Q&A Hero

Q: If merchandise sold on account is damaged in shipment, the seller may inform the customer of a reduction to the customer’s account by issuing a a. sales invoice b. purchase invoice c. credit memo d. debit memo

Q: Erickson Company had a $400 credit balance in Allowance for Doubtful Accounts at December 31, 2012, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:Instructions(a) Prepare the adjusting entry on December 31, 2012, to recognize bad debts expense.(b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $400 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts.

Q: Which term is applied to the excess of revenue from sales over the cost of merchandise sold? a. gross profit b. income from operations c. net income d. gross sales

Q: Prepare journal entries to record the following transactions entered into by the Merando Company:

Q: An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct.InstructionsPrepare the correcting entries.

Q: For a buyer using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a a. debit to Cost of Merchandise Sold b. credit to Accounts Payable c. credit to Merchandise Inventory d. credit to Sales

Q: If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as a. FOB shipping point b. FOB destination c. FOB n/30 d. FOB buyer

Q: On December 31, 2011, when its Allowance for Doubtful Accounts had a credit balance of $1,500, Leeds Company estimates that 7% of its accounts receivable balance of $95,000 will become uncollectible. On March 3, 2012, Leeds Company determined that Megan Jost’s account of $950 was uncollectible. On May 15, 2012, Jost paid the amount previously written off.InstructionsPrepare the journal entries for December 31, 2011, March 3, 2012 and May 15, 2012.

Q: President's salaries, depreciation of office furniture, and office supplies are a. selling expenses b. miscellaneous expenses c. administrative expenses d. inventory expenses

Q: The percentage of receivables approach to estimating bad debts expense is used by Hayes Company. On February 28, the firm had accounts receivable in the amount of $555,000 and Allowance for Doubtful Accounts had a credit balance of $370 before adjustment. Net credit sales for February amounted to $3,000,000. The credit manager estimated that uncollectible accounts would amount to 5% of accounts receivable. On March 10, an accounts receivable from Mark Dole for $2,100 was determined to be uncollectible and written off. However, on March 31, Dole received an inheritance and immediately paid her past due account in full.(a) Prepare the journal entries made by Hayes Company on the following dates:1. February 282. March 103. March 31(b) Assume no other transactions occurred that affected the allowance account during March. Determine the balance of Allowance for Doubtful Accounts at March 31.

Q: Merchandise is ordered on November 10; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on November 13; the merchandise is received by the buyer on November 18; and the entry is made in the buyer's accounts on November 20. The credit period begins with what date? a. November 10 b. November 13 c. November 18 d. November 20

Q: Hess Computer Store has credit sales of $450,000 in 2011 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2011, $130,000 of accounts receivable remain uncollected. The credit manager of Hess prepared an aging schedule of accounts receivable and estimates that $6,500 will prove to be uncollectible.On March 4, 2012 the credit manager authorizes a write-off of the $1,000 balance owed by A. Myers.Instructions(a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2011.(b) Show the balance sheet presentation of accounts receivable on December 31, 2011.(c) On March 4, before the write-off, assume the balance of Accounts Receivable account is $145,000 and the balance of Allowance for Doubtful Accounts is a credit of $4,000. Make the appropriate entry to record the write off of the Myers account. Also show the balance sheet presentation of accounts receivable before and after the write-off.

Q: A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to a. $12,670 b. $9,070 c. $8,420 d. $17,230

Q: Hachey Company has accounts receivable of $85,100 at March 31, 2012. An analysis of the accounts shows these amounts.Credit terms are 2/10, n/30. At March 31, 2012, there is a $2,500 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage of receivables basis for estimating uncollectible accounts. The company's estimates of bad debts are as shown belowInstructions(a) Determine the total estimated uncollectibles.(b) Prepare the adjusting entry at March 31, 2012, to record bad debts expense.

Q: Under a periodic inventory system, closing entries will include a. debits to Sales, Purchases Returns and Allowances, and Purchases Discounts b. credits to Purchases and Sales Discounts c. adjustments to Merchandise Inventory to match physical inventory d. All of these choices

Q: Compute the missing amount for each of the following notes:

Q: Bradford Company had sales of $700,000 for the year. The total assets at the beginning of the year were $240,000, and the total assets at the end of the year were $280,000. The asset turnover is (round answer to two decimal places) a. 2.69 b. 0.40 c. 2.92 d. 0.34

Q: Record the following transactions in general journal form for the Newell Company.

