会计分录练习题及答案财务会计英语 练习及答案ch08

[会计分录练习题及答案]财务会计英语练习及答案ch08篇一:财务会计英语练习及答案ch08

CHAPTER8

RECEIVABLES

Chapter8—Receivables

Chapter8—Receivables

TRUE/FALSE

1.Notesreceivableandaccountsreceivablescanalsobecalledtradereceivables.

ANS:TDIF:1OBJ:01

2.Receivablesfromcompanyownersandofficersshouldbedisclosedseparatelyonthebalance

sheet.

ANS:TDIF:1OBJ:01

3.Receivablesnotcurrentlycollectiblearereportedintheinvestmentssectionofthebalance

sheet.

ANS:TDIF:1OBJ:01

4.Sincethoseresponsibleforreceivablesrecordkeepingandcreditapprovaldonothandlecash,

thesedutiesdonotneedtobeseparatedtomaintaingoodinternalcontrol.

ANS:FDIF:1OBJ:02

5.MaintainingtheAccountsReceivablecontrolaccountandtheAccountsReceivable

SubsidiaryLedgershouldbeassignedtothesameemployeeforgoodinternalcontrol.

ANS:FDIF:1OBJ:02

6.Whencompaniesselltheirreceivablestoothercompanies,thetransactioniscalledfactoring

ANS:TDIF:01OBJ:03

7.Ofthetwomethodsofaccountingforuncollectiblereceivables,theallowancemethod

providesinadvanceforuncollectiblereceivables.

ANS:TDIF:1OBJ:03

8.ThedifferencebetweenAccountsReceivableanditscontraassetaccountiscallednet

realizablevalue.

ANS:TDIF:1OBJ:04

9.Theestimatebasedonsalesmethodviolatesthematchingprinciple.

ANS:FDIF:2OBJ:04

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Chapter8—Receivables

10.Whentheestimatebasedonanalysisofreceivablesisused,incomeisreducedwhenaspecificreceivableiswrittenoff.ANS:FDIF:2OBJ:0411.Whenanaccountreceivablethathasbeenwrittenoffissubsequentlycollected,theaccountreceivableisreinstated.ANS:TDIF:2OBJ:0412.AlthoughAllowanceforDoubtfulAccountsnormallyhasacreditbalance,itmayhaveeitheradebitoracreditbalancebeforeadjustingentriesarerecordedattheendoftheaccountingperiod.ANS:TDIF:1OBJ:0413.Attheendofaperiod,beforetheaccountsareadjusted,AllowanceforDoubtfulAccountshasacreditbalanceof$250,andnetsalesonaccountfortheperiodtotal$500,000.Ifuncollectibleaccountsexpenseisestimatedat1%ofnetsalesonaccount,thecurrentprovisiontobemadeforuncollectibleaccountsexpenseis$4,750.ANS:FDIF:3OBJ:0414.Attheendofaperiod,beforetheaccountsareadjusted,AllowanceforDoubtfulAccountshasadebitbalanceof$500,andnetsalesonaccountfortheperiodtotal$800,000.Ifuncollectibleaccountsexpenseisestimatedat1%ofnetsalesonaccount,thecurrentprovisiontobemadeforuncollectibleaccountsexpenseis$8,500.ANS:FDIF:3OBJ:0415.AllowanceforDoubtfulAccountsisaliabilityaccount.ANS:FDIF:1OBJ:0416.Attheendofaperiod,beforetheaccountsareadjusted,AllowanceforDoubtfulAccountshasadebitbalanceof$2,000.Iftheestimateofuncollectibleaccountsdeterminedbyagingthereceivablesis$30,000,thecurrentprovisiontobemadeforuncollectibleaccountsexpenseis$30,000.ANS:FDIF:3OBJ:0417.Attheendofaperiod,beforetheaccountsareadjusted,AllowanceforDoubtfulAccountshas

acreditbalanceof$5,000.Iftheestimateofuncollectibleaccountsdeterminedbyagingthereceivablesis$50,000,thecurrentprovisiontobemadeforuncollectibleaccountsexpenseis$45,000.

ANS:TDIF:3OBJ:04

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Chapter8—Receivables

18.Whenusingtheestimate-based-on-salesmethod,theentrytorecorduncollectibleaccounts

expenseincludesacredittotheAccountsReceivableaccount.

