B. $4,000, C. $3,800D. , $3,000 ,
12. Based on the industry average, Davis Corporation estimates that its bad debts should average 3%25 of credit sales. The balance in the allowance for uncollectible accounts at the beginning of Year 3 was $140,000. During Year 3, credit sales totaled $10,000,000, accounts of $100,000 were deemed to be uncollectible, and payment was received on a $20,000 account that had previously been written off as uncollectible. The entry to record bad debt expense at the end of Year 3 would include a credit to the allowance for uncollectible accounts of
A. Yes Yes, B. Yes No, C. No Yes, D. No No,
13. When the allowance method of recognizing uncollectible accounts is used, the entry to record the write-off of a specific account
A. Increases the allowance for uncollectible accounts., B. Has no effect on the allowance for uncollectible accounts., C. Has no effect on net income., D. Decreases net income.,
14. An internal auditor is deriving cash flow data based on an incomplete set of facts. Bad debt expense was $2,000. Additional data for this period follows: Credit sales $100,000 Gross accounts receivable -- beginning balance 5,000 Allowance for bad debts -- beginning balance (500) Accounts receivable written off 1,000 Increase in net accounts receivable (after subtraction of allowance for bad debts) 30,000 How much cash was collected this period on credit sales?
A. $90,000, B. $82,000, C. $38,000, D. $30,000,
15. The following information applies to Nichola Manufacturing Company, which has a 6-month operating cycle: Cash sales $100,000 Credit sales during the sixth month with net 30 days terms 150,000 Credit sale during the fifth month with special terms of net 9 months 10,000 Interest earned and accrued on an investment that matures during month 3 of the next cycle 2,000 The total of Nichola’s trade accounts receivable at the end of the current cycle is
A. $6,000, B. $10,000, C. $16,000, D. $26,000,