51. A company had the following partial list of account balances at year-end:
How much is net sales revenue?
A. $91,900
B. $90,700
C. $89,900
D. $88,600
52. A company purchased goods on credit with credit terms of 3/15, n/45. Although the company does not have cash available to pay within the discount period, the manager of the company is considering borrowing money to take advantage of the discount. In order to make the appropriate decision, the manager computed the annual interest rate associated with the sales discount. Which of the following is the annual interest rate (rounded)?
A. 56%.
B. 38%.
C. 25%.
D. 18%.
30-day interest rate (.031) = Amount saved ($3) ? Amount paid ($97)
53. When credit terms for a sale are 2/15, n/40, the customer saves by paying early. What percent (rounded) would this savings amount to on an annual basis?
A. 18%.
B. 20%.
C. 30%.
D. 37%.
25-day interest rate (.02) = Amount saved ($2) ? Amount paid ($98)
54. Which of the following accounts is not a contra-revenue?
A. Sales discounts
B. Credit card discounts
C. Sales returns and allowances
D. Allowance for doubtful accounts
55. Which of the following is the most likely cause of a decrease in a company's gross profit percentage?
A. The selling price decreased.
B. The product cost as a percentage of sales decreased.
C. The operating expenses increased.
D. Fewer products were sold.
56. Dillon Company uses the allowance method to account for bad debts. The entry to write-off a bad account (one that will never be collected) should be:
A. Option A
B. Option B
C. Option C
D. Option D
57. When using the allowance method for accounting for bad debts, accounts receivable is reported on the balance sheet at the expected net realizable value. When a particular receivable from a customer ultimately is determined to be uncollectible and is written off, the recording of this event will
A. decrease the net realizable value of the accounts receivable.
B. have an effect that is not determinable from the information given.
C. increase the net realizable value of the accounts receivable.
D. have no effect on the net realizable value of the accounts receivable.
58. Oakwood Company had accounts receivable of $750,000 and an allowance for doubtful accounts of the $21,500 just prior to writing off as worthless an account receivable for Hyland Company of $5,000. The net realizable value of accounts receivable as shown by the accounting records before and after the write-off was as follows:
A. Option A
B. Option B
C. Option C
D. Option D
59. Woodland Company uses the allowance method to account for bad debts. During 2009, a customer became bankrupt and a receivable of $10,000 was deemed uncollectible. Which of the following journal entries records the uncollectible account write-off?
A. Option A
B. Option B
C. Option C
D. Option D
60. At year end, Chief Company has a balance of $10,000 in accounts receivable of which $1,000 is more than 30 days overdue. Chief has a credit balance of $100 in the allowance for doubtful accounts before any year-end adjustments. Chief estimates that 1% of current accounts and 10% of accounts over thirty days are uncollectible. How much is bad debt expense?
A. $90
B. $190
C. $290
D. $100
