ACCT 201A Exam 2 Hoffman QUESTIONS & ANSWERS(GRADED A+)

ACCT 201A Exam 2 Hoffman
QUESTIONS & ANSWERS(GRADED A+)
When a company provides services on account, which of the following accounts is
debited?
Service Revenue.
Accounts Payable.
Accounts Receivable.
Cash. - ANSWERAccounts Receivable.

A sales discount is recorded by the seller as a(n):
Expense.
Contra asset.
Contra revenue.
Liability. - ANSWERcontra

On January 18, a company provides services to a customer for $500 and offers the
customer terms 2/10, n/30. Which of the following would be recorded when the
customer remits payment on January 25?
Debit Cash for $500.
Credit Accounts Receivable for $490.
Credit Service Revenue for $500.
Debit Sales Discount for $10. - ANSWERDebit Sales Discount for $10.

Which of the following refers to the seller reducing the customer's balance owed
because of some deficiency in the company's product or service?
Sales Allowance.
Sales Discount.
Trade Discount.
Allowance for Uncollectible Accounts. - ANSWERSales Allowance.

Use the information below to calculate net revenues.
Service Revenue$100,000 Sales Discounts$2,000 Accounts Receivable$15,000
Sales Allowances$7,000 Cash$18,000
$91,000.
$85,000.
$68,000.
$98,000. - ANSWER$91,000. (Don't include cash or account receivable both assets)

On August 4, Sanders provides services to Frederickson for $5,000, terms 3/10,
n/30. Frederickson pays for the services on August 12. What amount would Sanders
record as revenue on August 4?
$4,850.
$5,000.
$5,150.
$5,300. - ANSWER$5,000.

,On August 4, Sanders provides services to Frederickson for $5,000, terms 3/10,
n/30. Frederickson pays for the services on August 12. What is the amount of net
revenues (total revenue minus sales discounts) as of August 12?
$4,850.
$5,000.
$5,150.
$5,300. - ANSWER$4,850.

The entry to record the estimate for uncollectible accounts includes:
A debit to Allowance for Uncollectible Accounts.
A credit to Accounts Receivable.
A debit to Sales Revenue.
A debit to Bad Debt Expense. - ANSWERA debit to Bad Debt Expense.

Under the allowance method for uncollectible accounts, the balance of Allowance for
Uncollectible Accounts increases when:
Future bad debts are estimated.
Bad debts actually occur.
Cash is received from customers.
Never. - ANSWERFuture bad debts are estimated.

Schmidt Company's Accounts Receivable balance is $100,000, its adjusted balance
in Allowance for Uncollectible Accounts is $4,000, and its bad debt expense is
$3,800. The net amount of accounts receivable is:
$96,000.
$96,200.
$100,000.
$104,000. - ANSWER$96,000.

At the end of its first year of operations, a company establishes an allowance for
future uncollectible accounts for $5,600. At what amount would bad debt expense be
reported in the current year's income statement?
$800.
$4,800.
$5,600.
$6,400. - ANSWER$5,600.

If a company uses the allowance method of accounting for uncollectible accounts
and writes off a specific account:
Net accounts receivable increase.
Net accounts receivable decrease.
Net accounts receivable do not change.
The effect on net account receivables depends on the relationship between the
allowance account balance and the amount of the write off. - ANSWERNet accounts
receivable do not change.

If a company uses the allowance method of accounting for uncollectible accounts
and collects cash on an account receivable previously written off:
Total assets increase.
Total assets decrease.

, There is no change in total assets.
The change in total assets depends on the relationship between the allowance
account balance and the amount of the collection. - ANSWERThere is no change in
total assets.

The effect of writing off a specific account receivable is:
A reduction in the Allowance for Uncollectible Accounts.
An increase in the amount of Accounts Receivable.
An increase in the amount of Bad Debt Expense.
An increase in the Allowance for Uncollectible Accounts. - ANSWERA reduction in
the Allowance for Uncollectible Accounts.

On December 31, the Accounts Receivable ending balance is $80,000. Assume that
the unadjusted balance of Allowance for Uncollectible Accounts is a debit of $500
and that the company estimates 7% of the accounts receivable will not be collected.
The amount of bad debt expense recorded on December 31 will be:
$5,000.
$5,100.
$5,600.
$6,100. - ANSWER$6,100.

On December 31, the Accounts Receivable ending balance is $80,000. Assume that
the unadjusted balance of Allowance for Uncollectible Accounts is a credit of $500
and that the company estimates 7% of the accounts receivable will not be collected.
The amount of bad debt expense recorded on December 31 will be:
$5,000.
$5,100.
$5,600.
$6,100. - ANSWER$5,100.

Suppose the balance of the allowance for uncollectible accounts at the end of the
current year is $800 (credit) before any adjustment entry. The company estimates
future uncollectible accounts to be $5,600. At what amount would bad debt expense
be reported in the current year's income statement?
$800.
$4,800.
$5,600.
$6,400. - ANSWER$4,800.

On April 1, 20X1, Nelsen Inc. accepts a $100,000, 8% note. The note receivable and
interest are due on March 31, 20X2 (one year later). Assuming Nelson Inc. has a
December 31 year-end, on March 31, 20X2, Nelson Inc. will record interest revenue
of:
$8,000.
$6,000.
$2,000.
$0. - ANSWER$2,000.