On November 10 of the current year Flores Mills provides services to a customer for

 

75. On November 10 of the current year, Flores Mills provides services to a customer for $8,000 with credit terms 2/10, n/30. The customer made the correct payment on December 5. How would Flores record the collection of cash on December 5?

a. Cash7,840

Accounts Receivable7,840

 

b. Cash7,840

    Sales Discounts   160

Accounts Receivable8,000

 

c. Cash7,840

    Sales Revenue   160

Accounts Receivable8,000

 

d. Cash8,000

Accounts Receivable8,000

 

 

76. Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 12?

a.	Accounts Receivable	46,000
	Sales Revenue		46,000
b.	Accounts Receivable	46,000
	Sales Revenue		45,540
	Sales Discounts		460
c.	Accounts Receivable	45,540
	Sales Revenue		45,540
d.	Accounts Receivable	45,540
	Sales Discounts	460
	Sales Revenue		46,000

 

 

77. Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date?

a.	Cash	45,540
	Sales Revenue	460
	Accounts Receivable		46,000
b.	Cash	46,000
	Sales Discounts	460
	Accounts Receivable		46,000
	Interest Revenue		460
c.	Cash	45,540
	Sales Discounts	460
	Accounts Receivable		46,000
d.	Cash	46,000
	Accounts Receivable		45,540
	Sales Revenue		460

 

 

78. Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on June 10, assuming the customer made the correct payment on that date?

a.	Cash	46,000
	Accounts Receivable		45,540
	Discounts Receivable		460
b.	Cash	46,000
	Accounts Receivable		45,540
	Interest Revenue		460
c.	Cash	46,000
	Accounts Receivable		46,000
d.	Cash	46,460
	Accounts Receivable		46,000
	Interest Revenue		460

 

 

79. Which of the following is recorded upon receipt of a payment on April 7, 2015, by a customer who pays a $900 invoice dated March 3, 2015, with terms 2/10, n/60?

a. Debit Sales Discounts $18.

b. Credit Purchase Discounts $18.

c. Credit Accounts Receivable $882.

d. Debit Cash $900.

 

 

              80. Accounts receivable are normally reported at the:

a. Present value of future cash receipts.

b. Current value plus accrued interest.

c. Expected amount to be received.

d. Current value less expected collection costs.

 

 

81. Shupe Inc. estimates uncollectible accounts based on the percentage of accounts receivable. What effect will recording the estimate of uncollectible accounts have on the accounting equation?

a. Increase liabilities and decrease stockholders’ equity.

b. Decrease assets and decrease liabilities.

c. Decrease assets and decrease stockholders’ equity.

d. Increase assets and decrease stockholders’ equity.

 

 

              82. Under the allowance method, which of the following does not change the balance in the

Accounts Receivable account?

a. Returns on credit sales.

b. Collections on customer accounts.

c. Bad debt expense adjustment.

d. Write-offs.

 

 

83. At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

a. $6,540.

b. $7,800.

c. $7,140.

d. $7,740.

 

 

84. At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (debit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

a. $6,540.

b. $7,800.

c. $7,140.

d. $7,740.

 

 

              85. At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and $970 (credit) in Allowance for Uncollectible Accounts. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. Bad debt expense for the year should be:

a. $6,220.

b. $6,450.

c. $5,250.

d. $7,190.

 

 

              86. At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and $970 (debit) in Allowance for Uncollectible Accounts. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. Bad debt expense for the year should be:

a. $6,220.

b. $6,450.

c. $5,250.

d. $7,190.

 

 

87. A company’s adjustment for uncollectible accounts at year-end would include a:

a. Debit to Bad Debt Expense.

b. Credit to Accounts Receivable.

c. Debit to Accounts Receivable.

d. Debit to Allowance for Uncollectible Accounts.

 

 

88. Allowance for Uncollectible Accounts is:

a. An expense account.

b. A contra asset account.

c. A contra revenue account.

d. A liability account.

 

 

89. At the end of 2015, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.  Murray State’s adjustment on December 31, 2015, to record its estimated uncollectible accounts included a:

a. Credit to Allowance for Uncollectible Accounts of $12,000.

b. Debit to Bad Debt Expense of $7,500.

c. Credit to Allowance for Uncollectible Accounts of $7,500.

d. Both b and c.

 

 

90. At the end of 2015, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (debit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.  Murray State’s adjustment on December 31, 2015, to record its estimated uncollectible accounts included a:

a. Credit to Allowance for Uncollectible Accounts of $12,000.

b. Debit to Bad Debt Expense of $16,500.

c. Credit to Allowance for Uncollectible Accounts of $16,500.

d. Both b and c.

 

 

91. Richard LLC accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation?

a. Increases assets and increases stockholders’ equity.

b. Decreases assets and decreases stockholders’ equity.

c. Decreases assets and decreases liabilities.

d. No effect on the accounting equation.

 

 

92. On December 31, 2015, Mark Inc. estimates future bad debts to be $6,500. The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment. What adjustment should Mark Inc. record for the estimated bad debts on December 31, 2015?

a. Debit Bad Debt Expense, $6,500; credit Allowance for Uncollectible Accounts, $6,500.

b. Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000.

c. Debit Allowance for Uncollectible Accounts, $9,000; credit Bad Debt Expense, $9,000.

d. Debit Bad Debt Expense, $9,000; credit Allowance for Uncollectible Accounts, $9,000.

 

 

93. Suppose that the balance of a company’s Allowance for Uncollectible Accounts was $6,200 (credit) at the end of 2015, prior to any adjustments. The company estimated that the total of uncollectible accounts in its accounts receivable was $44,300 at the end of 2015. What amount of bad debt expense would appear in the company’s 2015 income statement?

a. $38,100.

b. $105,700.

c. $33,000.

d. $50,500.

 

 

94. On December 31, 2015, Andy Inc. has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment. Andy Inc. also has the following information for its accounts receivable and the estimated percentages of bad debts for different past-due amounts:

Age Group (days past due)	Accounts Receivable	Estimated Percent Uncollectible
0-30	$50,000	5%
31-60	$20,000	10%
61-90	$10,000	20%

What is the amount of bad debt expense to be reported on Andy Inc.’s financial statements for 2015?

a. $6,500.

b. $1,500.

c. $5,000.

d. $8,000.