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Exam 5: Receivables and Sales

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Question 21

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On August 12,a company provides services on account to a customer for $3,000.However,on August 16,the customer is not completely satisfied with the service and the company grants an allowance on the amount owed of $400.On August 20,the customer makes full payment of the balance owed,excluding the allowance.Record the services provided on August 12,the sales allowance on August 16,and the cash collection on August 20.

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Question 22

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Garber Plumbers offers a 20% trade discount when providing $2,000 or more of plumbing services to its customers.In March 2015,Garber provided $4,000 of plumbing services to Red Oak,Inc.and $1,500 of services to Cyril,Inc.Each of these customers was granted credit terms of 2/10,net 30.If both customers paid for the plumbing services within the discount period,what was the net revenues figure for these two transactions?

A) $5,500.
B) $4,312.
C) $4,486.
D) $4,606.

E) C) and D)
F) B) and D)

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Question 23

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At the end of the year,a company has a balance in Allowance for Uncollectible Accounts of $2,000 (debit)before any year-end adjustment.The balance of Accounts Receivable is $180,000.The company estimates that 5% of accounts receivable will not be collected over the next year.Record the adjustment for uncollectible accounts.

Tom's Textiles shipped the wrong material to a customer,who refused to accept the order.This is an example of a:

McConnell's Bakeries had the following balances on December 31,2015,before any adjustment: Accounts Receivable = $100,000;Allowance for Uncollectible Accounts = $4,100 (credit) .McConnell's estimates uncollectible accounts based on an aging of accounts receivable as shown below: What amount of bad debt expense did McConnell's record in its December 31,2015,adjustment to the allowance account?

Notes receivable are assets and are reported in the balance sheet.

Gershwin Wallcovering Inc.shipped the wrong shade of paint to a customer.The customer agreed to keep the paint upon being offered a 15% price reduction.Gershwin would record this reduction by crediting Accounts Receivable and debiting:

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

On May 1,2015,a company lends $100,000 to one of its main suppliers and accepts a 12-month,6% note.Record the acceptance of the note on May 1,2015,the adjustment on December 31,2015,and the cash collection on May 1,2016.

On March 17,Jackal Lumber sold building materials to Fredo Limited for $15,000 with terms of 3/10,net 20.What amount did Jackal record as revenue on March 25 when Fredo paid for the building materials?

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

Gershwin Wallcovering Inc.shipped the wrong shade of paint to a customer.The customer agreed to keep the paint upon being offered a 15% price reduction.The price reduction is an example of a:

The direct write-off method is used for tax purposes but is generally not permitted for financial reporting.

Tom's Textiles shipped the wrong material to a customer,who refused to accept the order.Upon receipt of the material,Tom's would credit Accounts Receivable and debit:

Suppose Casey Title Company normally charges $500 for services related to selling a house.As part of a summer special,Casey offers customers a trade discount of 20%.On July 9,Linda Holmes uses the services of Casey and pays cash equal to the discounted price.Record the revenue earned by Casey on July 9.

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?

At the end of the year,a company has a balance in Allowance for Uncollectible Accounts of $2,000 (credit)before any year-end adjustment.The balance of Accounts Receivable is $180,000.The company estimates that 5% of accounts receivable will not be collected over the next year.Record the adjustment for uncollectible accounts.

A company uses the allowance method to account for uncollectible accounts.During the year,the company has actual bad debts of $25,000.Record the write-off of the uncollectible accounts.

The direct write-off method is generally not permitted for financial reporting purposes because:

A credit balance in the Allowance for Uncollectible Accounts before adjustment indicates that last year's estimate of uncollectible accounts may have been too high.