Q: Using the following information, determine the cost of merchandise sold.Purchases$32,000 Selling expenses$ 960Merchandise inventory, September 15,700 Merchandise inventory, September 306,370Administrative expenses910 Sales63,000Rent revenue1,200 Interest expense1,040 a. $32,400 b. $32,670 c. $31,330 d. $38,370

Q: Grey Boat Company often requires customers to sign promissory notes for major credit purchases. Journalize the following transactions for Grey Boat Company.

Q: Bountiful Company had sales of $650,000 and cost of merchandise sold of $200,000 during the year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Compute the asset turnover. a. 3.00 b. 3.80 c. 0.29 d. 0.26

Q: compute the maturity value as indicated for each of the following notes receivable. 1>an $6,000, 6%, 3-month note dated april 20. maturity value $____________. 2>a $14,000, 9%, 72-day note dated march 5. maturity value $____________. 3>a $12,000, 5%, 30-day note dated september 10. maturity value $____________. 4>a $9,000, 7%, 6-month note dated november 15. maturity value $____________.

Q: Using a perpetual inventory system, the entry to journalize the purchase of $30,000 of merchandise on account would include a a. debit to Accounts Payable b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Sales

Q: great plains supply co. has the following transactions related to notes receivable during the last 2 months of the year.InstructionsJournalize the transactions for Great Plains Supply Co.

Q: These transaction took place for Sanders Co.instructionsrecord the transactions in general journal.

Q: Kaden Co. sells merchandise on account to Jase Co. for $9,600. The invoice is dated July 15 with terms of 1/15, net 45. If Jase Co. chooses not to take the discount, by when should the payment be made? a. July 30 b. August 29 c. August 15 d. July 25

Q: presented here is basic financial information (in millions) from the annual reports of nike and adidas.instructionscalculate the receivables turnover ratio and average collection period for both companies. comment on the difference in their collection experiences.

Q: The statement of owner's equity shows a. only net income and beginning and ending capital b. only total assets and beginning and ending capital c. only net income, beginning capital, and withdrawals d. beginning and ending capital, all the changes in the owner's capital as a result of net income (loss), and withdrawals

Q: the following information is available from the annual reports of nite and day companies.Instructions(a) Based on the preceding information, compute the following for each company:1. Receivables turnover ratio. (Assume all sales were credit sales.)2. Average collection period.(b) What conclusion concerning the management of accounts receivable can be drawn from these data?

Q: The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a a. multiple-step income statement b. revenue statement c. report-form income statement d. single-step income statement

Q: Shafer Company has the following accounts in its general ledger at July 31: Accounts Receivable $49,000 and Allowance for Doubtful Accounts $3,400. During August, the following transactions occurred.Instructions(a) Journalize the transactions.(b) Indicate the statement presentation of service charges.

Q: Cumberland Co. sells $2,000 of merchandise to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following is the correct journal entry(ies)? a. debit Cash, $2,000; credit Merchandise Inventory, $2,000 b. debit Cash, $2,000; credit Sales, $2,000; and debit Cost of Merchandise Sold, $1,250; credit Merchandise Inventory, $1,250 c. debit Cash, $1,250; credit Sales, $1,250 d. debit Accounts Receivable, $2,000; credit Sales, $2,000; and debit Cost of Merchandise Sold, $1,250; credit Merchandise Inventory, $1,250

Q: two accounting problems associated with accounts receivable are (1) ______________ and (2) ______________ accounts receivable.

Q: When purchases of merchandise are made on account with a perpetual inventory system, the transaction is journalized with which entry? a. debit Accounts Payable; credit Merchandise Inventory b. debit Merchandise Inventory; credit Accounts Payable c. debit Merchandise Inventory; credit Cash Discounts d. debit Merchandise Inventory; credit Purchases

Q: notes and accounts receivable that result from sales transactions are often called ______________ receivables.

