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Exam 8: Receivables

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Question 31

Multiple Choice

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Which statement is not true?

A) Current assets are normally reported in order of their liquidity.
B) Disclosures related to receivables are reported on the financial statement notes.
C) Cash and cash equivalents are the first items reported under current assets.
D) All receivables that are expected to be realized in cash beyond 265 days are reported in the non­current assets section.

E) A) and B)
F) All of the above

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Question 32

Multiple Choice

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Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

A) Notes Receivable 6,000
Accounts Receivable-Dame Company 6,000
B) Notes Receivable 6,090
Accounts Receivable-Dame Company 6,090
C) Notes Receivable 6,090
Accounts Receivable-Dame Company 6,000
Interest Revenue 90
D) Notes Receivable 6,000
Interest Revenue 90
Accounts Receivable-Dame Company 6,000
Interest Revenue 90

E) A) and D)
F) A) and C)

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Question 33

Multiple Choice

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Jefferson uses the percent of method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?

A note receivable due in 18 months is listed on the balance sheet under the caption

Journalize the following transactions for Lucite Company. November 14 Received a $4,800.00, 90-day, 9% note from Alan Albertson in payment of his account. December 31 Accrued interest on the Albertson note. February 12 Received the amount due from Albertson on his note.

Match each description to the appropriate term a-d) . Each term may be used more than once. -This method focuses on the balance sheet.

The following are the current assets of Barnes Co. as of December 31: Prepare the current assets section of the balance sheet.

The amount for which a promissory note is written is called the

Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.

The maturity value of a note receivable is always the same as its face value.

List at least three indicators that a receivable may be uncollectible.

Match each description to the appropriate term a-h) . -The amount charged for using the money of another party

Determine the due date and the amount of interest due at maturity on the following notes:

On the basis of the following data related to assets due within one year for Webb Co., prepare a partial balance sheet in good form at December 31. Show total current assets.

When a note is written to settle an open account, no entry is necessary.

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?

The amount of the promissory note plus the interest earned on the due date is called the

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

Other receivables include nontrade receivables such as loans to company officers.