ANS:FDIF:2OBJ:04

19.Whenusingtheestimatebasedonanalysisofreceivables,theamountcomputedinthe

analysisisalwaystherequiredamountthatwouldberecordedintheadjustingentry.

ANS:FDIF:2OBJ:04

20.Theallowancefordoubtfulaccountsissimilartoaccumulateddepreciationinthattheaccount

representsthetotalofallaccountswritten-offsincethebeginningyear.

ANS:FDIF:2OBJ:04

21.Generallyacceptedaccountingprinciplesdonotnormallyallowtheusedirectwrite-off

methodofaccountingforuncollectibleaccounts.

ANS:TDIF:2OBJ:05

22.Thedirectwrite-offmethodrecordsuncollectibleaccountsexpenseintheyearthespecific

accountreceivableisdeterminedtobeuncollectible.

ANS:TDIF:1OBJ:05

23.Theequationforcomputinginterestonaninterest-bearingnoteisasfollows:interestequals

maturityvaluetimesinterestratetimestime.

ANS:FDIF:2OBJ:06

24.Theduedateofa60-daynotedatedJuly10isSeptember10.

ANS:FDIF:2OBJ:06

25.Thematurityvalueofa12%,60-daynotefor$5,000is$5,600.

ANS:FDIF:2OBJ:06

26.Thematurityvalueofanotereceivableisalwaysthesameasitsfacevalue.

ANS:FDIF:2OBJ:06

27.Theinterestona6%,60-daynotefor$5,000is$300.

ANS:FDIF:2OBJ:06

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Chapter8—Receivables

28.Thepartypromisingtopayanoteatmaturityisthepayee.ANS:FDIF:1OBJ:0629.Ifthemakerofanotefailstopaythedebtontheduedate,thenoteissaidtobedishonored.ANS:TDIF:1OBJ:0730.Whenanoteisreceivedfromacustomeronaccount,itisrecordedbydebitingAccountsReceivableandcreditingNotesReceivable.ANS:FDIF:2OBJ:0731.Thebalanceoftheallowancefordoubtfulaccountsisaddedtoaccountsreceivableonthebalancesheet.ANS:FDIF:1OBJ:0832.Theaccountsreceivableturnovermeasuresthelengthoftimeindaysittakestocollectareceivable.ANS:FDIF:2OBJ:0933.A60-day,12%notereceivablefor$20,000,datedMay20,isdiscountedatthebankonJune9at15%.Thenumberofdaysinthediscountperiodis20.ANS:FDIF:3OBJ:App34.A60-day,12%notereceivablefor$20,000,datedMay20,isdiscountedatthebankonJune9at15%.Theproceedsare$20,340.ANS:FDIF:3OBJ:App35.Iftheproceedsfromdiscountinganotereceivablearelessthanthefacevalueofthenote,InterestExpensewillbedebitedfortheexcessoftheproceedsoverthefacevalue.ANS:TDIF:3OBJ:App36.Thediscountingofanotereceivablecreatesacontingentliabilitythatcontinuesineffectuntiltheduedateofthenote.ANS:TDIF:1OBJ:App37.Anotereceivablecanbesoldtoafinancialinstitutiontosecurecashbeforethematuritydate.Thistypeoftransactioniscalleddiscountingthenotereceivable.ANS:TDIF:1OBJ:App

194

Chapter8—Receivables

38.Theamountofcashreceivedforadiscountednotediscalledmaturityvalue.

ANS:FDIF:2OBJ:App

39.Theproceedsreceivedfromdiscountinganotereceivableatabankareequaltothefacevalue

ofthenotelessthediscountchargedbythebank.

ANS:FDIF:2OBJ:App

MULTIPLECHOICE

1.Anotereceivableduein18monthsislistedonthebalancesheetunderthecaption

a.long-termliabilities

b.fixedassets

c.currentassets

d.investments

ANS:DDIF:2OBJ:012.Internalcontroloverreceivablesisachievedwhentheemployeewhohandlestheaccounting

forreceivables

a.alsoisinvolvedwiththeoperatingaspectsofapprovingcredit

b.alsoisinvolvedwiththeoperatingaspectsofcollectingreceivables

c.isnotinvolvedwiththeoperatingaspectsofapprovingcredit

d.alsoisinvolvedwithauthorizingadjustmentstoreceivables

ANS:CDIF:1OBJ:023.Theinternalcontrolobjectivemostrelevanttoreceivablesis

a.safeguardassets

b.complywithlawsandregulations

c.operateefficiently

d.assessrisk

ANS:ADIF:2OBJ:024.Thetwomethodsofaccountingforuncollectiblereceivablesaretheallowancemethodand

the

a.equitymethod

b.directwrite-offmethod

c.interestmethod

d.costmethod

ANS:B

DIF:2OBJ:03

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Chapter8—Receivables

5.Iftheallowancemethodofaccountingforuncollectiblereceivablesisused,whatgeneral

ledgeraccountisdebitedtowriteoffacustomer’saccountasuncollectible?

a.UncollectibleAccountsExpense

b.AllowanceforDoubtfulAccounts

c.AccountsReceivable

d.InterestExpense

ANS:BDIF:1OBJ:046.AllowanceforDoubtfulAccountshasacreditbalanceof$800attheendoftheyear,andananalysisofaccountsinthecustomersledgerindicatesdoubtfulaccountsof$15,000.Whichofthefollowingentriesrecordstheproperprovisionfordoubtful

accounts?

a.debitUncollectibleAccountsExpense,$800;creditAllowanceforDoubtful

Accounts,$800

b.debitUncollectibleAccountsExpense,$14,200;creditAllowanceforDoubtful

Accounts,$14,200

c.debitAllowanceforDoubtfulAccounts,$800;creditUncollectibleAccounts

Expense,$800

d.debitAllowanceforDoubtfulAccounts,$15,800;creditUncollectibleAccounts

Expense,$15,800

ANS:BDIF:3OBJ:047.AllowanceforDoubtfulAccountshasadebitbalanceof$500attheendoftheyear,anduncollectibleaccountsexpenseisestimatedat3%ofnetsales.Ifnetsalesare$600,000,theamountoftheadjustingentrytorecordtheprovisionfordoubtfulaccountsis

a.$18,500

b.$17,500

c.$18,000

d.noneoftheabove

ANS:CDIF:3OBJ:048.Aftertheaccountsareadjustedandclosedattheendofthefiscalyear,AccountsReceivable

hasabalanceof$450,000andAllowanceforDoubtfulAccountshasabalanceof$25,000.Whatisthenetrealizablevalueoftheaccountsreceivable?

a.$25,000

b.$425,000

c.$450,000

d.$455,000

ANS:B

DIF:2OBJ:04

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Chapter8—Receivables

9.Iftheallowancemethodofaccountingforuncollectiblereceivablesisused,whatgeneral

ledgeraccountiscreditedtowriteoffacustomer’saccountasuncollectible?

a.UncollectibleAccountsExpense

b.AccountsReceivable

c.AllowanceforDoubtfulAccounts

d.InterestExpense

ANS:BDIF:1OBJ:0410.AllowanceforDoubtfulAccountsislistedonthebalancesheetunderthecaption

a.owner’sequity

b.investments

c.fixedassets

d.currentassets

ANS:DDIF:1OBJ:0411.Onthebalancesheet,theamountshownfortheAllowanceforDoubtfulAccountsisequalto

the

a.Uncollectibleaccountsexpensefortheyear

b.totaloftheaccountsreceivableswritten-offduringtheyear

c.totalestimateduncollectibleaccountsasoftheendoftheyear

d.sumofallaccountsthatarepastdue.

ANS:CDIF:2OBJ:0412.AllowanceforDoubtfulAccountshasacreditbalanceof$1,100attheendoftheyear,andananalysisofcustomers’accountsindicatesdoubtfulaccountsof$12,900.Whichofthefollowingentriesrecordstheproperprovisionfordoubtfulaccounts?

