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Exam 5: Receivables and Sales

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Question 51

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A company reports the following amounts at the end of the year: Total sales = $500,000; sales discounts = $10,000; sales returns = $30,000; sales allowances = $20,000. Compute net sales.

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Net sales = $500,00...

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Question 52

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On April 1, a company provides services to one of its customers for $12,000. As payment for the services, the company accepts a six-month, 10% note from the customer. Record the acceptance of the note receivable on April 1 and the cash collection on October 1.

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Interest ...

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Question 53

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If a company has total revenues of $100,000, sales discounts of $3,000, sales returns of $4,000, and sales allowances of $2,000, the income statement will report net revenues of $91,000.

Boynton Jewelers reported the following amounts at the end of the year: total sales = $550,000; sales discounts = $12,000; sales returns = $44,000; sales allowances = $17,000. What was the company's net sales for the year?

Which of the following statements is true with respect to the percentage-of-credit-sales method for estimating uncollectible accounts?

Which accounting principle does the direct write-off method violate?

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term placing the letter designating the term in the space provided. Terms: -_____ The effect of estimating future bad debts.

Eric Company has the following information: What is the amount of net revenues for Eric Company?

Accrued interest on a note receivable is interest earned by the end of the year but not yet received.

At the end of 2012, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (debit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2012, to record its estimated uncollectible accounts included a:

Below are amounts for two companies: For each company, calculate the receivables turnover ratio. Which company appears more efficient in collecting cash from sales?

When customers purchase products on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a:

Explain why the percentage-of-receivables method is referred to as the balance sheet method and the percentage-of-credit-sales method is referred to as the income statement method. Which method is typically used in practice? Why?

A company records a sales return from a credit customer. Indicate how this transaction would affect the following five financial statement items.

At the beginning of the year, a company had an Allowance for Uncollectible Accounts of $22,000. By the end of the year, actual bad debts total $24,000. What is the balance of the Allowance for Uncollectible Accounts after the write-offs (before any year-end adjustment)?

Which method is not allowed under Generally Accepted Accounting Principles for the purpose of accounting for uncollectible accounts?

Garber Plumbers offers a 20% trade discount when providing $2,000 or more of plumbing services to its customers. In March 2012, Garber provided $4,000 of plumbing services to Red Oak, Inc. and $1,500 of services to Cyril, Inc. Each of these customers was granted credit terms of 2/10, net 30. If both customers paid for the plumbing services within the discount period, what was the net sales figure for these two transactions?

On February 1, 2012, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp report during 2012?

A $10,000 note that has a stated interest rate of 10% and is due in six months would have interest of $1,000.

Explain how companies account for uncollectible accounts receivable (bad debts).