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					At the beginning of the year, the balance in the allowance for doubtful account is a
credit of $540. During the year, $650 of previously written-off accounts was
reinstated and accounts totalling $410 are written-off as uncollectible. The end of the
year balance in the allowance for doubtful accounts should be
a. $350
b. $410
c. $600
d. $480
$540
None of the above. The answer should be $780.

At the end of a period, before the accounts are adjusted, Allowance for Doubtful
accounts has a debit balance of $500, and the net sales on account for the period total
$800,000. If uncollectible accounts expense is estimated at 1% of net sales on
account, the current provision to be made for uncollectible accounts expense is
$8,500.
FALSE. $8,000 only. ($800,000 x 1%)

Allowance for Doubtful Accounts has a credit balance of $1,500 at the end of the year
(before adjustment), and an analysis of customers' accounts indicates doubtful
accounts of $17,900. Which of the following entries records the proper provision for
doubtful accounts?

A. debit Allowance for Doubtful Accounts, $16,400; credit Uncollectible Accounts
Expense, $16,400

B. debit Allowance for Doubtful Accounts, $19,400; credit Uncollectible Accounts
Expense, $19,400

C. debit Uncollectible Accounts Expense, $19,400; credit Allowance for Doubtful
Accounts, $19,400

D. debit Uncollectible Accounts Expense, $16,400; credit Allowance for Doubtful
Accounts, $16,400


The maturity value of a $20,000, 9%, 40-day note receivable dated July 3 is
a. $21,800
b. $20,200
c. $20,000
d. $22,000
 $20,000 + ($20,000 x 9% x 40/360) = $20,200


The estimate based on sales method violates the matching principle
FALSE

The receivables turnover ratio is computed by dividing total gross sales by the
average net receivables during the year
FALSE
Both accounts receivable and notes receivable represent claims that are expected to be
collected in cash
TRUE

On November 1, Kim Company accepted a 3-month note receivable as payment for
services provided to Chu Company. The terms of the note were $8,000 face value and
6% interest. Him Company closes its books at December 31 and does not use
reversing entries. On February 1, the journal entry to record the collection of the note
should include a credit to

a. Interest Revenue for $120
b. Notes Receivable for $8,120
c. Interest Revenue for $40
d. Interest Receivable for $120


An estimated based on an analysis of receivables shows that $780 of accounts
receivables are uncollectible. The allowance for Doubtful Accounts has a debit
balance of $110. After preparing the adjusting entry at the end of the year, the balance
in the Allowance for Doubtful Accounts is

a. $780
b. $110
c. $890
d. $670

				
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posted:12/8/2012
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