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"Table 5-1 Top cap, Inc. Unadjusted Trial Balanc...

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"Table 5-1 Top cap, Inc. Unadjusted Trial Balance Year 5 Sales $600,000 Ending Accounts Receivable 180,000 Ending Allowance for Uncollectibles 6,200CR Bad Debt Expense 5,000 Estimated Uncollectibles 4% 1.Refer to Table 5-1. If Top cap uses the sales revenue approach for estimating bad debt expense, after the proper adjustments to the accounts are recorded, the Allowance for Uncollectibles account should show a balance of: a. $6,200. b. $7,200. c. $11,200. d. $25,200. 2. Refer to Table 5-1. If Top cap uses the gross accounts receivable approach for estimating bad debt expense, after the proper adjustment to the accounts is recorded the Allowance for Uncollectibles account should show a balance of: (Points: 5) a. $6,200. b. $7,200. c. $11,200. d. $25,200. 3. When a specific account becomes uncollectible, the Accounts Receivable account is credited and which one of the following accounts is debited? a. Allowance for Returns and Adjustments b. Allowance for Uncollectibles c. Bad Debt Expense d. Miscellaneous Expense 4. When goods are returned by customers, the seller will debit __________ and credit Accounts Receivable. a. Allowance for Uncollectibles b. Sales c. Sales Discounts d. Sales Returns and Adjustments 5. Table 5-2 The Gerner Corporation sells to customers on a note basis with 10% credit terms with interest payable quarterly. every notes are due in one year. Gerner made the following sales on April 1, Year 6. CustomerPottsLarabee Note Maturity$50,000$50,000 Interest DueQuarterlyNA Interest Rate10%None Future Value of $50,000 in one year: $55,191 gift Value of $50,000 for one year: $45,298 Note: To encourage sales, Larabee was given a special deal on interest. Refer to Table 5-2. Which one of the following entries would record the sale to Larabee? A)DR notes receivable 55,191 CR sales 55,191 B)DR Notes Receivable 50,000 CR Sales 50,000 C)DR Notes Receivable 45,298 CR Sales 45,298 D) DR Notes Receivable 45,298 DR Interest Receivable 4,702 CR Sales 50,000 6. Refer to Table 5-2. As of June 30, Year 6, which one of the following entries will be made to record the interest earned, but not yet received, by Gerner on the Potts note? A) DR Accured interest receivable 1,250 CR Interest Income 1,250 B) DR Cash 1,250 CR Intereste Income 1,250 C) DR Cash 1,132 CR Accured interest receivable 1,132 D) DR Notes receivable-Potts 1,132 CR Interest Income 1,132 7. Refer to Table 5-2. As of June 30, Year 6, which one of the following entries will be made to record the interest earned, but not yet received, by Gerner on the Larabee note? A) DR Notes Receivable?Larabee 1,132 CR Interest Income 1,132 B) DR Accrued Interest Receivable 1,250 CR Interest Income 1,250 C) DR Cash 1,250 CR Interest Income 1,250 D) There is no entry because the note is non-interest bearing. 8. ABC, Inc. enters into an arrangement with Matt D Corporation whereby Matt D will assume $100,000 of ABC?s receivables for a 6% fee. Assuming that the transaction has a factoring arrangement with recourse and a $9,000 holdback, which one of the following entries will ABC make to record this transaction? A) DR Cash 100,000 CR Accounts Receivable 100,000 B) DR Cash 91,000 DR Interest Expense 9,000 CR Accounts Receivable 100,000 C) DR Cash 85,000 DR Due from Matt D Corp. 9,000 DR Interest Expense 6,000 CR Accounts Receivable 100,000 D) DR Cash 85,000 DR Interest Expense 15,000 CR Due to Matt D Corp. 100,000 9. ABC, Inc. enters into an arrangement with Matt D Corporation whereby Matt D will assume $100,000 of ABC?s receivables for a 6% fee. Assuming the transaction was a collateralized loan, which one of the following entries will ABC make to record this transaction A) DR Cash 94,000 DR Prepaid Interest 6,000 CR Accounts Receivable 100,000 B) DR Cash 94,000 DR Interest Expense 6,000 CR Loan Payable?Matt D 100,000 C ) DR Cash 94,000 DR Prepaid Interest 6,000 CR Loan Payable?Matt D 100,000 D) DR Cash 94,000 CR Due to Matt D Corp. 94,000 "

 

Paper#10167 | Written in 18-Jul-2015

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