Question :
91. A company uses the percent of sales method to determine : 1225946
91. A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts:
All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
A. Debit Bad Debts Expense $2,130; credit Allowance for Doubtful Accounts $2,130.
B. Debit Bad Debts Expense $2,630; credit Allowance for Doubtful Accounts $2,630.
C. Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300.
D. Debit Bad Debts Expense $4,800; credit Allowance for Doubtful Accounts $4,800.
E. Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300.
92. A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $800. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
A. $4,600
B. $5,400
C. $6,200
D. $6,800
E. None of these
93. Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom’s entry to record the transaction should include a:
A. Debit to Notes Receivable for $75,000.
B. Debit to Accounts Receivable for $75,000.
C. Credit to Notes Receivable for $75,000.
D. Debit Notes Payable for $75,000.
E. Credit to Sales for $75,000.
94. The amount due on the maturity date of a $6,000, 60-day 8%, note receivable is:
A. $6,000.
B. $6,480.
C. $5,520.
D. $6,080.
E. $5,920.
95. Paoli Pizza bought $5,000 worth of merchandise from TechCom and signed a 90-day, 10% promissory note for the $5,000. TechCom’s journal entry to record the sales portion of the transaction is:
A. Debit Accounts Receivable $5,000; credit Sales $5,000.
B. Debit Notes Receivable $5,000; credit Sales $5,000.
C. Debit Accounts Receivable $5,125; credit Sales $5,125.
D. Debit Notes Receivable $5,125; credit Sales $5,125.
E. Debit Notes Receivable $5,000; debit Interest Receivable $125; credit Sales $5,125.
96. MixRecording Studios purchased $7,800 in electronic components from TechCom. MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom’s journal entry to record the sales portion of the transaction is:
A. Debit Accounts Receivable $7,800; credit Sales $7,800.
B. Debit Accounts Receivable $7,930; credit Sales $7,930.
C. Debit Notes Receivable $7,800; credit Sales $7,800.
D. Debit Notes Receivable $7,930; credit Sales $7,930.
E. Debit Notes Receivable $7,800; debit Interest Receivable $130; credit Sales $7,930.
97. When the maker of a note honors a note this indicates that the note is:
A. Signed.
B. Paid in full.
C. Guaranteed.
D. Notarized.
E. Cosigned.
98. Failure by a promissory note’s maker to pay the amount due at maturity is known as:
A. Protesting a note.
B. Closing a note.
C. Dishonoring a note.
D. Discounting a note.
E. Depreciating a note.
99. Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller’s $4,800, 90-day, 10% note. What entry should TechCom make on January 15 of the next year when the note is paid?
A. Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920.
B. Debit Cash $4,920; credit Notes Receivable $4,920.
C. Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800.
D. Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100; credit Notes Receivable $4,800.
E. Debit Cash $4,920; credit Interest Revenue $120; credit Notes Receivable $4,800.
100. Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller’s $4,800, 90-day, 10% note. What entry should TechCom make on December 31, to record the accrued interest on the note?
A. Debit Cash $20; credit Notes Receivable $20.
B. Debit Cash $100; credit Notes Receivable $100.
C. Debit Interest Receivable $20; credit Interest Revenue $20.
D. Debit Interest Receivable $100; credit Interest Revenue $100.
E. Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20.
