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Chapter 8 wiley practice

# Chapter 8 wiley practice - Chapter 8 A receivable that is...

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Chapter 8 A receivable that is evidenced by a formal instrument and that normally requires the payment of interest is: a classified receivable. an account receivable. a trade receivable. a note receivable. Kersee Company on June 15 sells merchandise on account to Soo Eng Co. for \$1,000, terms 2/10, n/30. On June 20 Eng Co. returns merchandise worth \$300 to Kersee Company. On June 24 payment is received from Eng Co. for the balance due. What is the amount of cash received? (\$1,000-\$300) x 2% = \$686 Accounts and notes receivable are reported in the current assets section of the balance sheet at: lower-of-cost-or-market value. cash (net) realizable value. net book value. invoice cost. Net credit sales for the month are \$800,000. The accounts receivable balance is \$160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage of receivables basis. If the Allowance for Doubtful Accounts has a credit balance of \$5,000 before adjustment, what is the balance after adjustment? \$7,000 \$17,000 \$31,000 \$12,000 accounts receivable \$160,000 x allowance as 7.5% In 2010 Patterson Wholesale Company had net credit sales of \$750,000. On January 1, 2010, Allowance for Doubtful Accounts had a credit balance of \$18,000. During 2010, \$30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was \$200,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2010? \$75,000 \$32,000 \$30,000 \$20,000 An analysis and aging of the accounts receivable of Raja Company at December 31 reveal these data: Accounts Receivable \$800,000 Allowance for doubtful accounts per books before adjustment (credit) 50,000

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Amounts expected to become uncollectible 65,000 What is the cash realizable value of the accounts receivable at December 31, after adjustment? \$685,000 \$750,000 \$800,000 \$735,000 \$800,000-\$65,000 = \$735,000 Which of these statements about promissory notes is incorrect ? A promissory note is more liquid than an account receivable. A promissory note is not a negotiable instrument. The party making the promise to pay is called the maker. The party to whom payment is to be made is called the payee. Michael Co. accepts a \$1,000, 3-month, 12% promissory note in settlement of an account with Tani Co. The entry to record this transaction is: Notes Receivable 1,030 Accounts Receivable Notes Receivable 1,020 Accounts Receivable Notes Receivable 1,000 Sales Notes Receivable 1,000 Accounts Receivable Schleis Co. holds Murphy Inc.'s \$10,000, 120-day, 9% note. The entry made by Schleis Co. when the note is collected, assuming no interest has previously been accrued, is: Accounts Receivable 10,300 Notes Receivable Interest Revenue Cash 10,300 Notes Receivable Interest Revenue Cash 10,300 Notes Receivable Cash 10,000 Notes Receivable Notes receivable = (\$10,000 x 120days/360days x 9%) = (\$10,000 / 3 x 9%) = \$300 If a company is concerned about lending money to a risky customer, it could do any of the following except :
require the customer to provide a letter of credit or a bank guarantee.

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Chapter 8 wiley practice - Chapter 8 A receivable that is...

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