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Exam 6: Reporting and Interpreting Sales Revenue,receivables,and Cash

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Question 31

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Dillon Company uses the allowance method to account for bad debts.The entry to write off a bad account (one that will never be collected) should be:

A)
B)
C)
D)

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

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Question 32

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Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection?

A) Current assets will remain the same.
B) Gross profit will decrease $200.
C) Accounts receivable will decrease $9,800.
D) Net sales will increase $9,800.

E) A) and D)
F) All of the above

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Question 33

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Select the appropriate answer choice A through G (listed below)to correspond with the following numbered items on a bank reconciliation.There may be more than one letter selection for the numbered item. Items: A.Checks written during June that had not cleared the bank by June 30. B.Bank service charges for June,which were not known until the June 30th bank statement arrived. C.Deposit made on June 30 that did not reach the bank until July 1. D.Upon reviewing the company's cash receipts book after June 30,it was discovered the accounting clerk had neglected to post one receipt to the cash account. E.The bank statement reported a "NSF check" during June. F.The bank incorrectly deducted the check of another company to the bank account during June. G.The company was paid interest on its account by the bank.

Gross profit decreases when sales discounts increase.

Which of the following transactions will result in a decrease in the receivables turnover ratio?

The accounts receivable aging schedule determines the dollar amount of uncollectible accounts receivable at year-end;this dollar amount of uncollectible accounts receivable is the bad debt expense that is recorded for the year regardless of the existing balance in the allowance for doubtful accounts.

Which of the following statements is correct?

Which of the following is not a component of the gross profit calculation?

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

The Ward Company has provided the following information: • Net sales totaled $750,000. • Beginning net accounts receivable was $65,000. • Ending net accounts receivable was $85,000. - What was Ward's average collection period? (Use 365 days a year)

Which of the following transactions will result in an increase in the receivables turnover ratio?

Credit card discounts are reported as operating expenses on an income statement.

Sales discounts are deducted from sales in the calculation of net sales.

Clark Company estimated the net realizable value of its accounts receivable as of December 31,2019,to be $165,000,based on an aging schedule of accounts receivable.Clark has also provided the following information: • The accounts receivable balance on December 31,2019 was $175,000. • Uncollectible accounts receivable written off during 2019 totaled $12,000. • The allowance for doubtful accounts balance on January 1,2019 was $15,000. How much is Clark's 2019 bad debt expense?

Which of the following accounts is not a contra-revenue account?

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance.Record your answer to the left of each account by entering either Dr or Cr.

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15,n/30.Which of the following is not correct?

Josephine sells organic,GMO-free pecans in the United States,Canada,and Europe.Recently Josephine made the following two sales.Prepare the entries required on Josephine's books to record these sales. February Sold 3,500 pounds of pecans on account to Tinder,a German company.Tinder agreed to pay €14,000.On the sale date,each Euro was worth US$1.35. March Sold 4,000 pounds of pecans on account to Charlie Co. ,an English company.Charlie agreed to pay £24,800.On the sale date,each British pound was worth US$.98.

The journal entry to record bad debt expense is made during the year in which it is determined that a particular receivable is uncollectible,regardless of the year of sale.

When using an allowance for doubtful accounts and a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces net income.