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ACC102 CHAPTER 9

Terms in this set (51)

Receivables are frequently classified as:
accounts receivable, notes receivable, and other receivables.
Buehler Company on June 15 sells merchandise on account to Chaz Co. for $1,000, terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth $300 to Buehler Company. On June 24, payment is received from Chaz Co. for the balance due. What is the amount of cash received?
$686
Which of the following approaches for bad debts is best described as a balance sheet method?
Percentage-of-receivables basis.
Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is:
$55,000
Use the same information as in question 4, except that Hughes has a debit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. In this situation, the amount of bad debt expense that should be reported for the year is:
$65,000.
Net sales for the month are $800,000, and bad debts are expected to be 1.5% of net sales. The company uses the percentage-of-sales basis. If the Allowance for Doubtful Accounts has a credit balance of $15,000 before adjustment, what is the balance after adjustment?
$27,000.
In 2011, Roso Carlson Company had net credit sales of $750,000. On January 1, 2011, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2011, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2011?
$10,500.
An analysis and aging of the accounts receivable of Prince Company at December 31 reveals the following data.
$735,000.
One of the following statements about promissory notes is incorrect. The incorrect statement is:
A promissory note is not a negotiable instrument.
Which of the following statements about Visa credit card sales is incorrect?
Two parties are involved.
Blinka Retailers accepted $50,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Blinka Retailers will include a credit to Sales of $50,000 and a debit(s) to:
Cash
$48,000
and Service Charge Expense
$ 2,000
Foti Co. accepts a $1,000, 3-month, 12% promissory note in settlement of an account with Bartelt Co. The entry to record this transaction is as follows.
Notes Receivable
1,000

Accounts Receivable
1,000
Ginter Co. holds Kolar Inc.'s $10,000, 120-day, 9% note. The entry made by Ginter Co. when the note is collected, assuming no interest has been previously accrued, is:
Cash
10,300

