Chapter 5

Allowance for Uncollectible Accts

100

What is the formula for Net Realizable Value for Accounts Receivable?

A/R- Allowance for uncollectible accounts= net realizable value for A/R

200

Uncollectible accounts are determined by the percent-of-sales method to be  4%  of credit sales. How much is uncollectible-account expense for 2021?

Accounts receivable 12/31/21= $7,000

Allowance for uncollectible-accounts credit balance 12/31/21 (before adjustment)= 1,200

Credit service revenue during 2021= 46,000

Cash service revenue during 2021= 15,000

Collections from customers on account during 2021 =44,000

1840

300

Uncollectible account expense for 2021 is $1,615. What is the adjusted balance in the Allowance account at year-end for 2021? 

Accounts receivable 12/31/21 $7,000

Allowance for uncollectible-accounts credit balance 12/31/21 (before adjustment) 600

Credit service revenue during 2021 45,000

Cash service revenue during 2021 15,000

Collections from customers on account during 2021 50,000

2,215

400

Uncollectible accounts are determined by the percent-of-sales method to be 2% of credit sales. How much is uncollectible-account expense for 2021?

Data for company: 

Accounts receivable 12/31/21= $16,000

Allowance for uncollectible-accounts credit balance 12/31/21 (before adjustment)= 1,000

Credit service revenue during 2021= 40,000

Cash service revenue during 2021= 9,000

Collections from customers on account during 2021= 52,000

800

500

Is Allowance for Uncollectible Accounts is an asset, liability, stockholder's equity, or a contra-account?

Contra- Accounts Receivable

Notes Receivable

100

Corporation received a four-month 5%,$6,000note receivable on March 1. The adjusting entry on March 31 will include

A.a debit to Interest Receivable for $100.

B.a debit to Cash for $300.

C.a debit to Interest Receivable for $300.

D.a credit to Interest Revenue for $25.

D

200

What is the maturity value of a $20,000,8%,six-month note?

A.$20,800

B.$19,200

C.$21,600

D.$ 20,000

A

300

What is the maturity value of a $100,000, 15%, six-month note?

A.$92,500

B.$100,000

C.$115,000

D.$107,500 

D

400

MarsCorporation received a four-month 1%, $12,000 note receivable on March 1. The adjusting entry on March 31 will include

A.a debit to Interest Receivable for $120.

B.a debit to Interest Receivable for $40.

C.a credit to Interest Revenue for $10.

D.a debit to Cash for $120.

C

500

If the adjusting entry to accrue interest on a note receivable is omitted, then

A.assets, net income, and stockholders' equity are understated.

B.liabilities are understated, net income is overstated, and stockholders' equity is overstated.

C.assets are overstated, net income is understated, and stockholders' equity is understated.

D.assets, net income, and stockholders' equity are overstated.

A

Quick Ratio

100

Calculate the Quick Ratio

Cash $10,000

Accounts receivable 10,000

Inventory 14,000

Prepaid insurance 1,000

Accounts payable 9,000

Salary payable 3,000

Notes payable (due in two years) 16,000

Short-term investments 5,000

2.1

200

Calculate the Quick Ratio

Cash $6,000

Accounts receivable 6,000

Inventory 17,000

Prepaid insurance 4,000

Accounts payable 12,000

Salary payable 7,000

Notes payable (due in two years) 13,000

Short-term investments 3,000

.8 (rounded to one dec)

300

Calculate the Quick Ratio

Cash $4,000

Accounts receivable 8,000

Inventory 12,000

Prepaid insurance 1,000

Accounts payable 12,000

Salary payable 8,000

Notes payable (due in two years) 13,000

Short-term investments 2,000

.7

400

Calculate the Quick Ratio

Cash $10,000

Accounts receivable 11,000

Inventory 19,000

Prepaid insurance 5,000

Accounts payable 13,000

Salary payable 2,000

Notes payable (due in two years) 9,000

Short-term investments 2,000

1.5

500

Calculate the Quick Ratio

Cash $10,000

Accounts receivable 11,000

Inventory 16,000

Prepaid insurance 5,000

Accounts payable 6,000

Salary payable 2,000

Notes payable (due in two years) 11,000

Short-term investments 4,000

3.1