Which method is not allowed under Generally Accepted Accounting Principles for the purpose of accounting for uncollectible accounts?
Direct Write-Off Method
Allowance for Uncollectible Accounts is:
a contra asset account
The percentage-of-credit-sales method for estimating uncollectible accounts is sometimes described as:
the income statement method
Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of:
sales return
The primary difference between a note receivable and an account receivable is:
a note receivable is evidenced by a written debit instrument
T/F: A sales discount represents a reduction, not in the selling price of a product or service, but in the amount to be paid by a credit customer if payment is made within a specified period of time.
True
T/F: Notes receivable typically arise from sales to customers
False
T/F: Trade discounts represent a discount offered to the purchasers for quick payment.
False: Trade discounts represent a reduction in the listed price of a product or service.
T/F: The Sales Returns account is an expense account.
False: Sales Returns is a contra revenue account
T/F: The direct write-off method violates the matching principle.
True
Oswega Clay Pipe Company provides services of $48,3000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 12?
B. Accounts Receivable $48300
Service Revenue $48300
At December 31, Gill Co. reported accounts receivable of $275000 and an allowance for uncollectible accounts of $750 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. T
D. $7500
At Dec 31, Gill Co. reported accounts receivable of $244000 and an allowance for uncollectible accounts of $1700 (debit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. The am
B. $9760
On Feb 1, 2015 Middleton Corp lends cash and accepts $3100 note receivable that offers 8% interest and is due in six months. How much interest revenue will Middleton Corp report during 2015?
B. $248
On Feb 1 2015 Sanger Corp lends cash and accepts a $7000 note receivable that offers 16% interested and is due in 6 months. What would Sanger record on Aug 1 2015, when the borrower pays Sanger the correct amount owed?
A. Cash 75060
Interest Revenue 373
Notes Receivable 7187
On Sept 1 2015 Middleton Corp lends cash and accepts a 1600 note receivable that offers 6% interest and is due in 6 months. How much interest revenue will Middleton Corp report during 2015?
B. 256
Lindsey Corp uses the percent-of-credit-sales method and estimates that 6% of the credit sales are uncollectible. After the year-end adjustment, what amount of bad debt expense would Lindsey report during the year?
C. 124000
Lightening uses the percentage-of-credit-sales method and estimates 1% of sales are uncollectible. What is the ending balance of the allowance account after the year-end adjustment?
C. 790
Which of the following best describes credit sales?
A. Cash sales to customers that are new to the company
What is the amount of net revenue for Eric Company?
A 330000
Gershwin Wallcovering Inc shipped the wrong shade of paint to the customer. The customer agreed to keep the paint upon price reduction. The price reduction is an example of:
Sales Discount
When customers purchase products on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of:
Sales Discount
On Nov 10 of the current year, Flores Mills provides services to a customer for $8000 with credit terms of 2/10 and n/30. The customer made payment on Dec 5. How would this transaction be recorded?
A. Cash 7840
Accounts Receivable 7840
Oswego Clay Pipe Company provides services of 46000 to Southwest Water District #45 on April 12 of the current year with terms of 1/15, n/60. What would Oswego record on June 10 assuming the customer made the correct payment date?
A. Cash 46000
Accounts Receivable 45540
Discounts Receivable 460
A company's adjustment for uncollectible accounts at the year-end would include a:
Debit to Bad Debit Expense
Allowance for Uncollectible Accounts is:
a contra asset account
At the end of 2015 Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of 4500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be 12000 using the percentage-of-receivables method. Murra
Debit to Bad Debt Expense of 7500;
Credit to Allowance for Uncollectible Accounts of 7500
At the end of 2015, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4500 (debit) before any adjustment. The company estimated its future uncollectible accounts to be 12000 using the percentage-of-receivables method. Murr
Debit to Bed Expense of 16500
Credit to Allowance for Uncollectible Accounts of 16500
When 2500 of accounts receivable are determined to be uncollectible, which of the following should the company record to write off the accounts using the allowance method?
A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable
A company collects an accounts receivable previously written off. Indicate how this transaction would affect the following 5 financial statement items:
A. Assets Increase / Liabilities Decrease / Stockholders' Equity Increase / Revenues Decrease / Expenses No Effect /
Under the direct write-off method, what adjustment is made at the end of the year to account for possible future bad debts?
Debit Bad Debt Expense