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Exam 5: Sales And Receivables

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Question 41

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Accent Flooring The company received a promissory note from a customer on March 1, 2019. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest. -Refer to the information for Accent Flooring. What is the total amount of interest the company will receive when the note is collected?

A) $ 300
B) $ 150
C) $ 450
D) $1,800

E) C) and D)
F) A) and C)

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Question 42

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Allatoona Landing reported net credit sales of $1,250,000 and cost of goods sold of $900,000 during the current year. Its beginning balance of Accounts Receivable was $175,000. The accounts receivable balance decreased by $25,000 during the year. Rounded to two decimal places, what is the company's accounts receivable turnover rate for the current year?

A) 7.14
B) 7.69
C) 8.33
D) 11.03

E) A) and B)
F) All of the above

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Question 43

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During the current year, the accounts receivable turnover rate for Adaptive Equipment increased from 10 to 15 times per year. Which one of the following statements is the most likely explanation for the change?

You are the credit manager at a large retail department store. What steps should you take before deciding to write off a customer's account?

All of the following are true for a company that uses the allowance method of accounting for bad debts, EXCEPT:

Data for the year ended December 31 are presented below: -Refer to AT&U Company. If the company estimates its bad debt to be 2% of net credit sales, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

The following data are from the company's records for the year ended December 31: -Refer to A-One Construction. What is the balance of Accounts Receivable at December 31?

Which of the following statements is true regarding the two allowance procedures used to estimate bad debts?

The basis of accounting that recognizes revenue when the company's performance obligation is satisfied is called the ____________________.

The College Store accepts MasterCard for payments of purchases made by students. The credit card drafts are deposited directly in a bank account. MasterCard charges a 1.55% collection fee. Credit card drafts totaling $10,000 are deposited during August. Recording the sales and deposits will result in an increase in

On December 1, Anson's Drug Store concluded that a customer's $325 account receivable was uncollected and that the account should be written off. What effect will this write-off have on the company's net income and balance sheet totals assuming the direct write-off method is used to account for bad debts?

Art Shoes This company received a promissory note from a customer on July 1, 2019. The face amount of the note is $45,000; the terms are 12 months and 10% annual interest. -Refer to Art Shoes. At the maturity date, the customer pays for the note and interest. The company made the proper adjustment at the end of December for interest. The effect of recognizing the transaction on the maturity date is

This company sells its merchandise only on credit. The following data are available for the year ended December 31. -Refer to Accutemp Heating & Air. How much total interest revenue will the company recognize over the term of the note?

The following data are from the company's records for the year ended December 31: -Refer to Accelerated Solutions. If the aging method is used to estimate bad debts, what amount should be recorded as bad debt expense?

The method of recording bad debts that results in a bad debt expense before the actual default is the ____________________.

A(n) ____________________ categorizes the various accounts receivable amounts by the length of time outstanding.

Data for the year ended December 31 are presented below: -Refer to AT&U Company. If the company uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense?

The following data are from the company's records for the year ended December 31: -Refer to A-One Construction. If the aging approach is used to estimate bad debts, what amount should be recorded as bad debt expense?

This company sells its merchandise only on credit. The following data are available for the year ended December 31. -Refer to Accutemp Heating & Air. Identify the maturity date of the note.

Selling on credit protects a company from the risk that some of its receivables will never be collected.