The entry to write off an account under the allowance method for estimating uncollectible accounts:
A) reduces total assets.
B) reduces net income.
C) has no effect on total assets or net income.
D) increases net income.
A separate account for each customer is kept in a:
A) control account.
B) subsidiary ledger.
C) general ledger.
D) control ledger.
Under the allowance method, the entry to write off a $2,600 uncollectible account includes a:
A) debit to Accounts Receivable for $2,600.
B) credit to Uncollectible Account Expense for $2,600.
C) credit to Allowance for Uncollectible Accounts for $2,600.
D) debit to Allowance for Uncollectible Accounts for $2,600.
The purpose of owning trading securities is to:
A) increase cash reserves.
B) hold for a long-term period.
C) sell the investment for more than its cost.
D) sell the investment to decrease net income
The net realizable value of accounts receivable is the amount:
A) the company can collect from a factor when the receivables are sold.
B) remaining after uncollectible accounts are written off.
C) the company expects to collect from customers.
D) the company expects to pay to creditors
The journal entry to record the receivable from performing a service on account is:
A) debit notes receivable, credit service revenue.
B) debit notes receivable, credit cash.
C) debit service revenue, credit accounts receivable.
D) debit accounts receivable, credit service revenue.
When a company sells a trading investment, the gain or loss on the sale is reported in the:
A) revenue section of the Income Statement.
B) short-term investments section of the Balance Sheet.
C) other revenue, gains, and losses section of the Balance Sheet.
D) other revenue, gains, and losses section of the Income Statement.
When a company receives a cash dividend from a trading investment, the journal entry includes:
A) a debit to cash and credit to dividend revenue.
B) a debit to dividend revenue and credit to cash.
C) a debit to cash and credit to trading investment.
D) none of the above.
A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following:
1-30 Days = 40K @1.5%
31-60 Days = 10K @ 8%
Over 60 Days = 6K @ 22%
Amounts over 90 days past due are written off. The credit balance in Allowance for Uncollectible Accounts was $520. The uncollectible-account expense for the year is:
Last Bank lends money to a customer on a six month note. The entry to record the issuance of the note by Last Bank is:
A) debit Note Receivable and credit Service Revenue.
B) debit Service Revenue and credit Note Receivable.
C) debit Note Receivable and credit Cash.
D) debit Cash and credit Note Receivable.
Investments in trading securities are reported on the Balance Sheet at their _________ value.
A) current market
C) market or investment
The net realizable value of accounts receivable is:
A) the difference between accounts receivable and its contra asset account.
B) the difference between accounts receivable and uncollectible-account expense.
C) the amount of accounts receivable that the company expects to collect.
D) both A and C.
The ABC Company is preparing its financial statements on December 31. During the year, they purchased IBM stock for $20,000. On December 31, the market value of the stock is $8,000. The journal entry on December 31 will include a:
A) debit to unrealized gain for $12,000.
B) debit to unrealized loss for $8,000.
C) debit to unrealized loss for $12,000.
D) debit to realized loss for $12,000.
The following account balances were extracted from the accounting records of AD Corporation:
Accts Recv = 110K
Allowace for Uncollectable Accts = 35K
Uncollectavle Acct Expense= 60K
What is the net realizable value of the accounts receivable?