Q: when credit sales are made, _________________ expense is considered a normal and necessary risk of doing business on a credit basis.

Q: Jacob Co. sells merchandise on account to Isaiah Co. for $9,700. The invoice is dated on May 1 with terms of 1/15, net 45. What is the discount, and up to what date must the invoice be paid in order for the buyer to take advantage of the discount? a. $194, May 15 b. $194, May 16 c. $97, May 15 d. $97, May 16

Q: the net amount expected to be collected in cash from receivables is the _____________.

Q: When a buyer returns merchandise purchased for cash, the buyer will journalize the transaction as a a. debit to Merchandise Inventory and a credit to Cash b. debit to Cash and a credit to Merchandise Inventory c. debit to Cash and a credit to Sales d. debit to Sales and a credit to Accounts Payable

Q: when the allowance method is used to account for uncollectible accounts, ____________ is debited when an account is determined to be uncollectible.

Q: Under the perpetual inventory system, all purchases of merchandise are debited to the account a. Merchandise Inventory b. Cost of Merchandise Sold c. Cost of Merchandise Available for Sale d. Purchases

Q: Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the merchandise inventory account? a. $21,000 b. $20,580 c. $30,000 d. $29,400

Q: allowance for doubtful accounts is a _____________ account which is ______________ from accounts receivable on the balance sheet.

Q: the two methods used in accounting for uncollectible accounts are the ____________ method and the ______________ method.

Q: In a merchandising business, operating income plus operating expenses is equal to a. cost of merchandise sold b. cost of merchandise available for sale c. sales d. gross profit

Q: Using a perpetual inventory system, the journal entry for the sale of merchandise on account includes a a. debit to Sales b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Accounts Receivable

Q: the _________________ basis of estimating uncollectibles normally results in the best approximation of _______________ value.

Q: In recording the cost of merchandise sold based on data available from perpetual inventory records, the journal entry is a a. debit to Cost of Merchandise Sold and a credit to Sales b. debit to Cost of Merchandise Sold and a credit to Merchandise Inventory c. debit to Merchandise Inventory and a credit to Cost of Merchandise Sold d. debit to Accounts Receivable and a credit to Merchandise Inventory

Q: a note that is not paid on the maturity date is said to be ______________.

Q: Which of the following accounts will not be found in the Cost of Merchandise Sold section of the income statement for a company using the periodic inventory method? a. Purchases b. Freight In c. Selling Expense d. Merchandise Inventory

Q: collection of a note receivable will result in a credit to ______________ for the face value of the note and a credit to ______________.

Q: a 75-day note receivable dated july 5 would mature on ______________.

Q: Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately a. 2% b. 24% c. 20% d. 36%

Q: The primary difference between a periodic and perpetual inventory system is that a periodic system a. determines the inventory on hand only at the end of the accounting period b. keeps a record showing the inventory on hand at all times c. provides an easy means to determine inventory shrinkage d. records the cost of the sale on the date the sale is made

Q: the ratio used to assess the liquidity of accounts receivable is the ______________ ratio.

Q: Under the periodic inventory system, the journal entry for the purchase of merchandise inventory will include a debit to a. Merchandise Inventory b. Purchases c. Accounts Payable d. Cost of Merchandise Purchased

Q: a concentration of ______________ is a threat of nonpayment from a single customer or class of customers.

Q: Which of the following accounts should be closed at the end of the fiscal year? a. Merchandise Inventory b. Accumulated Depreciation c. Owner’s Capital d. Cost of Merchandise Sold

Q: match the items below by entering the appropriate code letter in the space provided.A. Aging the accounts receivable B. Direct write-off method C. Obligation Due D. Trade receivables E. Receivables turnover ratio F. Percentage of receivables basisG. Promissory noteH. Dishonored noteI. Cash net realizable valueJ. Credit card sales

Q: a finance company or bank that purchases receivables from businesses is known as a ______________.

Q: Which of the following items should not be included in the cost of ending merchandise inventory? a. purchased units in transit, shipped FOB shipping point b. purchased units in transit, shipped FOB destination c. units on hand in the warehouse d. sold units in transit, not invoiced, and shipped FOB destination

Q: Gross profit is equal to a. sales plus cost of merchandise sold b. sales plus selling expenses c. sales less selling expenses d. sales less cost of merchandise sold

Q: two methods can be used in accounting for uncollectible accounts. identify and contrast the two methods. how do the methods differ regarding the time periods in which bad debts expense is recognized?

