Quiz 7 indivudual solution fall 2015 PDF

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ACC 203

Quiz 7

11 pts

Individual

14. The accounts receivable turnover is calculated by: A. Dividing net sales by average accounts receivable. B. Dividing net sales by average accounts receivable and multiplying by 365. C. Dividing average accounts receivable by net sales. D. Dividing average accounts receivable by net sales and multiplying by 365. E. Dividing net income by average accounts receivable.

15. On September 1, a customer's account balance of $2,300 was deemed to be uncollectible. What entry should be recorded on September 1 to record the writeoff assuming the company uses the allowance method? A. Debit Bad Debts Expense $2,300; credit Accounts Receivable $2,300. ONLY USE BAD DEBT TO DO THE YEAR END ADJUSTING ENTRY. B. Debit Allowance for Doubtful Accounts $2,300; credit Bad Debts Expense $2,300. AR ALLOWANCE C. Debit Allowance for Doubtful Accounts $2,300; credit Accounts Receivable (AR) $2,300. 2,300 2,300 D. Debit Accounts Receivable $2,300; credit Allowance for Doubtful Accounts $2,300. YOU WANT TO MAKE THE AR SMALLER. THAT TAKES A CREDIT TO AR.

Use these facts for the next two questions: On September 1, 2013, Your Company lent $12,000 to Ace Company. It is a one year loan and bears interest at 5%.

16. Select the entry that shows the effect of the December 31, 2013 adjusting entry to accrue interest on the financial statements. 120 = 200 or something close depending on your method.

D.

Cash Flow NA

Assets IR 200

Liabilities

Equity

Revenues

200

200

Expenses

Net income 200

($12,000 * .05) ÷ 360 *

17. Give the journal entries to reflect the repayment of the loan AND accrued interest on August 31, 2014.Interest was accrued prior to this entry. ($12,000 * .05) ÷ 360 * 240 = 400 or something like that for the rest of the interest depending on your method. So total interest = 360 Date A.

Account Titles

Debit 12,600

Cash Note Receivable Interest Receivable

Credit 12,000 600

18. D 7.72 A Company had net sales of $23,000,000. Its beginning balance in accounts receivables was $2,530,000. Its ending balance in accounts receivables was $3,430,000. Calculate its accounts receivable turnover. Round to two decimals. Average accounts receivable =( BB + EB) ÷ 2 = ($2,530 million +$3,430 million)÷ 2 = $2,980 million Accounts receivable turnover = Net sales ÷ Average accounts receivable, $23,000 ÷ $2,980 = 7.72

19. A company has $90,000 in credit sales for the year and it uses the allowance method to account for bad debt expense. Experience suggests that 6% of credit sales are uncollectible. Record the bad debt expense. AR C.

Allowance 5,400

Bad debt expense 5,400

20.

Recording the interest Your Corporation has earned but not yet received is best describes as which of these events?

A. Claims exchange

B. Asset exchange

C. Asset use

D. Asset source

21. Your Company uses the allowance method of accounting for uncollectible accounts. In February 2014, one of Your Company customers failed to pay his $2,500 account and IT was written off. On April 4, 2014, this customer paid you the $2,500. When you record the cash, you will credit AR 2,300

A.

Revenue

B. Allowance for doubtful accounts

C. Accounts Receivable

CASH 2,300

D. Accounts Payable

22. On December 31, 2014, Your Corporation estimated that 3% of its credit sales of $215,000 would be uncollectible. It uses the allowance method of accounting for uncollectible accounts. Which of the following answers correctly shows the effect of the December 31, 2014 adjusting entry for uncollectible accounts on the financial statements of the Your Corporation? A. B. C. D.

Cash Flow OA NA OA NA

Assets 6,450 -6,450 -6,450 -6,450

Liabilities -6,450 6,450 NA NA

Equity NA NA -6,450 -6,450

Revenues NA NA NA NA

Expenses NA NA 6,450 6,450

Net income NA NA -6,450 -6,450

Your Company provided $25,000 of services to a customer who paid with a credit card. The credit card company charges a 3% service charge. This transaction would

23.

A. increase Retained Earnings by $24,250. B. increase assets by $25,000. 24,500 C. decrease expenses by $750. increase D. increase cash flows for operations by $25,00024,500 Cash Flow OA

Assets 24,250

Liabilities

Equity 24,250

Revenues 25,000

24. Sellers allow customers to use credit cards: A. To avoid having to evaluate a customer's credit standing for each sale. B. To lessen the risk of extending credit to customers who cannot pay. C. To speed up receipt of cash from the credit sale. D. To increase total sales volume. E. All of these Discussed in slides and book.

Expenses 750

Net income 24,250...