69) Garber Plumbers offers a 20% trade discount when providing $2,000 or more of plumbing
services to its customers. In March 2021, 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 revenues amount for these two transactions?
A) $5,500.
B) $4,312.
C) $4,486.
D) $4,606.
70) 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?
A.
Cash
60,000
Accounts Receivable
60,000
B.
Cash
58,800
Accounts Receivable
58,800
C.
Cash
58,800
Sales Discounts
1,200
Accounts Receivable
60,000
D.
Cash
60,000
Sales Discounts
1,200
Sales Revenue
58,800
A) Option A
B) Option B
C) Option C
D) Option D
71) 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?
A) $15,000.
B) $14,550.
C) $15,450.
D) $0.
72) A company collects a customer’s account within the discount period. Indicate how this
transaction would affect (1) assets, (2) stockholders’ equity, and (3) revenues.
A) (1) Decrease, (2) Decrease, (3) Decrease
B) (1) Increase, (2) Increase, (3) Increase
C) (1) Increase, (2) Increase, (3) No effect
D) (1) No effect, (2) No effect, (3) No effect
73) 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?
A.
Accounts Receivable
7,840
Sales Revenue
7,840
B.
Accounts Receivable
8,000
Sales Revenue
8,000
C.
Accounts Receivable
7,840
Cash Discounts
160
Sales Revenue
8,000
D.
Accounts Receivable
8,000
Cash Discounts
160
Sales Revenue
7,840
A) Option A
B) Option B
C) Option C
D) Option D
74) 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 17. How
would Flores record the collection of cash on November 17?
A.
Cash
7,840
Accounts Receivable
7,840
B.
Cash
7,840
Sales Discounts
160
Accounts Receivable
8,000
C.
Cash
7,840
Sales Revenue
160
Accounts Receivable
8,000
D.
Cash
8,000
Accounts Receivable
8,000
A) Option A
B) Option B
C) Option C
D) Option D
75) 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. How would
Flores record the collection of cash on December 5?
A.
Cash
7,840
Accounts Receivable
7,840
B.
Cash
7,840
Sales Discounts
160
Accounts Receivable
8,000
C.
Cash
7,840
Sales Revenue
160
Accounts Receivable
8,000
D.
Cash
8,000
Accounts Receivable
8,000
A) Option A
B) Option B
C) Option C
D) Option D
76) 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?
A.
Accounts Receivable
46,000
Sales Revenue
46,000
B.
Accounts Receivable
46,000
Sales Revenue
45,540
Sales Discounts
460
C.
Accounts Receivable
45,540
Sales Revenue
45,540
D.
Accounts Receivable
45,540
Sales Discounts
460
Sales Revenue
46,000
A) Option A
B) Option B
C) Option C
D) Option D
77) 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 23,
assuming the customer made the correct payment on that date?
A.
Cash
45,540
Sales Revenue
460
Accounts Receivable
46,000
B.
Cash
46,000
Sales Discounts
460
Accounts Receivable
46,000
Interest Revenue
460
C.
Cash
45,540
Sales Discounts
460
Accounts Receivable
46,000
D.
Cash
46,000
Accounts Receivable
45,540
Sales Revenue
460
A) Option A
B) Option B
C) Option C
D) Option D
78) 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?
A.
Cash
46,000
Accounts Receivable
45,540
Discounts Receivable
460
B.
Cash
46,000
Accounts Receivable
45,540
Interest Revenue
460
C.
Cash
46,000
Accounts Receivable
46,000
D.
Cash
46,460
Accounts Receivable
46,000
Interest Revenue
460
A) Option A
B) Option B
C) Option C
D) Option D
79) Which of the following is recorded upon receipt of a payment on April 7, 2021, by a customer
who pays a $900 invoice dated March 3, 2021, with terms 2/10, n/60?
A) Debit Sales Discounts $18.
B) Credit Purchase Discounts $18.
C) Credit Accounts Receivable $882.
D) Debit Cash $900.
