Question : 1. On January 2, Well Corporation sold merchandise with a gross : 1224905

1. On January 2, Well Corporation sold merchandise with a gross price of $140,000 to Priority Corporation with terms of 2/10, n/30. How much sales discounts would be recorded if payment was received on January 8?  A. $     2,800B. $            0C. $ 137,200D. $ 140.000

2. Records Inc. received payment of a $20,000 accounts receivable within 10 days. The terms were 2/10, n/30. Records would show a: A. trade discount of $400.B. trade allowance of $400.C. sales discount of $400.D. sales allowance of $400.

3. Leno, Inc.Data for Leno, Inc. for 2012 are presented below. 

Credit sales during the year

$3,200,000

Accounts receivable–December 31, 2012

325,000

Allowance for bad debts–December 31, 2012

35,000

Bad debt expense for the year

20,000

Refer to the information given above for Leno, Inc. What amount will Leno show on its year-end balance sheet for the net realizable value of its accounts receivable? A. $305,000B. $290,000C. $280,000D. $325,000

4. The following information was presented in the balance sheet of Diablo Company as of December 31, 2012: 

Trade accounts receivable, net of allowance for doubtful

accounts of $255,000

$1,700,000

Which one of the following statements is true? A. Diablo expects that $1,955,000 of accounts receivable will be collected after year end.B. The balance in the Accounts Receivable account in Diablo’s general ledger is $1,700,000.C. The net realizable value Diablo’s accounts receivable is $1,700,000.D. Diablo expects to collect only $1,445,000 from its customers.

5. When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when: A. a customer’s account becomes past due.B. an account becomes bad and is written off.C. a sale is made.D. the management estimates the amount of uncollectibles.

6. Which one of the following is an accurate description of the allowance for bad debts? A. Contra accountB. Liability accountC. Revenue accountD. Expense account

7. If a company uses the direct write-off method of accounting for bad debts: A. it establishes an estimate for the allowance for doubtful accounts.B. it will record bad debt expense only when an account is determined to be uncollected.C. it will reduce the accounts receivable account at the end of the accounting period for estimated uncollected accounts.D. total assets will stay the same, when an account is written off.

8. Forrest Corporation uses the direct write-off method to account for bad debts. What are the effects on the accounting equation of the entry to record the write-off of a customer’s account balance? A. Assets and liabilities decreaseB. Assets and equity decreaseC. Equity and liabilities decreaseD. Assets increase and equity decrease

9. If a company uses the allowance method of accounting for bad debts: A. it uses a liability account called the Allowance for Bad Debts account.B. it will record bad debts only when an account is determined to be uncollected.C. it does not have to reduce accounts receivable when the account is written off.D. it will report accounts receivable in the balance sheet at their net realizable value.

10. If a company uses the allowance method to account for doubtful accounts, when will the company’s equity decrease? A. At the date a customer’s account is written offB. At the end of the accounting period when an adjusting entry for bad debts is recordedC. At the date a customer’s account is determined to be uncollectedD. When the accounts receivable amount becomes past due