Accounting I – Week 6

• Question 1

1 out of 1 points

	Teller purchased merchandise from All-Com on October 17 of the current year, and All-Com accepted Teller’s $4,800, 90-day, 10% note. What entry should All-Com make on December 31 to record the accrued interest on the note?
	Selected Answer: debit interest receivable $100; credit interest revenue $100   Response Feedback: Correct! All-Com should make this entry on December 31 to record the accrued interest on the note: debit interest receivable $100; credit interest revenue $100.

• Question 2

1 out of 1 points

	Accounts receivable occur from credit sales to customers.
	Selected Answer: True   Response Feedback: Correct! To record a sale where the customer gives credit, the journal entry is a debit to accounts receivable, as current assets, and a credit to sales.

• Question 3

1 out of 1 points

	A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts: Accounts receivable                                       $355,000 debit Allowance for uncollectable accounts                                     $500 credit Net sales                                                                                             $800,000 credit All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What amount should be debited to bad debts expense when the year-end adjusting entry is prepared?
	Selected Answer: $4,800   Response Feedback: Correct! $800,000 * 0.006 = $4,800. This amount should be debited to bad debts expenses when the year-end adjusting entry is prepared.

• Question 4

1 out of 1 points

	A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the ______.
	Selected Answer: aging of accounts receivable method   Response Feedback: Correct! A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the aging of accounts receivable method.

• Question 5

1 out of 1 points

	Sellers allow customers to use credit cards ______.
	Selected Answer: all of the options are reasons for credit card use   Response Feedback: Correct! Sellers allow customers to use credit cards because it avoids having to evaluate the customers’ credit, it lessens the risk of default on payment, and it speeds the receipt of cash.

• Question 6

0 out of 1 points

	The maturity date of a note receivable is figured on a _____.
	Selected Answer: 12-month year   Response Feedback: Try again. A 12-month year and a 360-day year are basically the same thing, but the official calculation of a note receivable and its corresponding accounts payable is based on a 360-day year. Review the Notes Receivable, Interest Computation section in Chapter 9 of the textbook for more information.

• Question 7

1 out of 1 points

	When using the allowance method of accounting for uncollectible accounts, the entry to write off Harold’s uncollectible account is a debit to allowance for doubtful accounts and a credit to accounts receivable – Harold.
	Selected Answer: True   Response Feedback: Correct! The allowance for doubtful accounts is a contra account to accounts receivables.

• Question 8

1 out of 1 points

	TechnoComm’s customer, RDA, paid off an $8,300 balance on its account receivable. TechnoComm should record the transaction as a debit to accounts receivable – RDA and a credit to cash.
	Selected Answer: False   Response Feedback: Correct! A payment of an accounts receivable is a debit to cash and a credit to accounts receivable. This journal entry would increase cash and decrease the accounts receivable, which the customer is reducing with the payment of cash.

• Question 9

1 out of 1 points

	Teller purchased merchandise from All-Tech on October 17 of the current year, and All-Tech accepted Teller’s $4,800, 90-day, 10% note. What entry should All-Tech make on January 15 of the next year when the note is paid?
	Selected Answer: debit cash $4,920; credit interest revenue $20; credit interest receivable $100; credit notes receivable $4,800 1   Response Feedback: Correct! The entry All-Tech should make on January 15 of the next year when the note is paid is debit cash $4,920; credit interest revenue $20; credit interest receivable $100; and credit notes receivable $4,800.

• Question 10

1 out of 1 points

	The allowance method based on the idea that a given percent of a company’s credit sales for the period are uncollectible is _____.
	Selected Answer: the percentage of sales method   Response Feedback: Correct! The allowance method based on the idea that a given percent of a company’s credit sales for the period are uncollectible is the percent of sales method.