Receivables and Short-term investments (financial accounting) Chapt 5

Aging of accounts receivable

Short-term Investments

Accounts receivable turnover

Direct write off method

Available for sale securities

term

maturity

payee

Promissory note

Uncollectible Account Expense

allowance method

securities

acid test ratio

percentage of sales approach

equities securities

trading securities

debt instruments

principal

receivable

Interest

Using the allowance method, writing off a specific account receivable will

Uncollectible Account Expense

Which of the following will occur if uncollectible account expense is not recorded at the end of the year? a. expenses will be overstated b.net income will be understated c.Liabilities will be understated d.Assets will be overstated

Net accounts receivable is equal to

Accounts receivable has a debit balance of $8500 and the allowance for Uncollectible Accounts has a credit balance of $350. A specific account of $150 is written off. What is the amount of net receivables after the write off?

Allowance for uncollectible Accounts is

A three month note receivable reported on the balance sheet is classified as a

Interest is equal to

Assets listed as short-term investments on the balance sheet are

Trading securities are reported on the balance sheet at

Avaliable for sale securities are

An unrealized gain or loss results from

All of the following current assets are included in the acid-test ratio except

Short term investments transactions are reported on the statement of cash flows as

Receivable transactions are reported on the statement of cash flows as

The following information pertains to Lightning, Inc. at the end of the year: Credit Sales $68,000 Accounts Payable 14,400 Accounts Receivable 7,200 Allowance for Uncollectible Accounts $500 credit Cash Sales 39,000 Lightning uses the percentage-of-credit-sales method and estimates 7% of sales are uncollectible. What is the ending balance of the allowance account after the year-end adjustment? $5,260 $7,990 $4,260 $4,760 Ending balance of allowance for uncollectible accounts = $500 + ($68,000 × 7%) = $5,260.

At December 31, Gill Co. reported accounts receivable of $297,000 and an allowance for uncollectible accounts of $1,200 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 5% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: $14,850. $12,360. $13,650. $1,200. Adjustment for uncollectible accounts = ($297,000 × 5%) − $1,200 = $13,650.

On December 31, 2015, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $43,500 and $2,500, respectively. During 2016, Coolwear wrote off $700 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,000 at December 31, 2016. Bad debt expense for 2016 would be: rev: 05_10_2014_QC_49493, 05_15_2014_QC_49493 $3,200. $700. $2,700. $8,200. Bad debt expense = $5,000 − ($2,500 − $700) = $3,200.

Beverage International reports net credit sales for the year of $516,000. The company's accounts receivable balance at the beginning of the year equaled $39,000 and the balance at the end of the year equaled $49,000. What is Beverage International's receivables turnover ratio? (Round your answer to one decimal place.) 13.2 10.5 1.3 11.7 Receivables turnover ratio = Net credits sales ($516,000) / Average accounts receivable [($39,000 + $49,000) / 2] = 11.7

On September 1, 2015, Middleton Corp. lends cash and accepts a $4,000 note receivable that offers 15% interest and is due in six months. How much interest revenue will Middleton Corp report during 2016? (Do not round intermediate calculations.) $100 $200 $123 $150 Interest revenue = $4,000 × 15% × 2/12 = $100.

On August 1, 2015, Turner Manufacturing lends cash and accepts a $6,000 note receivable that offers 12% interest and is due in nine months. How would Turner record the year-end adjustment to accrue interest in 2015? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Interest Receivable 300 Interest Revenue 300

On September 1, 2015, Middleton Corp. lends cash and accepts a $4,400 note receivable that offers 7% interest and is due in six months. How much interest revenue will Middleton Corp report during 2015? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) $704 $308 $103 $616 Interest revenue = $4,400 × 7% × 4/12 = $103.

The following information pertains to Lightning, Inc. at the end of December: Credit Sales $20,000 Accounts Payable 10,000 Accounts Receivable 14,200 Allowance for Uncollectible Accounts $400 (credit) Cash Sales 20,000 Lightning uses the aging method and estimates it will not collect 7% of accounts receivable not yet due, 15% of receivables less than 30 days past due, and 44% of receivables greater than 30 days past due. The accounts receivable balance of $14,200 consists of $10,000 not yet due, $2,800 less than 30 days past due, and $1,400 greater than 30 days past due. What is the appropriate amount of Bad Debt Expense? $420 $1,336 $1,517 $400 Bad debt expense = ($10,000 × 7%) + ($2,800 × 15%) + ($1,400 × 44%) − $400 = $1,336.