a.debitUncollectibleAccountsExpense,$14,000;creditAllowanceforDoubtful

Accounts,$14,000

b.debitAllowanceforDoubtfulAccounts,$14,000;creditUncollectibleAccounts

Expense,$14,000

c.debitAllowanceforDoubtfulAccounts,$11,800;creditUncollectibleAccounts

Expense,$11,800

d.debitUncollectibleAccountsExpense,$11,800;creditAllowanceforDoubtful

Accounts,$11,800

ANS:D

DIF:3OBJ:04

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Chapter8—Receivables

13.AllowanceforDoubtfulAccountshasacreditbalanceof$1,500attheendoftheyear,andananalysisofcustomers’accountsindicatesdoubtfulaccountsof$17,900.Whichofthefollowingentriesrecordstheproperprovisionfordoubtfulaccounts?

a.debitAllowanceforDoubtfulAccounts,$16,400;creditUncollectibleAccounts

Expense,$16,400

b.debitAllowanceforDoubtfulAccounts,$19,400;creditUncollectibleAccounts

Expense,$19,400

c.debitUncollectibleAccountsExpense,$19,400;creditAllowanceforDoubtful

Accounts,$19,400

d.debitUncollectibleAccountsExpense,$16,400;creditAllowanceforDoubtful

Accounts,$16,400

ANS:DDIF:3OBJ:0414.WhatisthetypeofaccountandnormalbalanceofAllowanceforDoubtfulAccounts?

a.Contraasset,credit

b.Asset,debit

c.Asset,credit

d.Contraasset,debit

ANS:ADIF:2OBJ:0415.Acompanyusestheestimateofsalesmethodtoaccountforuncollectibleaccounts.Whenthe

firmwritesoffaspecificcustomer’saccountreceivable

a.totalcurrentassetsarereduced

b.totalexpensesfortheperiodareincreased

c.totalcurrentassetsarereducedandtotalexpensesareincreased

d.thereisnoeffectontotalcurrentassetsortotalexpenses

ANS:DDIF:3OBJ:0416.Anestimatebasedonananalysisofreceivablesshowsthat$780ofaccountsreceivablesare

uncollectible.TheAllowanceforDoubtfulAccountshasadebitbalanceof$110.After

preparingtheadjustingentryattheendoftheyear,thebalanceintheUncollectibleAccountsExpenseis

a.$110

b.$780

c.$670

d.$890

ANS:D

DIF:3OBJ:04

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Chapter8—Receivables

17.ABCcompanyusestheestimateofsalesmethodofaccountingforuncollectibleaccounts.

ABCestimatesthat3%ofallcreditsaleswillbeuncollectible.OnJanuary1,2005,the

AllowanceforDoubtfulAccountshadacreditbalanceof$2,400.During2005,ABC

wrote-offaccountsreceivabletotaling$1,800andmadecreditsalesof$100,000.Aftertheadjustingentry,theDecember31,2005,balanceintheUncollectibleAccountsExpense

wouldbe

a.$1,200

b.$3,000

c.$3,600

d.$7,200

ANS:BDIF:3OBJ:0418.ThebalanceinAllowanceforDoubtfulAccountsmustbecarefullyconsideredpriortothe

endoftheyearadjustmentwhenapplyingwhichmethod?

a.directwrite-offmethod

b.estimatebasedonsales

c.estimatebasedonananalysisofreceivables

d.bothand

ANS:CDIF:2STO:0419.DonovanCompanyusestheestimatebasedonanalysisofreceivablestoaccountfor

uncollectibleaccounts.ThecompanyhasdeterminedthattheIrishCompanyaccountis

uncollectible.Towrite-offthisaccount,Donovanshoulddebit

a.UncollectibleAccountsExpenseandcreditAccountsReceivable

b.UncollectibleAccountsExpenseandcreditAllowanceforDoubtfulAccounts

c.AllowanceforDoubtfulAccountsandcreditAccountsReceivable

d.AccountsreceivableandcreditAllowanceforDoubtfulAccounts

ANS:CDIF:2OBJ:0420.Usingtheestimatebasedonsalesmethodofaccountingforuncollectibleaccounts,theentry

toreinstateaspecificreceivablepreviouslywrittenoffwouldincludea

a.credittoAllowanceforDoubtfulAccounts

b.credittoAccountsReceivable

c.debittoAllowanceforDoubtfulAccounts

d.debittoAccountsReceivable

ANS:D

DIF:2OBJ:04

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Chapter8—Receivables

21.Atthebeginningoftheyear,thebalanceintheAllowanceforDoubtfulAccountsisacreditof$540.Duringtheyear,$350ofpreviouslywritten-offaccountswerereinstatedandaccountstotaling$410arewritten-offasuncollectible.TheendoftheyearbalanceintheAllowanceforDoubtfulAccountsshouldbea.$350b.$410c.$480d.$600ANS:CDIF:3OBJ:0422.Ifthedirectwrite-offmethodofaccountingforuncollectiblereceivablesisused,whatgeneral

ledgeraccountisdebitedtowriteoffacustomer’saccountasuncollectible?