Notes Receivable
10,000
Interest Revenue
300
Accounts and notes receivable are reported in the current assets section of the balance sheet at:
cash (net) realizable value
Oliveras Company had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in accounts receivable at the beginning of the year was $100,000, and the end of the year it was $150,000. What were the accounts receivable turnover ratio and the average collection period in days?
6.4 and 57 days.
INCOME SUMMARY
A TEMPORARY ACCOUNT USED IN CLOSING REVENUE AND EXPENSE ACCOUNTS
LONG-TERM INVESTMENTS
GENERALLY, (1) INVESTMENTS IN STOCKS AND BONDS OF OTHER COMPANIES THAT COMPANIES NORMALLY HOLD MANY YEARS, AND (2) LONG-TERM ASSETS, SUCH AS LAND AND BUILDING, NOT CURRENTLY BEING USED IN OPERATIONS
LONG-TERM LIABILITIES
OBLIGATIONS THAT A COMPANY EXPECTS TO PAY AFTER ONE YEAR
TEMPORARY (NOMINAL) ACCOUNTS
ACCOUNTS THAT RALTE ONLY TO A GIVEN ACCOUNTING PERIOD. CONSIST OF ALL INCOME STATEMENT AND THE DIVIDENDS ACCOUNT. ALL TEMPORARY ACCOUNTS ARE CLOSED AT END OF THE ACCOUNTING PERIOD
CURRENT ASSETS
ASSETS THAT A COMPANY EXPECTS TO CONVERT TO CASH OR USE UP WITHIN A ONE YEAR
PERMANENT (REAL) ACCOUNTS
ACCOUNTS THAT RELATE TO ONE OR MORE ACCOUNTING PERIODS. CONSIST OF ALL BALANCE SHEET ACCOUNTS. BALANCES ARE CARRIED FORWARD TO NEXT ACCOUNTING PERIOD
CLASSIFIED BALANCE SHEET
A BALANCE SHEET THAT CONTAINS STANDARD CLASSIFICATIONS OR SECTIONS
CORRECTING ENTRIES
ENTRIES TO CORRECT ERRORS MADE IN RECORDING TRANSACTIONS
OPERATING CYCLE
THE AVERAGE TIME THAT IT TAKES TO GO FROM CASH TO CASH IN PRODUCING REVENUES
CURRENT LIABILITIES
OBLIGATIONS THAT A COMPANY EXPECTS TO PAY FROM EXISTING CURRENT ASSETS WITHIN THE COMING YEAR
CLOSING ENTRIES
ENTRIES MADE AT THE END OF AN ACCOUNTING PERIOD TO TRANSFER THE BALANCES OF TEMPORARY ACCOUNTS TO A PERMANENT STOCKHOLDERS' EQUITY ACCOUNT, RETAINED EARNINGS
STOCKHOLDERS' EQUITY
THE OWNERSHIP CLAIM OF SHAREHOLDERS ON TOTAL ASSETS. IT IS TO A CORPORATION WHAT OWNER'S EQUITY IS TO A PROPERTY
LIQUIDITY
THE ABILITY OF A COMPANY TO PAY OBLIGATIONS EXPECTED TO BE DUE WITHIN THE NEXT YEAR
INTANGIBLE ASSETS
NONCURRENT ASSETS THAT DO NOT PHYSICAL SUBSTANCE
WORKSHEET
A MULTIPLE-COLUMN FORM THAT MAY BE USED IN MAKING ADJUSTING ENTRIES AND IN PREPARING FINANCIAL STATEMENTS
REVERSING ENTRY
AN ENTRY, MADE AT THE BEGINNING OF THE NEXT ACCOUNTING PERIOD, THAT IS THE EXACT OPPOSITE OF THE ADJUSTING ENTRY MADE IN THE PREVIOUS PERIOD
PROPERTY, PLANT, AND EQUIPMENT
PROPERTY, PLANT, AND EQUIPMENT
POST-CLOSING TRIAL BALANCE
A LIST OF PERMANENT ACCOUNTS AND THEIR BALANCES AFTER A COMPANY HAS JOURNALIZED AND POSTED CLOSING ENTRIES
OBLIGATIONS THAT A COMPANY EXPECTS TO PAY AFTER ONE YEAR
LONG-TERM LIABILITIES
A MULTIPLE-COLUMN FORM THAT MAY BE USED IN MAKING ADJUSTING ENTRIES AND IN PREPARING FINANCIAL STATEMENTS
WORKSHEET
ASSETS THAT A COMPANY EXPECTS TO CONVERT TO CASH OR USE UP WITHIN ONE YEAR
CURRENT ASSETS
GENERALLY, (1) INVESTMENTS IN STOCKS AND BONDS OF OTHER COMPANIES THAT COMPANIES NORMALLY HOLD FOR MANY YEARS, AND (2) LONG-TERM ASSETS, SUCH AS LAND AND BUILDINGS, NOT CURRENTLY BEING USED IN OPERATIONS
LONG-TERM INVESTMENTS
AN ENTRY, MADE AT THE BEGINNING OF THE NEXT ACCOUNTING PERIOD, THAT IS THE EXACT OPPOSITE OF TE ADJUSTING ENTRY MADE IN THE PREVIOUS PERIOD
REVERSING ENTRY
ASSETS WITH RELATIVELY LONG LIVES AND CURRENTLY BEING USED IN OPERATIONS
PROPERTY, PLANTS, AND EQUIPMENT
ACCOUNTS THAT RELATE ONLY TO A GIVEN ACCOUNTING PERIOD. CONSIST OF ALL INCOME STATEMENT ACCOUNTS AND THE DIVIDENDS ACCOUNT. ALL TEMPORARY ACCOUNTS ARE CLOSED AT END OF THE ACCOUNTING PERIOD
TEMPORARY (NOMINAL) ACCOUNTS
ACCOUNTS THAT RELATE TO ONE MORE ACCOUNTING PERIODS. CONSIST OF ALL BALANCE SHEET ACCOUNTS. BALANCES ARE CARRIED FORWARD TO NEXT ACCOUNTING PERIOD
PERMANENT (REAL) ACCOUNTS
THE ABILITY OF A COMPANY TO PAY OBLIGATIONS EXPECTED TO BE DUE WITHIN THE NEXT YEAR
LIQUIDITY
ENTRIES MADE AT THE END OF AN ACCOUNTING PERIOD TO TRANSFER THE BALANCES OF TEMPORARY ACCOUNTS TO A PERMANENT STOCKHOLDERS' EQUITY ACCOUNT, RETAINED EARNINGS
CLOSING ENTRIES
A LIST OF PERMANENT ACCOUNTS AND THEIR BALANCES AFTER A COMPANY HAS JOURNALIZED AND POSTED CLOSING ENTRIES
POST-CLOSING TRIAL BALANCE
A BALANCE SHEET THAT CONTAINS STANDARD CLASSIFICATIONS OR SECTIONS
CLASSIFIED BALANCE SHEET
ENTRIES TO CORRECT ERRORS MADE IN RECORDING TRANSACTIONS
CORRECTING ENTRIES
THE OWNERSHIP CLAIM OF SHAREHOLDERS' ON TOTAL ASSETS. IT IS TO A CORPORATION WHAT OWNER'S EQUITY IS TO A PROPRIETORSHIP
STOCKHOLDERS' EQUITY
THE AVERAGE TIME THAT IT TAKES TO GO FROM CASH TO CASH IN PRODUCING REVENUES
OPERATING CYCLES
OBLIGATIONS THAT A COMPANY EXPECTS TO PAY FROM EXISTING CURRENT ASSETS WITHIN HE COMING YEAR
CURRENT LIABILITIES
A TEMPORARY ACCOUNT USED IN CLOSING REVENUE AND EXPENSE ACCOUNTS
INCOME SUMMARY
ASSETS WITH RELATIVELY LONG USEFUL LIVES AND CURRENTLY BAING USED IN OPERATIONS
PROPERTY, PLANT, AND EQUIPMENT
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