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Exam 6: Receivables and Inventories

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Question 31

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Ariel Inc.uses the allowance method of accounting for uncollectible accounts receivable and estimates that 2% of the credit sales of $1,650,000 for the year ended will be uncollectible.Allowance for Doubtful Accounts has a negative unadjusted balance of $(1,600) at the end of the year.Determine the amount of the adjustment to record the provision for doubtful accounts.

A) $33,000
B) $31,400
C) $34,600
D) $30,000

E) All of the above
F) A) and B)

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Question 32

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Taxes receivable is classified as:

A) other receivable.
B) notes receivable.
C) accounts receivable.
D) trade receivables.

E) A) and B)
F) A) and C)

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Question 33

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Jonas Company's inventory has the following values: Cost........................................$1,000 Estimated selling price............1,500 Selling expenses.......................600 Under the lower-of-cost-or-market method, Jonas Company's inventory will be valued at:

The inventory costing method that assigns the most recent costs to cost of good sold is:

Dana Inc.showed the following data for the year end: $\begin{array} { l r } \text { Cash sales } & \$ 4,100,000 \\\text { Credit sales } & 5,900,000 \\\text { Accounts receivable, beginning of the year } & 600,000 \\\text { Accounts receivable, end of the year } & 400,000\end{array}$ ? Calculate Dana Inc.'s days' sales in receivables.(Round the answer to the nearest whole number.)

The units of Product YY2 available for sale during the year were as follows: $\begin{array}{lllll}\text { Apr 1 } & \text { Inventory } & 16 \text { units } & \text { at } & \$ 30 \text { each } \\\text { Jun 16 } & \text { Purchase } & 30 \text { units } & \text { at } & \$ 33 \text { each } \\\text { Sep 28 } & \text { Purchase } & 45 \text { units } & \text { at } & \$ 37 \text { each }\end{array}$ ? There are 15 units of the product in the physical inventory at March 31.The periodic inventory system is used.Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

The sum of the face amount and the interest that must be paid at the due date of the note is called maturity value.

A transaction in which a company sells its receivables and immediately receives cash for operating and other needs is called _____.

The due date of a 90-day note dated July 15 is October 13.(Assume 360 days in a year)

The difference between the total receivables and the balance in Allowance for Doubtful Accounts at the end of a period is referred to as the net realizable value of the receivables.

When companies sell their receivables to other companies, the transaction is called factoring.

The interest at 6%, on a 60-day note for $5,000 is $300.(Assume 360 days in a year)

The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the order in which they were incurred.

Allowance for Doubtful Accounts has an unadjusted balance of $400 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales.If net sales are $300,000, compute the amount of the adjustment to record the provision for doubtful accounts.

Receivables not expected to be collected within one year are reported in the fixed assets section of the balance sheet.

Georgia Inc.reported operating income of $156,000 and sales of $1,300,000 for the current year end.Determine the company's return on sales.

One of the weaknesses of the direct write-off method is that it:

All receivables that are expected to be realized in cash within a year are presented in the current assets section of the balance sheet.

The direct write-off method records uncollectible accounts expense in the year the specific account receivable is determined to be uncollectible.

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000.What is the net realizable value of the accounts receivable?