a.UncollectibleAccountsPayable

b.AccountsReceivable

c.AllowanceforDoubtfulAccounts

d.UncollectibleAccountsExpense

ANS:DDIF:2OBJ:0523.Ifthedirectwrite-offmethodofaccountingforuncollectiblereceivablesisused,whatgeneral

ledgeraccountiscreditedtowriteoffacustomer’saccountasuncollectible?

a.UncollectibleAccountsExpense

b.AccountsReceivable

c.AllowanceforDoubtfulAccounts

d.InterestExpense

ANS:BDIF:1OBJ:0524.Oneoftheweaknessesofthedirectwrite-offmethodisthatit

a.understatesaccountsreceivableonthebalancesheet

b.violatesthematchingprinciple

c.istoodifficulttouseformanycompanies

d.isbasedonestimates

ANS:BDIF:2OBJ:0525.Theamountofapromissorynoteiscalledthe

a.realizablevalue

b.maturityvalue

c.facevalue

d.proceeds

ANS:C

DIF:1OBJ:06

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Chapter8—Receivables

26.Theamountofthepromissorynoteplustheinterestearnedontheduedateiscalledthe

a.realizablevalue

b.maturityvalue

c.facevalue

d.netrealizablevalue

ANS:BDIF:1OBJ:0627.A60-day,10%notefor$8,000,datedApril15,isreceivedfromacustomeronaccount.The

facevalueofthenoteis

a.$8,600

b.$7,200

c.$8,800

d.$8,000

ANS:DDIF:1OBJ:0628.A90-day,12%notefor$10,000,datedMay1,isreceivedfromacustomeronaccount.The

maturityvalueofthenoteis

a.$10,000

b.$10,300

c.$450

d.$9,550

ANS:BDIF:3OBJ:0629.Interestonanotecanbecalculatedwithoutknowledgeofthe

a.note’smaturitydate

b.rateofinterest

c.notesduration

d.principalamount

ANS:ADIF:1OBJ:0630.OnNovember1,BlazerCompanyreceivesa6%interestbearingnotefromRamCompanyto

settlea$20,000accountreceivable.Thenoteisdueinsixmonths.AtDecember31,Blazershouldrecordinterestrevenueof

a.$0

b.$100

c.$200

d.$600

ANS:C

DIF:3OBJ:07

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Chapter8—Receivables

31.Ifthemakerofapromissorynotefailstopaythenoteontheduedate,thenoteissaidtobe

a.displaced

b.disallowed

c.dishonored

d.discounted

ANS:CDIF:1OBJ:0732.Thejournalentrytorecordanotereceivedfromacustomertoapplyonaccountis

a.debitNotesReceivable;creditAccountsReceivable

b.debitAccountsReceivable;creditNotesReceivable

c.debitCash;creditNotesReceivable

d.debitNotesReceivable;creditNotesPayable

ANS:ADIF:2OBJ:0733.A$6,000,30-day,12%noterecordedonNovember21isnotpaidbythemakeratmaturity.

Thejournalentrytorecognizethiseventis

a.debitCash,$6,060;creditNotesReceivable,$6,060

b.debitAccountsReceivable,$6,060;creditNotesReceivable,$6,000;CreditInterest

Receivable,$60

c.debitNotesReceivable,$6,060;creditAccountsReceivable,$6,060

d.debitAccountsReceivable,$6,060;creditNotesReceivable,$6,000;CreditInterest

Revenue,$60

ANS:DDIF:3OBJ:0734.OnNovember1,KimCompanyaccepteda3-monthnotereceivableaspaymentforservices

providedtoChuCompany.Thetermsofthenotewere$8,000facevalueand6%interest.

