Online Quiz 11a

Question 1

During the month of November, Sophie Company provided consulting services, on account, totaling $20,000. A journal entry was made at that time to record the revenue associated with providing this $20,000 of services on account. Later in November, $3,000 in cash was collected on account; the remainder is expected to be collected in December. – Which ONE of the following is included in the journal entry necessary to record the $3,000 in cash collected in November? WARNING: This is the journal entry to record the cash collection, NOT the journal entry to originally record the consulting service revenue.
CREDIT Cash for $3,000
CREDIT Accounts Receivable for $3,000
DEBIT Accounts Receivable for $3,000
DEBIT Consulting Service Revenue for $3,000

Answer 1

Answer: CREDIT Accounts Receivable for $3,000

Question 2

Julian Company sold goods for a total selling price of $5,000. The sale was made on account. The terms of the sale are 4/10, n/30. – Assume that Julian collects the cash six days after the sale. What amount will be reported as “net sales” from this transaction?

Answer 2

Answer: $4,800

Question 3

During 2013, its first year of operations, Kylie Department Store had total sales of $3,000,000, of which 60% were on credit. During the year, $1,000,000 cash was collected on credit sales. Management uses the percentage of sales method and estimates that 3% of credit sales will ultimately be uncollectible. – Which ONE of the following is included in the journal entry necessary to record the establishment of the allowance for bad debts?
DEBIT Cash for $54,000
DEBIT Allowance for Bad Debts for $54,000
DEBIT Accounts Receivable for $54,000
CREDIT Bad Debt Expense for $54,000
CREDIT Allowance for Bad Debts for $54,000

Answer 3

Answer: CREDIT Allowance for Bad Debts for $54,000

Question 4

At the end of its first year of business, Seth Company has performed an aging analysis on its Accounts Receivable. [Note: This analysis looks much like the analysis included in Example 4 on page 87 in the Packet.] The end result of this aging analysis is that Seth needs to establish an Allowance for Bad Debts of $40,000. Before recording this Allowance, the balance in Seth’s Accounts Receivable account is $500,000. – Which ONE of the following is included in the journal entry necessary to record the establishment of the Allowance for Bad Debts?
DEBIT Bad Debt Expense for $40,000
DEBIT Allowance for Bad Debts for $40,000
DEBIT Accounts Receivable for $40,000
CREDIT Bad Debt Expense for $40,000
CREDIT Accounts Receivable for $40,000

Answer 4

Answer: DEBIT Bad Debt Expense for $40,000

Question 5

At the end of its first year of business, Seth Company has performed an aging analysis on its Accounts Receivable. [Note: This analysis looks much like the analysis included in Example 4 on page 87 in the Packet.] The end result of this aging analysis is that Seth needs to establish an Allowance for Bad Debts of $40,000. Before recording this Allowance, the balance in Seth’s Accounts Receivable account is $500,000. – What is Seth’s NET Accounts Receivable balance as of the end of the year, after recording the Allowance for Bad Debts?
  $40,000
 $460,000
 $500,000
 $540,000

Answer 5

Answer: $460,000