FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Reporting and Analyzing Receivables

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following is not true regarding a credit card expense?

A) Credit card expense may be classified as a "discount" deducted from sales in the calculation of net sales.
B) Credit card expense may be classified as a selling expense.
C) Credit card expense may be classified as an administrative expense.
D) Credit card expense is not recorded by the seller.
E) Credit card expense is a fee the seller pays for services provided by the card company.

F) A) and C)
G) D) and E)

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

Woods Co.uses a perpetual inventory system,and accepts the World Express credit card from its customers.World Express charges a 3.5% service fee and all credit card receipts deposited are credited to the company account on the day of deposit.On February 28,Woods sold $24,000 worth of merchandise to customers (that had cost $14,400)using the World Express charge card.Prepare the journal entries to record February 28 sales.

Correct Answer

verified

Show Answer

Question 63

Essay

Review LaterAdd Note

Mercks uses the perpetual inventory system,and accepts the Discovery credit card for credit card sales.Discovery charges Mercks a 3% fee,and all credit card receipts deposited are credited to the company account on the day of deposit.Prepare journal entries to record the following transaction.

Describe how accounts receivable arise and how they accounted for,including the use of a subsidiary ledger and an allowance account.

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

A maker who dishonors a note is one who does not pay it at maturity.

When using the allowance method of accounting for uncollectible accounts,the recovery of a bad debt would be recorded as a debit to Cash and a credit to Bad Debts Expense.

The maturity date of a note receivable:

On October 12 of the prior year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Unexpectedly,on March 1 of the current year,the customer paid the account in full.Assuming the direct write-off method is used to account for bad debts,what effect will this recovery have on the company's net income and total assets?

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

On October 12 of the current year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Assuming the direct write-off method is used to account for bad debts,what effect will this write-off have on the company's net income and total assets?

Prepare general journal entries for the following transactions of Norman Company,assuming they use the allowance method to account for uncollectible accounts.

Majesty Productions accepted a $7,200,120-day,6% note from Swartz Studio on March 1.On the date the note matures,Swartz is unable to pay,but Majesty intends to continue collection efforts.What entry should Majesty record on the maturity date for this dishonored note?

Since pledged accounts receivables only serve as collateral for a loan and are not sold,it is not necessary to disclose the pledging.

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record this sale transaction would be:

A company had net sales of $550,000 and an average accounts receivable of $110,000.Its accounts receivable turnover equals 5.0.

On May 31,Cray has $375,800 of accounts receivable.Cray uses the allowance method of accounting for bad debts and has an existing credit balance in the allowance for doubtful accounts of $14,250. 1.Prepare journal entries to record the following selected May transactions.The company uses the perpetual inventory system. 2.Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its May 31 balance sheet. a.Sold $415,200 of merchandise (that cost $249,000)to customers on credit. b.Received $465,800 cash in payment of accounts receivable. c.Wrote off $15,800 of uncollectible accounts receivable. d.In adjusting the accounts on May 31,its fiscal year-end,the company estimated that 4.0% of accounts receivable will be uncollectible.

The maturity date of a note refers to the date the note must be repaid.

Installment Accounts Receivable are amounts owed by customers where payment is required in periodic amounts over time.

White Company allows customers to make purchases on credit.The terms of all credit sales are 2/10,n/30,and all sales are recorded at the gross price.Other customers can use a bank credit card where the bank deducts a 4% service charge for credit card sales and credits the bank account of White immediately when credit card receipts are deposited.White uses the perpetual inventory method.Prepare journal entries to record the following selected transactions and events.