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Exam 5: Short-Term Investments Receivables

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Question 71

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By selling on credit, companies run the risk of not collecting some receivables.

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Question 72

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Emporium Bank lends money to a customer on a six month note. What journal entry does the bank prepare?

A) debit Note Receivable and credit Service Revenue
B) debit Cash and credit Note Payable
C) debit Note Receivable and credit Cash
D) debit Cash and credit Note Receivable

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Question 73

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Trading securities purchased for $400,000, had a fair value of $410,000 at the end of the year. The adjusting entry to record this difference includes a credit to:

Bamboo Industries, Inc. has $39,000 in cash and cash equivalents, $19,000 in short-term investments, $129,000 in net current receivables, $58,000 in inventory and $18,000 in prepaid expenses. The total current liabilities of the firm are $240,000. Bamboo Industries' current ratio is: (Round your final answer to two decimal places.)

Lennon Company signed a 12-month, $59,000, 9% note on June 1, 2017. The amount of interest to be accrued on December 31, 2017, is: (Round your final answer to the nearest dollar.)

Under the allowance method for estimating uncollectible accounts:

When compared to the current ratio, the quick ratio is a less stringent measure of a company's ability to pay its current liabilities.

Which of the following is a TRUE statement regarding sales?

The direct-write off method for uncollectible accounts receivable may ________ net income and ________ total assets in the year of the sale:

Consider the following INDEPENDENT situations for Tommy Company: a. The Allowance for Uncollectible Accounts has a $1,200 credit balance prior to adjustment. Net credit sales during the year are $830,000 and 2% are estimated to be uncollectible. Accounts Receivable has a balance of $110,000 at the end of the year. The company uses the percent-of-sales method. b. The Allowance for Uncollectible Accounts has a $900 credit balance prior to adjustment. Based on an aging schedule of accounts receivable prepared at the end of the year, $20,000 of accounts receivable are estimated to be uncollectible. Accounts Receivable has a balance of $104,000 at the end of the year. c. The Allowance for Uncollectible Accounts has a $16,300 debit balance prior to adjustment. Based on an aging schedule of accounts receivable prepared at the end of the year, $200,000 of accounts receivable are estimated to be uncollectible. Accounts Receivable has a balance of $958,000 at the end of the year. d. The Allowance for Uncollectible Accounts has a $500 credit balance prior to adjustment. Net credit sales during the year are $900,000 and 1% are estimated to be uncollectible. Accounts Receivable has a balance of $825,000 at the end of the year. The company uses the percent-of-sales method. Required: Prepare the adjusting journal entries for uncollectible accounts for each INDEPENDENT situation. Explanations are not required.

On May 1, 2017, Mary Smith signed a $8000 promissory note with Continental Bank. The note is due in one year with 9% interest. What journal entry should the bank prepare on May 1, 2017?

The percent-of-sales method for computing uncollectible accounts:

The two major types of receivables are accounts receivable and trade receivables.

Johnsen Company earned service revenue on account of $300,000 and had cash collections of $130,000 for the year. During the year, uncollectible accounts receivable of $2,000 were written off. At December 31, an aging-of-accounts receivable schedule indicated that Johnsen Company will not collect $10,000 of accounts receivable. There was a credit balance of $2,100 in the Allowance for Uncollectible Accounts at the beginning of the year. Required: Journalize the entries to record (1)service revenue, (2)cash collections, (3)write-off of the uncollectible receivables and (4)the adjusting entry to record Uncollectible-Account Expense. Ignore Cost of Goods Sold. Explanations are not required.

Accounts (trade)receivable are amounts to be collected from customers from the sale of goods or services.

If Abby, Inc. sells items to a customer who uses a credit card for $1300, and there is a credit card fee of 2.5%, Abby will record a(n) : (Round your final answer to the nearest dollar.)

Journalize the following transactions for The Technology Store. The Technology Store uses the direct write-off method of accounting for uncollectible receivables. Ignore Cost of Goods Sold. Explanations are not required. April 5 The Technology Store sells $6,200 of computer equipment on account to Mrs. Jones. June 5 Mrs. Jones pays The Technology Store $2,000 of the amount she owes. July 7 After repeated attempts to collect the balance due from Mrs. Jones fail, The Technology Store writes-off the remainder of the amount she owes.

The quick ratio and the day's sales outstanding measure:

Which of the following is a CORRECT statement regarding the direct write-off method for uncollectible accounts?

The comparative financial statements of Walters Company for 2017, 2016, and 2015 contain the following selected data: Compute the following ratios for 2017 and 2016 and indicate which ratios improved and which ratios deteriorated: a. Current ratio b. Quick ratio c. Days' sales outstanding