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If the direct write-off method is used to account for uncollectible accounts which of the following statements is false

If the direct write-off method is used to account for uncollectible accounts, which of the following statements is false?

a. An allowance account is not used.

b. No adjustment is made at the end of the year to estimate future uncollectible accounts.

c. Accounts receivable will be reported at its net realizable value.

d. Bad debt expense is recorded at the time an actual bad debt is written-off.

 

 

              116. Which method is not allowed under Generally Accepted Accounting Principles for the purpose of accounting for uncollectible accounts?

a. Allowance method.

b. Direct write-off method.

c. Aging method.

d. Percentage-of-receivables method.

 

 

              117. The primary difference between a note receivable and an account receivable is:

a. A note receivable cannot be classified as a current asset.

b. Borrowers have the option of not paying a note receivable.

c. An account receivable is more likely to be collected.

d. A note receivable is evidenced by a written debt instrument.

 

 

118. Hughes Aircraft sold a four-passenger airplane for $380,000, receiving a $50,000 down payment and a 12% note for the balance. This transaction would include a:

a. Credit to Cash.

b. Debit to Sales Discount.

c. Debit to Notes Receivable.

d. Credit to Notes Receivable.

 

 

              119. On February 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp report during 2015?

a. $120.

b. $240.

c. $100.

d. $60.

 

 

              120. On February 1, 2015, Sanger Corp. lends cash and accepts a $2,000 note receivable that offers 10% interest and is due in six months. What would Sanger record on August 1, 2015, when the borrower pays Sanger the correct amount owed?

a. Cash2,000

    Interest Revenue   100

Notes Receivable2,100

 

b. Cash2,100

Notes Receivable2,100

 

c. Cash2,100

Interest Revenue   100

Notes Receivable2,000

 

d. Cash2,200

Notes Receivable2,200

 

 

              121. On September 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp report during 2015?

a. $20.

b. $40.

c. $30.

d. $60.

 

 

              122. On August 1, 2015, Turner Manufacturing lends cash and accepts a $6,000 note receivable that offers 8% interest and is due in nine months. How would Turner record the year-end adjustment to accrue interest in 2015?

a. Interest Revenue360

Interest Receivable360

 

b. Interest Receivable480

Interest Revenue480

 

c. Interest Receivable360

Interest Revenue360

 

d. Interest Receivable200

Interest Revenue200

 

 

              123. On September 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp report during 2016?

a. $20.

b. $40.

c. $30.

d. $60.

 

 

              124. On July 1, 2015, Herzog Mining lends cash and accepts a $9,000 note receivable that offers 10% interest and is due in nine months. How would Herzog record the transaction on April 1, 2016, when the borrower pays Herzog the correct amount owed?

a. Cash9,675

Notes Receivable9,000

Interest Revenue   675

 

b. Cash9,675

Notes Receivable9,000

Interest Revenue   225

Interest Receivable   450

 

a. Cash9,675

Notes Receivable9,000

Interest Receivable   675

 

d. Cash9,675

Notes Receivable9,675

Jan 27 2020 View more View Less

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