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Home / Questions / On January 1 2015 Alice & Co lends $5,000 to an employee and accepts a 24-month

On January 1 2015 Alice & Co lends $5,000 to an employee and accepts a 24-month

On January 1, 2015, Alice & Co. lends $5,000 to an employee and accepts a 24-month, 10% note. At the end of 2015, what effect will the adjustment for accrued interest revenue have on the Alice & Co.’s financial statements?

a. Decreases assets.

b. Decreases revenue.

c. Increases expense.

d. Increases stockholders’ equity.

 

 

126. At the beginning of the year, Vici Ventures had accounts receivable of $220,000.  At the end of the year, the company had accounts receivable of $340,000.  During the year, Vici had total sales of $1,000,000, 70% of which were credit sales.  What was Vici’s receivables turnover ratio for the year?

a. 2.50.

b. 3.57.

c. 2.94.

d. 146 days.

 

 

              127. Sandburg Veterinarian reports the following information for the year:

Net credit sales$120,000

Average accounts receivable    20,000

Cash collections on credit sales  100,000

What is Sandburg’s receivables turnover ratio?

a. 6.0.

b. 5.0.

c. 1.2.

d. 0.2.

 

 

              128. Beverage International reports net credit sales for the year of $240,000. The company’s accounts receivable balance at the beginning of the year equaled $20,000 and the balance at the end of the year equaled $30,000. What is Beverage International’s receivables turnover ratio?

a. 12.0.

b. 9.6.

c. 8.0.

d. 1.5.

 

 

              129. The amount of a company’s receivables is influenced by several variables, including all of the following except:

a. The level of sales.

b. The nature of the product or service sold.

c. The credit and collection policies.

d. Dividend payments to stockholders.

 

 

              130. Toppleson Manufacturing reports a receivables turnover ratio of 14.5. The industry average is 10.7. What most likely is causing this difference?

a. Toppleson is selling to high-risk customers.

b. Toppleson has effective procedures related to selling goods on account.

c. Toppleson provides superior products and services.

d. Toppleson allows customers too long to pay.

 

 

              131. The percentage-of-credit-sales method for estimating uncollectible accounts is sometimes described as:

a. The balance sheet method.

b. The method most used by companies.

c. The income statement method.

d. The percentage-of-receivables method.

 

 

              132. Which of the following statements is true with respect to the percentage-of-credit-sales method for estimating uncollectible accounts?

a. The amount recorded for bad debt expense does not depend on the balance of the allowance for uncollectible accounts.

b. This method is referred to as the balance sheet approach.

c. This method does not allow for future uncollectible accounts.

d. Under this method, bad debt expense is recorded at the time of an actual bad debt.

 

 

133. The following information pertains to Lindsey Corp. at the end of the year:

Credit Sales

$150,000

 

Accounts Payable

20,000

 

Accounts Receivable

30,000

 

Allowance for Uncollectible Accounts

800

debit

Cash Sales

5,500

 
     

Lindsey Corp. uses the percentage-of-credit-sales method and estimates that 2% of the credit sales are uncollectible. After the year-end adjustment, what amount of bad debt expense would Lindsey report for the year?

a. $1,200.

b. $2,200.

c. $3,000.

d. $3,800.

 

 

134. The following information pertains to Lightning, Inc. at the end of the year:

Credit Sales

$60,000

 

Accounts Payable

10,000

 

Accounts Receivable

7,000

 

Allowance for Uncollectible Accounts

400

credit

Cash Sales

20,000

 

     

 

Lightning uses the percentage-of-credit-sales method and estimates 1% of sales are uncollectible. What is the ending balance of the allowance account after the year-end adjustment?

a. $600.

b. $1,000.

c. $200.

d. $1,200.

 

 

 

 

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