KimCompanyclosesitsbooksatDecember31anddoesnotusereversingentries.On

February1,thejournalentrytorecordthecollectionofthenoteshouldincludeacredittoa.NotesReceivablefor$8,120

b.InterestReceivablefor$120

c.InterestRevenuefor$120

d.InterestRevenuefor$40

ANS:DDIF:3OBJ:0735.ReceivablesareusuallylistedonthebalancesheetafterCashinwhatorder?

a.AccountsReceivable,NotesReceivable,InterestReceivable

b.InterestReceivable,NotesReceivable,AccountsReceivable

c.NotesReceivable,InterestReceivable,AccountsReceivable

d.NotesReceivable,AccountsReceivable,InterestReceivable

ANS:D

DIF:2OBJ:08

202

Chapter8—Receivables

36.Receivablesareusuallylistedinorder

a.oftheduedate

b.ofthesize

c.alphabetically

d.ofliquidity

ANS:DDIF:2OBJ:0837.AccountsReceivableTurnovermeasures

a.howfrequentlyduringtheyeartheaccountsreceivableareconvertedtocash

b.thenumberofdaysoutstanding

c.thefairmarketvalueofaccountsreceivable

d.theefficiencyoftheaccountspayablefunction

ANS:ADIF:2OBJ:0938.Thenumberofdays’salesinreceivables

a.isanestimateofthelengthoftimethereceivableshavebeenoutstanding

b.measuresthenumberoftimesthereceivablesturnovereachyear

c.isNetCreditSalesdividedbyAverageReceivables

d.isnotmeaningfulandthereforeisnotused

ANS:ADIF:2OBJ:0939.Inreferencetoapromissorynote,anotherwordfor“discount”is

a.maturity

b.sale

c.purchase

d.interest

ANS:DDIF:1OBJ:App40.Theamountreceivedbytheendorserafterdiscountinganotereceivableatthebankiscalled

the

a.proceeds

b.maturityvalue

c.facevalue

d.realizablevalue

ANS:ADIF:1OBJ:App41.A60-day,12%notefor$10,000,datedMay1,isreceivedfromacustomeronaccount.Ifthe

noteisdiscountedonMay21at15%,theproceedsare

a.$170

b.$9,830

c.$10,000

d.$10,030

ANS:D

DIF:3OBJ:App

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Chapter8—Receivables

42.A60-day,12%notefor$10,000,datedMay1,isreceivedfromacustomeronaccount.Ifthe

noteisdiscountedonJune10at15%,theproceedsare

a.$10,115

b.$10,200

c.$10,000

d.$10,030

ANS:ADIF:3OBJ:App43.A60-day,12%notefor$10,000,datedMay1,isreceivedfromacustomeronaccount.Ifthe

noteisdiscountedonMay21at15%,theamountofinterestrevenueorexpensetobe

recordedbythepayeeofthenoteonMay21is

a.$30interestexpense

b.$30interestrevenue

c.$170interestrevenue

d.$170interestexpense

ANS:BDIF:3OBJ:App44.A60-day,12%notereceivedfromacustomerfor$50,000,datedMay15,isendorsedtothe

bankonMay25andthebankdiscountsthenoteat15%.Ifthenoteisdishonoredbythe

makerandthebankchargesa$20protestfee,whatistheamountpayabletothebankonJuly14?

a.$51,000

b.$51,020

c.$56,020

d.$50,000

ANS:BDIF:3OBJ:App45.A90-day,12%notefor$20,000,datedApril10,isreceivedfromacustomeronaccount.If

thenoteisdiscountedat15%onMay10,theduedateis

a.July9

b.July10

c.July11

d.July8

ANS:ADIF:5OBJ:App46.A90-day,12%notefor$20,000,datedApril10,isreceivedfromacustomeronaccount.If

thenoteisdiscountedat15%onMay10,thedaysinthediscountperiodare

a.60

b.90

c.120

d.30

ANS:ADIF:3OBJ:App

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Chapter8—Receivables

PROBLEM

1.Otherthanaccountsreceivableandnotesreceivable,nameotherreceivablesthatmightbe

includedinthegeneralledger.

ANS:

InterestReceivable,ReceivablesfromOfficersorEmployees,TaxesReceivable.

DIF:1OBJ:01

2.Giveexamplesoftheinternalcontrolprocedureofseparatingfunctionsrelatedtoreceivables.

