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1) Janway sells softball equipment. On November 14, they shipped $1,000 worth of softball uniforms to Chris Middle School, terms 2/10, n/30. On November 21, they received an order from Douglas High School for $600 worth of custom printed bats to be produced in December. On November 30, Chris Middle School returned $100 of defective merchandise. Janway has received no payments from either school as of the month end. What amount will be recognized as net accounts receivable on the Balance Sheets as of November 30?
2) The matching principle
A) requires that all credit losses be recorded when an individual customer cannot pay.
B) necessitates the recording of an estimated amount for bad debts.
C) results in the recording of a known amount for bad debt losses
D) is not involved in the decision of when to expense a credit loss.
3) A company has net credit sales of $900,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of
4) The face value of a note refers to the amount
A) that can be received if sold to a factor.
B) borrowed plus interest received at maturity from the maker.
C) at which the note receivable is recorded.
D) remaining after a service charge has been deducted.
5) Which one of the following is NOT a principle of sound accounts receivable management?
A) determine to whom to extend credit.
B) delay cash receipts from receivables if necessary.
C) monitor collections.
D) determine a payment period.
6) The financial statements of the Colter Manufacturing Company reports net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?
A) 40 times
B) 80 times
C) 54.7 times
D) 50 times
7) The financial statements of the Bolton Manufacturing Compnay reports net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What s the average collection period for accounts receivable in days?
8) Kline Corporation has net credit sales during the year of $80,000 and cost of goods sold of $500,000. The balance in receivables at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the receivables turnover ratio?
9) Baldwin Corporation sells its goods on terms of 2/10, n/30. It has a receivables turnover ration of 9. What is the average collection period (days)?
10) Manning Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for it credit card use. The entry to record this transaction by Manning Retailers will include a credit to Sales of $75,000 and a debit(s) to:
A) Cash $72,000 and Service Charge Expense $3,000
B) Accounts Receivable $72,000 and Service Charge Expense $3,000
C) Cash $72,000 and Interest Expense $3,000
D) Accounts Receivable $75,000
11) The sale of receivables by a business
A) Indicates that they business is in financial difficulty
B) Is generally the major revenue item on its income statement
C) Is an indication that the business is owned by a captive fiance company.
D) Can be a quick way to generate cash for operating needs.
12) The sale or transfer of accounts receivable in order to raise funds is called
12) A captive finance company refers to
A) A finance company that is owned by individuals who borrow money from the company.
B) Finance companies that won't allow early repayment of loans
C) A company that is wholly owned by another company and provides financing to purchasers of its owner company's goods.
D) Any company that issues a major credit card.
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