80) 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:
A) Sales revenue.
B) Sales discount.
C) Sales return.
D) Sales allowance.
81) 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:
A) Sales Revenue.
B) Sales Discounts.
C) Sales Returns.
D) Sales Allowances.
82) Tom’s Textiles shipped the wrong material to a customer, who refused to accept the order. This
is an example of a:
A) Sales revenue.
B) Sales discount.
C) Sales return.
D) Sales allowance.
30
83) Tom’s Textiles shipped the wrong material to a customer, who refused to accept the order.
Upon receipt of the material, Tom’s Textiles would credit Accounts Receivable and debit:
A) Sales Revenue.
B) Sales Discounts.
C) Sales Returns.
D) Sales Allowances.
84) A company records a sales return from a credit customer. Indicate how this transaction would
affect (1) assets, (2) stockholders’ equity, and (3) revenues.
A) (1) Decrease, (2) Decrease, (3) Decrease
B) (1) Decrease, (2) No effect, (3) Decrease
C) (1) Decrease, (2) Decrease, (3) No effect
D) (1) No effect, (2) No effect, (3) No effect
85) A company had the following information taken from various accounts at the end of the year:
$
41,000
$
32,000
$
459,000
$
15,000
$
35,000
$
205,000
What was the company’s net revenues for the year?
A) $368,000.
B) $434,000.
C) $383,000.
D) $437,000.
86) A company has the following information:
Total revenues
$
860,000
Sales returns and allowances
$
50,000
Sales discounts
$
30,000
Ending inventory
$
100,000
What is the amount of net revenues for the company?
A) $330,000.
B) $230,000.
C) $680,000.
D) $780,000.
87) A company reported the following amounts at the end of the year: total sales revenue =
$550,000; sales discounts = $12,000; sales returns = $44,000; sales allowances = $17,000. What
was the company’s net revenues for the year?
A) $489,000.
B) $485,000.
C) $477,000.
D) $499,000.
88) A company reported the following amounts at the end of the year: total sales revenue =
$500,000; sales discounts = $10,000; sales allowances = $15,000; net revenues = $440,000. What
amount did the company report for sales returns for the year?
A) $35,000.
B) $475,000.
C) $25,000.
D) $415,000.
89) A company reported the following amounts at the end of the year: total sales revenue =
$624,000; sales allowances = $6,000; sales returns = $22,000; net revenues = $588,000. What
amount did the company report for sales discounts for the year?
A) $28,000.
B) $8,000.
C) $16,000.
D) $22,000.
90) Which of the following amounts would be used to calculate net revenues for the current year?
A) Total sales revenue for the current year.
B) Actual sales returns, allowances, and discounts for the current year.
C) Estimated sales returns, allowances, and discounts for the next year.
D) All of the other answer choices are correct.
91) At the end of the current year, a company has the following amounts:
During the current
year
Estimated for
next year
Sales returns
$
7,200
$
8,300
Sales allowances
$
12,500
$
9,100
Sales discounts
$
2,400
$
2,600
For what amount would the company report sales returns in its current-year income statement?
A) $7,200.
B) $9,500.
C) $15,500.
D) $22,100.
92) Ryerson Co. provides goods and services to customers during the year totaling $100,000. Also
during the year, customers are granted discounts, returns, and allowance of $20,000. At the end of
the year, Ryerson estimates that an additional $5,000 in discounts, returns, and allowances will
occur next year as a result of sales transactions this year. What is the amount of net revenues
Ryerson will report in its current-year income statement?
A) $85,000.
B) $75,000.
C) $100,000.
D) $80,000.
93) Accounts receivable are normally reported at the:
A) Present value of future cash receipts.
B) Current value plus accrued interest.
C) Amount expected to be collected.
D) Current value less expected collection costs.
94) The amount of cash that is actually expected to be collected on accounts receivable is referred
to as:
A) Net accounts receivable.
B) Allowance for uncollectible accounts.
C) Net income.
D) Net revenue.
