1. Which of the following best describes credit sales?
2. Credits sales are recorded as:
3. A company provides services on account. Indicate how this transaction would affect the
following five financial statement items:
4. Barton Health Services provided care to a patient worth $1,200. Because the patient was
over the age of 65, Barton granted the patient a 20% discount and the customer paid the
correct amount in cash. How would Barton record the service transaction?
5. Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer
agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record
this reduction by crediting Accounts Receivable and debiting:
6. Tom’s Textiles shipped the wrong material to a customer, who refused to accept the order.
Upon receipt of the material, Tom’s would credit Accounts Receivable and debit:
7. 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:
8. On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with
credit terms 2/10, n/30. How would Flores record the sale on November 10?
D.
9. On November 10 of the current year, Flores Mills provides services to a customer for
$8,000 with credit terms 2/10, n/30. The customer made the correct payment on November
10. On November 10 of the current year, Flores Mills provides services to a customer for
$8,000 with credit terms 2/10, n/30. The customer made the correct payment on December 5.
11. Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45
on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April
12. Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45
on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April
13. Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45
on April 12 of the current year with terms 1/15, n/60. What would Oswego record on June 10,
assuming the customer made the correct payment on that date?
14. Which of the following is recorded upon receipt of a payment on April 7, 2012, by a
customer who pays a $900 invoice dated March 3, 2012, with terms 2/10, n/60?
15. On July 8, Ray Inc. sold 100 printers to Office Rental Company at $600 each and offered
a 2% discount for payment within 10 days. On July 15, Office Rental Company paid the full
amount in cash. What should Ray Inc. record on July 15?
16. Eric Company has the following information:
What is the amount of net revenues for Eric Company?
17. On March 17, Jackal Lumber sold building materials to Fredo Limited for $15,000 with
terms of 3/10, net 20. What amount did Jackal record as revenue on March 25 when Fredo
paid for the building materials?
18. 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?
19. 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?
20. A company collects a customer’s account within the discount period. Indicate how this
transaction would affect the following five financial statement items:
21. A company records a sales return from a credit customer. Indicate how this transaction
would affect the following five financial statement items.
22. Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The
customer agreed to keep the paint upon being offered a 15% price reduction. The price
reduction is an example of a:
23. Tom’s Textiles shipped the wrong material to a customer, who refused to accept the order.
This is an example of a:
24. Accounts receivable are normally reported at the:
25. Shupe Inc. estimates uncollectible accounts based on the percentage of accounts
receivable. What effect will recording the estimate of uncollectible accounts have on the
accounting equation?
26. Under the allowance method, which of the following does not change the balance in the
Accounts Receivable account?
27. At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for
uncollectible accounts of $600 (credit). An analysis of accounts receivable suggests that the
allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the
adjustment for uncollectible accounts would be:
28. At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for
uncollectible accounts of $600 (debit). An analysis of accounts receivable suggests that the
allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the
adjustment for uncollectible accounts would be:
29. At December 31, Amy Jo’s Appliances had account balances in Accounts Receivable of
$311,000 and $970 (credit) in Allowance for Uncollectible Accounts. An analysis of Amy
Jo’s December 31 accounts receivable suggests that the allowance for uncollectible accounts
should be 2% of accounts receivable. Bad debt expense for the year should be:
30. At December 31, Amy Jo’s Appliances had account balances in Accounts Receivable of
$311,000 and $970 (debit) in Allowance for Uncollectible Accounts. An analysis of Amy Jo’s
December 31 accounts receivable suggests that the allowance for uncollectible accounts
should be 2% of accounts receivable. Bad debt expense for the year should be:
31. A company’s adjustment for uncollectible accounts at year-end would include a:
32. Allowance for Uncollectible Accounts is:
33. Richard LLC accounts for possible bad debts using the allowance method. When an actual
bad debt occurs, what effect does it have on the accounting equation?
34. On December 31, 2012, Mark Inc. estimates future bad debts to be $6,500. The Allowance
for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment.
What adjustment should Mark Inc. record for the estimated bad debts on December 31, 2012?
35. Suppose that the balance of a company’s Allowance for Uncollectible Accounts was
$6,200 (credit) at the end of 2012, prior to any adjustments. The company estimated that the
total of uncollectible accounts in its accounts receivable was $44,300 at the end of 2012. Total
accounts receivable were $150,000 on December 31, 2012, and total credit sales for 2012
were $330,000. What amount of bad debt expense would appear in the company’s 2012
income statement, assuming the company uses the percentage-of–receivables method?
36. At the end of 2012, Murray State Lenders had a balance in its Allowance for Uncollectible
Accounts of $4,500 (credit) 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:
37. 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:
38. On December 31, 2012, Larry’s Used Cars had balances in Accounts Receivable and
Allowance for Uncollectible Accounts of $53,600 and $1,325, respectively. During 2013,
Larry’s wrote off $1,465 in accounts receivable and determined that there should be an
allowance for uncollectible accounts of $1,280 at December 31, 2013. Bad debt expense for
2013 would be:
39. On December 31, 2012, Coolwear Inc. had balances in Accounts Receivable and
Allowance for Uncollectible Accounts of $48,400 and $940, respectively. During 2013,
Coolwear wrote off $820 in accounts receivable and determined that there should be an
allowance for uncollectible accounts of $1,140 at December 31, 2013. Bad debt expense for
2013 would be:
40. Which of the following is recorded by a credit to Accounts Receivable?
41. Collections of accounts receivable that previously have been written off are credited to:
42. Lail Inc. accounts for bad debts using the allowance method. On June 1, Lail Inc. wrote
off Andrew Green’s $2,500 account. Based on Lail’s estimation, Andrew Green will never pay
any portion of the balance in his account. What effect will this write-off have on Lail Inc.’s
balance sheet at the time of the write-off?