FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Accounting for Receivables

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

The balance in Accounts Receivable at the beginning of the year amounted to $3,040. During the year, $9,880 of credit sales were made to customers. If the ending balance in Accounts Receivable amounted to $1,980, and uncollectible accounts expense amounted to $840, what is the amount of cash inflow from customers that would appear in the operating activities section of the cash flow statement?

A) $10,100
B) $9,880
C) $12,920
D) $10,940

E) All of the above
F) C) and D)

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

Which accounting concept can be used by some companies to justify the use of the direct write-off method?

A) The entity concept
B) The materiality concept
C) The going concern concept
D) The monetary principle

E) All of the above
F) C) and D)

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Elliston Company accepted credit card payments for $10,000 of services provided to customers. The credit card company charges a 3% fee for handling the transaction. Which of the following describes the effect of this transaction?

How is the accounts receivable turnover computed? What information does this ratio provide?

Kona Espresso Machine Company makes many of its sales on account. For Year 2, its beginning balance in Accounts Receivable was $190,000. Sales on account for the year were $904,000, and the amount of cash collected from its accounts receivable was $829,900. During the year, uncollectible accounts of $10,100 were written off. What was the ending balance in Accounts Receivable?

What type of transaction is the write-off of an uncollectible account using the allowance method? (asset source, asset use, asset exchange, or claims exchange)

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $31,000 and $500, respectively. During Year 2, Kincaid reported $72,500 of credit sales, wrote off $550 of receivables as uncollectible, and collected cash from receivables amounting to $74,550. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. What is the net realizable value of receivables that will be reported on Kincaid's Year 2 balance sheet?

The longer it takes to collect accounts receivable, the greater the implicit interest cost that is incurred.

For a company that uses the allowance method, the write-off of an uncollectible account receivable is an asset use transaction.

The Miller Company earned $123,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $82,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.What is the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement?

Which financial statement ratios facilitate the measurement of a company's effectiveness in collecting cash from customers?What is measured by each of these ratios? How should each of these ratios be interpreted?

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $31,000 and $500, respectively. During Year 2, Kincaid reported $72,500 of credit sales, wrote off $550 of receivables as uncollectible, and collected cash from receivables amounting to $74,550. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. Which of the following describes the effects of writing off the uncollectible accounts?

Lucas Company has the following account balances at the end of Year 1: Required: Compute the net realizable value of the above accounts receivable.

On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method. On February 15, Year 2, one of Loudoun's customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050. Which of the following correctly states the effect of the adjustment dated December 31, Year 1, on the financial statements of the Loudoun Corporation?

Which of the following is not considered a "cost" of extending credit to customers?

During Year 2, Oklahoma Trucking Company had service revenue on account of $350,000. Oklahoma had a beginning balance in Accounts Receivable of $35,000 and an ending balance of $42,500. During the year Oklahoma wrote-off $8,750 of receivables. Oklahoma uses the direct write-off method.Required:a)Determine the amount of cash that Oklahoma collected from customers during Year 1

Which of the following is the term commonly used to describe the practice of reporting the net realizable value of receivables in the financial statements?

Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $23,000 and $900, respectively. During Year 2, Allegheny wrote off $1,500 of Uncollectible Accounts. Using the percent of receivables method, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $1,600. What amount will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement?

Rosewood Company made a loan of $11,000 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. What is the amount of interest revenue that Rosewood would report in Year 1 and Year 2, respectively?

The direct write-off method overstates assets on the balance sheet.