Q: Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make for this sale? a. Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000 b. Accounts Receivable—Stanton, debit $19,600; Sales, credit $19,600, andAccounts Receivable—Stanton, debit $500; Cash, credit $500 c. Accounts Receivable—Stanton, debit $20,100; Sales, credit $20,100 d. Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000, andDelivery Expense, debit $500; Cash, credit $500

Q: your roommate is uncertain about the advantages of a promissory note. compare the advantages of a note receivable with those of an account receivable.

Q: jenkins company dishonors a note at maturity. what are the options available to the lender?

Q: Which account is not classified as a selling expense? a. Sales Salaries b. Delivery Expense c. Cost of Merchandise Sold d. Advertising Expense

Q: an article in the wall street journal indicated that companies are selling receivables at a record rate. why do companies sell their receivables?

Q: CompanyNameNet CreditSalesBeginningNet ReceivablesEndingNet ReceivablesBrown$180,000$ 5,000$30,000Pink$400,000$52,000$42,000Yellow$ 75,000$ 5,400$ 5,800(a)which company is doing the best job of managing its accounts receivable? why? be sure to support your answer with computations.(b)what are your concerns about these companies?

Q: A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period? a. $30,000 b. $24,900 c. $29,400 d. $24,990

Q: your friend mark has opened an office supply store. he will extend open credit to local businesses and is concerned about potential bad debts. what can mark do to reduce potential bad debts?

Q: What type of company would normally offer trade discounts to its customers? a. service company b. retailer c. wholesaler d. online retailer

Q: banks that issue credit cards generally charge retailers a fee of 2 to 4% of the amount of sale. list reasons why companies are willing to pay these fees.

Q: When the perpetual inventory system is used, the inventory sold is debited to a. Supplies Expense b. Cost of Merchandise Sold c. Merchandise Inventory d. Sales

Q: customer purchases using credit cards are a significant source of revenue for many retailers. from the standpoint of a retailer, briefly discuss some advantages and disadvantages of a retail store having its own credit card as opposed to accepting one of the national credit cards (e.g., visa or mastercard).

Q: Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as a. selling expenses b. general expenses c. other expenses d. administrative expenses

Q: two brothers, a small book publishing company, wrote off the debt of the learning place, and the academy of basic education, both small private schools, after it determined that the schools were facing serious financial difficulty. no notice of the action was sent to the schools; two brothers simply stopped sending bills. nearly a year later, the learning place was given a large endowment and a government grant. the resulting publicity brought the school to the attention of two brothers, which immediately reinstated the account, and sent a new bill to the school, including interest for the entire time the debt was outstanding. no further action was taken regarding the academy of basic education, which was still operational.Required:Did Two Brothers act ethically in reinstating the debt of one client, and not the other? Explain.

Q: Even when special journals are used, closing journal entries are recorded in the general journal. a. True b. False

Q: schmidt company received a letter from deborah stine, a customer. deborah had purchased $325 worth of clothing from schmidt on credit. she has made two payments of $50 each. she has missed the last two payments, and has received a collection letter from schmidt. her total debt presently, with interest and late fees, is $2513.deborah sent a letter to schmidt in which she asked for her debt to be forgiven. she said she had heard that companies make allowances for accounts they are doubtful about collecting, and that schmidt certainly should have been doubtful about herthat as a college student she had changed her major three times. she also said that she could not enjoy a high quality of life when making such high payments, but that she didn't want to be embarrassed by bill collectors, either. she especially didn't want her parents to find out that she had not paid her debts. having schmidt write off her account seemed to her the best solution in the circumstances. she added that the clothes she bought at schmidt were among the best she had ever owned, and that she "told everybody" that schmidt was definitely the best place to get clothes.Required:You are the accounting manager for Schmidt. Write a short letter to Deborah explaining why her debt cannot be written off.

Q: Services provided on account are recorded in the revenue journal. a. True b. False