Question : 151.Refer to the information above. Tutor uses the balance sheet : 1237645

 

 

151.Refer to the information above. Tutor uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $8,600. What is the amount of uncollectible accounts expense recognized in Tutor’s income statement for March?   

A.$8,600.

 

B.$6,800

 

C.$10,400.

 

D.$1,800.

$8,600 – $1,800 = $6,800

 

 

 

152.Refer to the information above. Tutor uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $7,400. The net realizable value of Tutor’s accounts receivable in the March 31 balance sheet is:   

A.$247,400.

 

B.$240,000.

 

C.$232,600.

 

D.$352,600.

$240,000 – $7,400 = $232,600

 

 

 

153.Refer to the information above. Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. What is the amount of uncollectible accounts expense recognized in Tutor’s income statement for March?   

A.$13,500.

 

B.$18,000.

 

C.$8,600.

 

D.$7,200.

3% (.75 × $600,000) = $13,500

 

 

 

154.Refer to the information above. Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. The net realizable value of Tutor’s accounts receivable in the March 31 balance sheet is:   

A.$251,800.

 

B.$253,500.

 

C.$224,700.

 

D.$255,300.

$240,000 – ($13,500 + $1,800) = $224,700

 

 

 

155.A promissory note:   

A.Is a conditional promise in writing to pay on demand or at a future date a definite sum of money.

 

B.Is recorded by the maker by crediting Note Receivable.

 

C.Is signed by the person promising to pay the note, called the payee.

 

D.Will be recorded on both the books of the payee and the maker.

 

 

 

 

156.J. Lennon borrows a sum of money from Y. Ono. A promissory note is used to document the terms of the transaction. In this situation:   

A.J. Lennon is considered the maker of the note.

 

B.J. Lennon is considered the payee of the note.

 

C.J. Lennon records the note as an asset in his accounting records.

 

D.The maker of the note could be either Y. Ono or J. Lennon depending on which party actually draws up the document.

 

 

 

 

157.Anthony loaned $2,000 to Cleopatra for one year at 10% interest, all due at maturity. He insisted the terms of the transaction be formalized in a promissory note. In this situation:   

A.The maturity value of the note is $2,000.

 

B.Anthony is considered the maker of the note and records the note as an asset in his accounting records.

 

C.Anthony is considered the maker of the note and records the note as a liability in his accounting records.

 

D.Cleopatra is considered the maker of the note and records the note as a liability in her accounting records.

 

 

 

 

158.When a promissory note is issued, you would expect to find:   

A.Notes payable and interest expense in the financial statements of the maker of the note throughout the life of the note.

 

B.Notes receivable and interest revenue in the financial statements of the maker of the note throughout the life of the note.

 

C.Notes receivable in the financial statements of the maker of the note throughout the life of the note, but interest revenue only when interest payments are received.

 

D.Notes payable in the financial statements of the payee of the note throughout the life of the note, but interest expense only when interest payments are made.

 

 

 

 

159.When the maker of a note defaults:   

A.An account receivable is recorded for the principal amount of the note only.

 

B.An account receivable is recorded in the amount of the principal plus interest through the maturity date.

 

C.Any interest earned for the current period is not recorded, since the maker has defaulted.

 

D.Any interest earned in a previous period that has already been recorded as interest receivable is written off as a loss due to the maker’s default.

 

 

 

 

On November 1, 2014, Salem Corporation sold land priced at $900,000 in exchange for a 6%, six-month note receivable.

 

160.Refer to the information above. The journal entry made by Salem to record this transaction on November 1, 2014, includes:   

A.A debit to Notes Receivable of $927,000.

 

B.A debit to Interest Receivable of $27,000.

 

C.A credit to Interest Revenue of $27,000.

 

D.A debit to Notes Receivable of $900,000.