Oswego Clay Pipe Company provides services of $45,800 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? Accounts Receivable 45,342 Service Revenue 45,342 Accounts Receivable 45,800 Service Revenue 45,800 Accounts Receivable 45,800 Sales Discounts 458 Service Revenue 46,258 Accounts Receivable 45,800 Service Revenue 45,342 Sales Discounts 458

At December 31, Gill Co. reported accounts receivable of $239,000 and an allowance for uncollectible accounts of $700 (debit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 5% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: $11,950. $12,650. $700. $11,250. Adjustment for uncollectible accounts = ($239,000 × 5%) + $700 = $12,650.

Which of the following statements is true with respect to the percentage-of-credit-sales method for estimating uncollectible accounts? This method does not allow for future uncollectible accounts. Under this method, bad debt expense is recorded at the time of an actual bad debt. The amount recorded for bad debt expense does not depend on the balance of the allowance for uncollectible accounts. This method is referred to as the balance sheet approach.

A trade discount results in: A contra revenue account being recorded. A contra asset being recorded. Revenue being recorded for the discounted price. Customers delaying cash payment.

Oswego Clay Pipe Company provides services of $46,000 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?

The primary difference between a note receivable and an account receivable is: An account receivable is more likely to be collected. A note receivable cannot be classified as a current asset. A note receivable is evidenced by a written debt instrument. Borrowers have the option of not paying a note receivable.

Using the allowance method, writing off an actual bad debt would include a: Credit to Allowance for Uncollectible Accounts. Credit to Accounts Receivable. Debit to Accounts Receivable. Debit to Bad Debt Expense.

Accounts receivable are normally reported at the: Present value of future cash receipts. Current value less expected collection costs. Expected amount to be received. Current value plus accrued interest.

When $2,500 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 Bad Debt Expense and a credit to Allowance for Uncollectible Accounts. A debit to Bad Debt Expense and a credit to Accounts Receivable. A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense. A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable.

At the beginning of 2015, the balance in Jackson Enterprises' Allowance for Uncollectible Accounts was $31,800. During 2015, the company wrote off $38,000 of accounts receivable. Writing off the individual bad debts would include a: Debit to Bad Debt Expense. Credit to the Allowance for Uncollectible Accounts. Debit to Bad Debt Expense; credit to the Allowance for Uncollectible Accounts. Credit to Accounts Receivable.

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. Credit Accounts Receivable. Debit Allowance for Uncollectible Accounts. No adjustment is made.

On December 31, 2015, Mark Inc. estimates future bad debts to be $6,500. The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment. What adjustment should Mark Inc. record for the estimated bad debts on December 31, 2015? Debit Bad Debt Expense, $9,000; credit Allowance for Uncollectible Accounts, $9,000. Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000. Debit Bad Debt Expense, $6,500; credit Allowance for Uncollectible Accounts, $6,500. Debit Allowance for Uncollectible Accounts, $9,000; credit Bad Debt Expense, $9,000. Bad Debt Expense = $6,500 - $2,500 = $4,000.

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting Accounts Receivable and debiting: Sales Returns. Sales Allowances. Sales Revenue. Sales Discounts.

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a: Sales revenue. Sales discount. Sales allowance. Sales return.

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit Accounts Receivable and debit: Sales Returns. Sales Revenue. Sales Allowances. Sales Discounts.

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a: Sales return. Sales revenue. Sales discount. Sales allowance.

Toppleson Manufacturing reports a receivables turnover ratio of 14.5. The industry average is 10.7. What most likely is causing this difference? Toppleson allows customers too long to pay. Toppleson is selling to high-risk customers. Toppleson provides superior products and services. Toppleson has effective procedures related to selling goods on account.

Allowance for Uncollectible Accounts is: An expense account. A contra revenue account. A contra asset account. A liability account.

Collections of accounts receivable that previously have been written off are credited to: Accounts Receivable. Bad Debt Expense. Retained Earnings. A Gain account.

On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. How would Flores record the sale on November 10?

A company's adjustment for uncollectible accounts at year-end would include a: Credit to Accounts Receivable. Debit to Accounts Receivable. Debit to Bad Debt Expense. Debit to Allowance for Uncollectible Accounts.