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Exam 5: Accounting for Receivables and Inventory Cost Flow

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Question 21

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On March 31,2012,Stuart Co.wrote off a $600 account receivable of one of its customers.The $600 sale had been made in 2011.Stuart uses the allowance method to account for uncollectible accounts expense.Show how the write-off of the account would affect Stuart's financial statements.

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Question 22

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Which of the following answers correctly states the effect of Landon's write-off entry on February 15,2013?

A) Option A
B) Option B
C) Option C
D) Option D

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

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Question 23

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Haltom Co.uses the allowance method to account for uncollectible accounts.Show how the adjusting entry to recognize uncollectible accounts expense would affect the elements of Haltom's financial statements.

The net realizable value of accounts receivable is the amount of its receivables a company expects to collect.

When a customer's account,previously written off as uncollectible,is reinstated,the net realizable value of Accounts Receivable increases.

Which of the following is not an accurate description of the Allowance for Doubtful Accounts?

Green Bay Corporation used the allowance method to account for uncollectible accounts expense.On June 20,2012,Green Bay wrote off an uncollectible account in the amount of $3,000.On September 1,2012,the account was collected.How would the appropriate entries on September 1 affect the financial statements?

Matsuzaka Company uses the allowance method to account for uncollectible accounts.An account that had been previously written-off as uncollectible was recovered.How would the recovery affect the company's accounting equation?

Which of the following reflects the effect of the year-end adjusting entry to record estimated uncollectible accounts expenses?

On October 1,2012,Balkan,Inc.accepted from another corporation a 1-year note receivable in the amount of $15,000,with an interest rate of 6%.On December 31,2012,Balkan accrued the interest income earned to date.How did this accrual affect Balkan's financial statements?

Haltom Co.uses the allowance method to account for uncollectible accounts.Show how the adjusting entry to recognize uncollectible accounts expense would affect the elements of Haltom's financial statements.

The amount of uncollectible accounts expense recognized on the 2012 income statement was

The following information is for Carmen Company for 2012: Beginning inventory,100 units @$25 Units purchased,200 units @ $28 During the year,Carmen sold 250 units for $45 each. Required: a)Calculate gross margin assuming Carmen uses: 1)FIFO; 2)LIFO b)Disregarding the effect of income taxes,what would be the dollar amount of difference in net income between FIFO and LIFO? c)Calculate the cash flow from operating activities assuming that Carmen uses 1)LIFO; 2)FIFO.Assume that all transactions during the year were for cash.

A promissory note may be secured by assets belonging to the maker.

The following information is available for Parsons Corporation,which uses the allowance method of accounting for uncollectible accounts.

On September 30,2012,Falls Company collected the principal on a one-year note receivable dated October 1,2011.Show the effect of the collection of the principal on Falls' financial statements.

On November 1,2012,Hardin Company accepted a credit card as payment for $2,000 of services rendered to one of its customers.Assume the credit card fee of 3% is recorded on the date of the sale.Show the effect of the sale and credit card fee on Ulmer's financial statements.

When an uncollectible account receivable is written off,the amount of total assets is unchanged.

The amount of accounts receivable that is actually expected to be collected is known as:

Stewart Company sold 180 units @ $320 each on October 31,2012.Cash selling and administrative expenses were $15,000.The following information is also available: The company's income tax rate is 40%. Required: a)Determine the amount of cost of goods sold using: FIFO LIFO Weighted Average b)Determine the amount of ending inventory using: FIFO LIFO Weighted Average c)Determine the company's net income (after income taxes)using: FIFO LIFO