ANS:

Separationofdutiesforthefollowingoperations:Recordkeepingforreceivablesandcreditapproval;collectionofcashandrecordkeepingforreceivables;creditapprovalandsales.

DIF:1OBJ:02

3.Ifsalespersonnelareallowedtoapprovecustomercredit,howmightthecostofapproving

poorcreditriskbecontrolled?

ANS:

Allowsalespersonneltoapprovecustomercreditforonlysalesofsmallamounts.

DIF:1OBJ:03

4.DeterminetheamounttobeaddedtoAllowanceforDoubtfulAccountsineachofthe

followingcases.Indicatetheendingbalanceineachcase.

Creditbalanceof$400intheallowanceaccountjustpriortoadjustment.

Analysisofaccountsreceivableindicatesdoubtfulaccountsof$8,500.

Creditbalanceof$400intheallowanceaccountjustpriortoadjustment.

Uncollectibleaccountsareestimatedat2%ofsales,whichtotaled$1,000,000

fortheyear.

ANS:

$8,100and$8,500

$20,000and$20,400

DIF:3OBJ:04

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Chapter8—Receivables

5.Thefollowingjournalentriesillustratethetwomethodsofaccountingforuncollectiblereceivables.Identifyeach.UncollectibleAccountsExpense450AccountsReceivable-Billings450AllowanceforDoubtfulAccounts450AccountsReceivable-Helena450ANS:DirectWrite-OffMethodAllowanceMethodDIF:1OBJ:04,056.Forabusinessthatmakesadvanceprovisionforuncollectiblereceivables

Journalizetheentriestorecordthefollowing:

RecordtheadjustingentryatDecember31,theendofthefiscalyear,to

providefordoubtfulaccounts.Theaccountsreceivableaccounthasabalance

of$800,000,andthecontraassetaccountbeforeadjustmenthasadebit

balanceof$600.Analysisofthereceivablesindicatesdoubtfulaccountsof

$20,000.

InMarchofthefollowingfiscalyear,the$550owedbyFlakeCo.onaccount

iswrittenoffasuncollectible.

Eightmonthslater,$200oftheFlakeCo.accountisreinstatedandpaymentof

thatamountisreceived.

InOctober,$400isreceivedonthe$600owedbyDoeCo.andtheremainder

iswrittenoffasuncollectible.

Basedonthedatainabove,whatisthenetrealizablevalueoftheaccounts

receivableasreportedonthebalancesheetasofDecember31?

Assumingthatthebusinesshadbeenfollowingthedirectwrite-offprocedurein

accountingforuncollectiblereceivables,journalizetheentriestorecordthe

following:

Recordedthewrite-offofaccountofFlakeCo.[above].

ReinstatedaccountofFlakeCo.for$200andrecordedpaymentofthat

amountreceived[above].

Recordedthereceiptof$400fromDoeCo.inaboveandwroteoffthe

remainderowedasuncollectible.

206

Chapter8—Receivables

ANS:UncollectibleAccountsExpense20,600AllowanceforDoubtfulAccounts20,600AllowanceforDoubtfulAccounts550AccountsReceivable-FlakeCoAccountsReceivable-FlakeCo200AllowanceforDoubtfulAccountsCash200AccountsReceivable-FlakeCoCash400AllowanceforDoubtfulAccounts200AccountsReceivable-DoeCo$780,000UncollectibleAccountsExpense550AccountsReceivable-FlakeCoAccountsReceivable-FlakeCo200UncollectibleAccountsExpenseCash200AccountsReceivable-FlakeCoCash400UncollectibleAccountsExpense200AccountsReceivable-DoeCo

DIF:3OBJ:04,05)

7.Calculatethefollowing:

Iftheinterestonanoteis$500,theinterestrateis6%andthetimeis60days,

whatistheprincipal?

Iftheprincipalofanoteis$30,000,theinterestis$500andthetimeis60

days,whatistheinterestrate?

550200200600550200200600207

Chapter8—Receivables

ANS:$50,000÷.0610%?=10%DIF:2OBJ:068.Determinetheduedateandamountofinterestdueatmaturityonthefollowingnotes:OriginationFaceTermInterestMaturityInterestMar1$4,00060days9%_____