Question 1

On April 1, 2010, Dozier Inc. purchased 1,000 handkerchiefs at a cost of $1.50 per unit and subject to credit terms 3/10, net 45. Dozier remitted full payment on April 9, 2010. The total purchase price of the handkerchiefs was

Accepted Answer

The answer of On April 1, 2010, Dozier Inc. purchased...

Question 2

Romo Corp. made a $3,000 sale with terms of 2/10, n/30. The customer remitted payment within the discount period. How will Romo record the receipt of that payment?

Accepted Answer

The answer of Romo Corp. made a $3,000 sale with...

Question 3

Recording an uncollectible account receivable as a bad debt expense when it is determined that the account receivable will not be collected

Accepted Answer

The direct write-off method involves writing off an uncollectible account receivable directly to expense when it is determined that the account will not be collected. This method does not involve estimating bad debts in advance, which differentiates it from the allowance method.

Question 4

Joyner Distribution is estimating its uncollectible accounts expense at December 31, 2010 based on the following information:
 Sixty percent of Joyner's total sales for 2010 are credit sales. Based on past experience, Joyner estimates that 5% of credit sales will be uncollectible. What is uncollectible accounts expense for 2010?

Accepted Answer

The answer of Joyner Distribution is estimating its uncollectible accounts...

Question 5

Use the following information to answer questions
Foley Industries is estimating its allowance for uncollectible accounts at December 31, 2010 based on the following information:
  
Seventy percent of Foley's total sales for 2010 are on credit. Foley has always estimated that 5% of credit sales will be uncollectible.
-What is the balance in the Allowance for Uncollectible Accounts before the uncollectible accounts estimate entry is made on December 31, 2010?

Accepted Answer

The answer of Use the following information to answer questions
Foley...

Question 6

Use the following information to answer questions
Foley Industries is estimating its allowance for uncollectible accounts at December 31, 2010 based on the following information:
  
Seventy percent of Foley's total sales for 2010 are on credit. Foley has always estimated that 5% of credit sales will be uncollectible.
-What is the balance in the Allowance for Uncollectible Accounts after the uncollectible accounts estimate entry is made on December 31, 2010?

Accepted Answer

The balance in the Allowance for Uncollectible Accounts after the estimate entry is made is $320,000 credit, assuming the estimate entry adjusts the allowance to this amount based on the company's policy or historical data.

Question 7

Manning Co. had an account receivable from Ny Giant for $3,500 and determined that Giant would be unable to pay that debt. Manning decided to write off Giant's account. At the date of the write-off, total Accounts Receivable were $531,000 and the Allowance for Uncollectible Accounts was $26,800. Manning would make which of the following entries to record the write-off?

Accepted Answer

The answer of Manning Co. had an account receivable from...

Question 8

In November 2009, Steeler Inc. wrote off a $3,800 account receivable from P. Burg. In May 2010, Burg remitted $1,500 of his account receivable to Steeler Inc. How would Steeler Inc. record the remittance?

Accepted Answer

The answer of In November 2009, Steeler Inc. wrote off...

Question 9

Use the following information to answer questions 
On February 1, 2010, Kern Corporation bought $5,000 of paints and brushes from Mobile Incorporated. Credit terms were 3/10, net 45. On March 15, Kern was unable to pay its outstanding invoice and had Mobile Inc. transfer the outstanding balance to a 10%, 180-day note receivable. Interest is due on the note's maturity date.
-What is the maturity date of Kern's note to Mobile Inc.?

Accepted Answer

The answer of Use the following information to answer questions...

Question 10

Use the following information to answer questions 
On February 1, 2010, Kern Corporation bought $5,000 of paints and brushes from Mobile Incorporated. Credit terms were 3/10, net 45. On March 15, Kern was unable to pay its outstanding invoice and had Mobile Inc. transfer the outstanding balance to a 10%, 180-day note receivable. Interest is due on the note's maturity date.
-How much must Kern remit to Mobile on the maturity date (assuming a 360-day year)?

Accepted Answer

The principal amount is $5,000. The interest for 180 days at 10% per annum is calculated as follows: $5,000 * 10% * (180/360) = $250. Therefore, the total amount Kern must remit is $5,000 + $250 = $5,250.

Question 11

Measures that express the relationship or interrelationships between or among two or more financial statement items are

Accepted Answer

Financial ratios are measures that express the relationship or interrelationships between or among two or more financial statement items, allowing for analysis of financial health, performance, and comparisons.

Question 12

Accounts receivable may be used as collateral for borrowings in a process called

Accepted Answer

Pledging accounts receivable involves using them as collateral for a loan. This means that the borrower promises their accounts receivable to the lender in case they fail to repay the loan.

Question 13

Goldburg Theaters recently extinguished $1,000,000 of long-term debt with cash. This transaction will

Accepted Answer

The transaction involves using cash to pay off long-term debt, which does not affect current liabilities.

Question 14

A company's quick ratio would include

Accepted Answer

The quick ratio includes accounts receivable in the numerator and excludes inventory and prepaid supplies. It considers liabilities like 9-month notes payable in the denominator.

Question 15

Quick assets include

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The answer of Quick assets include
...

Question 16

The following information is from McCaine Corporation's year-end 2009 and 2010 general ledger account information:

What is McCaine's accounts receivable turnover ratio for 2010?

Accepted Answer

The answer of The following information is from McCaine Corporation's...

Question 17

The formula to calculate the age of accounts receivable is

Accepted Answer

The correct formula to calculate the age of accounts receivable, also known as the accounts receivable turnover in days, is 360 divided by the accounts receivable turnover ratio, which is net credit sales divided by average accounts receivable.

Question 18

The appropriate amount of cash for an organization to have on hand is between 5% and 10% of total assets.

Accepted Answer

The appropriate amount of cash for an organization to have on hand varies greatly depending on the industry, size of the company, its cash flow cycle, and specific operational needs. There is no one-size-fits-all percentage.

Question 19

Investments in stocks or bonds of another company qualify as cash equivalents.

Accepted Answer

Investments in stocks or bonds of another company are not considered cash equivalents because they typically cannot be quickly converted to cash without significant risk of losing value. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so close to their maturity that they present insignificant risk of changes in value.

Question 20

The difference between the purchase price of a treasury bill and the amount that is paid at maturity is the interest earned on the bill.

Accepted Answer

The interest earned on a Treasury bill (T-bill) is indeed the difference between the purchase price and the amount paid to the holder at its maturity. T-bills are sold at a discount to their face value, and the investor earns the interest when the bill matures at its face value.

Quiz 4: Cash, Short-Term Investments and Accounts Receivable