95) The percentage-of-receivables method for estimating uncollectible accounts is sometimes
described as:
A) The balance sheet method.
B) The sales method.
C) The income statement method.
D) The aging method.
96) The percentage-of-receivables method for accounting for uncollectible accounts focuses on
the:
A) Total credit sales for the year.
B) Ratio of accounts receivable to sales.
C) Net amount of cash expected to be collected.
D) Cash flows from sales.
97) Using a balance sheet approach to estimate bad debts involves calculating the desired ending
balance in which account?
A) Accounts receivable.
B) Allowance for uncollectible accounts.
C) Bad debt expense.
D) Credit sales.
98) The purpose of recording an allowance for uncollectible accounts is to:
A) Record the sales returns and allowances.
B) Report net sales conservatively.
C) Report accounts receivable at the net amount of cash expected to be collected.
D) Report accounts receivable for the total amount of sales in the period.
99) A company’s adjustment for uncollectible accounts at year-end would include a:
A) Debit to Bad Debt Expense.
B) Credit to Accounts Receivable.
C) Debit to Accounts Receivable.
D) Debit to Allowance for Uncollectible Accounts.
100) One advantage of the allowance method for accounting for uncollectible accounts is that the
company reports:
A) Bad debt expense in the same period as the credit sale.
B) Greater total sales to customers.
C) Fewer returns by customers.
D) Greater total cash collected from customers.
101) The account “Allowance for Uncollectible Accounts” is classified as a(n):
A) Liability account in the balance sheet.
B) Contra revenue to credit sales in the income statement.
C) Expense in the income statement.
D) Contra asset to accounts receivable in the balance sheet.
102) Allowance for Uncollectible Accounts is:
A) An expense account.
B) A contra asset account.
C) A contra revenue account.
D) A liability account.
103) The normal balance of the account “Allowance for Uncollectible Accounts” is a ________
because ________.
A) Debit; it is a contra account to Revenue (a credit account)
B) Credit; it is a contra account to Accounts Receivable (a debit account)
C) Debit; it is an expense in the income statement
D) Credit; it is a contra account to Bad Debt Expense (a debit account)
104) 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?
A) Increase liabilities and decrease stockholders’ equity.
B) Decrease assets and decrease liabilities.
C) Decrease assets and decrease stockholders’ equity.
D) Increase assets and decrease stockholders’ equity.
105) Under the allowance method, which of the following does not change the balance in the
Accounts Receivable account?
A) Returns on credit sales.
B) Collections on customer accounts.
C) Bad debt expense adjustment.
D) Write-offs.
106) At the end of its first year of operations, a company has accounts receivable of $250,000. The
company expects to collect 90% of these accounts. The company’s year-end adjusting entry for
uncollectible accounts would be:
A) Debit Bad Debt Expense; Credit Accounts Receivable for $25,000.
B) Debit Allowance for Uncollectible Accounts; Credit Bad Debt Expense for $25,000.
C) Debit Bad Debt Expense; Credit Allowance for Uncollectible Accounts for $25,000.
D) Debit Allowance for Uncollectible Accounts; Credit Accounts Receivable for $25,000.
107) During its first year of operations, a company has credit sales of $250,000 and cash sales of
$100,000. By the end of the year, cash collections on credit sales total $180,000, and the company
estimates uncollectible accounts to be 6% of accounts receivable. The amount to record for the
year-end adjusting entry for uncollectible accounts would be:
A) $15,000.
B) $4,200.
C) $6,000.
D) $10,200.
108) When $2,500 of accounts receivable are determined to be uncollectible, which of the
following should the company record to write off the accounts using the allowance method?
A) A debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts.
B) A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense.
C) A debit to Bad Debt Expense and a credit to Accounts Receivable.
D) A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable.
109) Using the allowance method, writing off an actual bad debt would include a:
A) Debit to Bad Debt Expense.
B) Credit to Accounts Receivable.
C) Debit to Accounts Receivable.
D) Credit to Allowance for Uncollectible Accounts.