Question : 106.Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy : 1258897

 

 

106.Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply 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.

Interest accrued at December 31: $4,800 * .10 * 75/360 = $100Interest earned during January: $4,800 * .10 * 15/360 = $20

 

 

 

107.Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply 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.

Interest accrued at December 31: $4,800 * .10 * 75/360 = $100

 

 

 

108.Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. If the note is dishonored, what entry should Uniform Supply make on January 15 of the next year?   

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 Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100, credit Notes Receivable $4,800.

Interest accrued at December 31: $4,800 * .10 * 75/360 = $100Interest earned during January: $4,800 * .10 * 15/360 = $20

 

 

 

109.Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note?   

A. $130

 

B. $7,800

 

C. $7,930

 

D. $8,050

 

E. $8,130

$7,800 * 0.10 * 60/360 = $130 + $7,800 = $7,930

 

 

 

110.Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the journal entry to record the dishonored note?   

A. Debit Accounts Receivable $7,930; debit Bad Debt Expense $130; credit Notes Receivable $7,800.

 

B. Debit Bad Debt Expense $7,930; credit Accounts Receivable $7,930.

 

C. Debit Bad Debt Expense $7,800; credit Notes Receivable $7,800.

 

D. Debit Accounts Receivable—Valley Spa $7,800; credit Notes Receivable $7,800.

 

E. Debit Accounts Receivable—Valley Spa $7,930, credit Interest Revenue $130; credit Notes Receivable $7,800.

$7,800 * 0.10 * 60/360 = $130 + $7,800 = $7,930

 

 

 

111.Which of the following is not true about the Allowance for Doubtful Accounts?   

A. It is a contra asset account.

 

B. It is used instead of reducing accounts receivable directly.

 

C. It is debited when uncollectible accounts are written off.

 

D. It is a liability account.

 

E. It is credited when bad debts expense is estimated and recorded.

 

 

 

 

112.Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 5% factoring fee. What entry should Jervis make on to record the transaction?    

A. Debit Cash $71,250; debit Factoring Fee Expense $3,750; credit Accounts Receivable $75,000

 

B. Debit Accounts Receivable $71,250; debit Factoring Fee Expense $3,750; credit Cash $75,000

 

C. Debit Cash $75,000; credit Factoring Fee Expense $3,750; credit Accounts Receivable $75,000

 

D. Debit Cash $71,250; credit Accounts Receivable $71,250

 

E. Debit Accounts Receivable $75,000; credit Factoring Fee Expense $3,750; credit Cash $71,250

Factoring fee expense: $75,000 * .05 = $3,750Cash received: $75,000 – $3,750 = $71,250

 

 

 

113.Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 3% charge on sales for using its card. On June 28, Jervis had $3,500 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit?    

A. Debit Cash $3,500; credit Sales $3,500

 

B. Debit Accounts Receivable $3,500; credit Sales $3,500

 

C. Debit Cash $3,605; credit Credit Card Expense $105; credit Sales $3,500

 

D. Debit Cash $3,395; debit Credit Card Expense $105; credit Sales $3,500

 

E. Debit Accounts Receivable $3,395; debit Credit Card Expense $105; credit Sales $3,500

Credit card fee expense: $3,500 * .03 = $105Cash received: $3,500 – $105 = $3,395

 

 

 

114.Brinker accepts all major bank credit cards, including First Savings Bank’s, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit?   

A. Debit Accounts Receivable $4,800; credit Sales $4,800.

 

B. Debit Cash $4,680; debit Credit Card Expense $120; credit Sales $4,800.

 

C. Debit Cash $4,800; credit Sales $4,800.

 

D. Debit Cash $4,920; credit Credit Card Expense $120; credit Sales $4,800.

 

E. Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales $4,800.

Credit card fee expense: $4,800 * 0.025 = $120Cash received: $4,800 – $120 = $4,680

 

 

 

115.Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 4% of accounts receivable, what is the amount of the bad debts expense adjusting entry?   

A. $4,845

 

B. $4,180

 

C. $3,515

 

D. $3,700

 

E. $3,850

$104,500 * 0.04 = $4,180 – $665 = $3,515