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Exam 5: Receivables and Sales

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Question 61

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A company has the following balances on December 31,2015,after year-end adjustments: Accounts Receivable = $75,000;Service Revenue = $400,000;Allowance for Uncollectible Accounts = $5,000;Cash = $20,000.Calculate the net realizable value of accounts receivable.

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Question 62

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Richard LLC accounts for possible bad debts using the allowance method.When an actual bad debt occurs,what effect does it have on the accounting equation?

A) Increases assets and increases stockholders' equity.
B) Decreases assets and decreases stockholders' equity.
C) Decreases assets and decreases liabilities.
D) No effect on the accounting equation.

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Question 63

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Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Contra asset that represents the estimated amount of future bad debts.

The following information pertains to Lindsey Corp.at the end of the year: Lindsey Corp.uses the percentage-of-credit-sales method and estimates that 2% of the credit sales are uncollectible.After the year-end adjustment,what amount of bad debt expense would Lindsey report for the year?

A company offers a 20% trade discount when providing services of $5,000 or more to its customers.Record the transaction when the company provides services of $8,000 (not including the trade discount)on account.

A trade discount results in:

Give three examples of contra revenue accounts and the transactions with which they are associated.

Explain how companies account for uncollectible accounts receivable (bad debts).

On December 31,2015,Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $53,600 and $1,325,respectively.During 2016,Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31,2016.Bad debt expense for 2016 would be:

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ The effect of estimating future bad debts.

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.

On December 31,2015,Andy Inc.has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment.Andy Inc.also has the following information for its accounts receivable and the estimated percentages of bad debts for different past-due amounts: What is the amount of bad debt expense to be reported on Andy Inc.'s financial statements for 2015?

Accrued interest on a note receivable is interest earned by the end of the year but not yet received.

The amount of a company's receivables is influenced by several variables,including all of the following except:

The direct write-off method involves recording an adjustment at the end of each period to account for the possibility of future uncollectible accounts.

Which of the following best describes credit sales?

A lower receivables turnover ratio generally indicates more favorable management of accounts receivable by company managers.

On April 1,a company provides services to one of its customers for $12,000.As payment for the services,the company accepts a six-month,10% note from the customer.Record the acceptance of the note receivable on April 1 and the cash collection on October 1.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Actual bad debts.

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 a: