Online Quiz 11b Flashcards
Melinda Company sells a plasma TV screen and THREE-year warranty to a customer for a joint price of $3,000. Melinda collects all of the cash up front on the contract-signing date. Melinda Company has generated the following information regarding sales of this type.
Cost of plasma TV screen, $2,000
Sales price of plasma TV screen if sold separately, $2,800
Sales price of Three-year warranty if sold separately, $700
Which ONE of the following is included in the journal entry Melinda Company makes to record the receipt of the $3,000 cash?
CREDIT to Cash for $3,000
CREDIT to Contract Liability-TV Screen for $3,000
CREDIT to Contract Liability-TV Screen for $2,800
CREDIT to Contract Liability-TV Screen for $2,400
CREDIT to Contract Liability-TV Screen for $2,300
Answer: CREDIT to Contract Liability-TV Screen for $2,400
Melinda Company sells a plasma TV screen and THREE-year warranty to a custormer for a joint price of $3,000. Melinda collects all of the cash up front on the contract-signing date. Melinda Company has generated the following information regarding sales of this type.
Cost of plasma TV screen, $2,000
Sales price of plasma TV screen if sold separately, $2,800
Sales price of Three-year warranty if sold separately, $700
Which ONE of the following is included in the ADJUSTING ENTRY that Melinda Company should make after one month?
DEBIT to Contract Liability-Warranty for $16.67
DEBIT to Contract Liability-Warranty for $19.44
DEBIT to Contract Liability-Warranty for $66.67
DEBIT to Warranty Revenue for $16.67
DEBIT to Warranty Revenue for $19.44
DEBIT to Warranty Revenue for $66.67
Answer: DEBIT to Contract Liability-Warranty for $16.67
The following data are for Soderstrom’s for the most recent year:
Credit sales for the year = $3,000
Beginning Allowance for Bad Debts = $100
Write-offs during the year = $80
Ending accounts receivable = $800
Soderstrom’s uses the percentage of sales method of estimating bad debts. Bad debt expense is estimated to be 2.5% of credit sales.
Which ONE of the following is included in the journal entry Soderstrom’s must make to record BAD DEBT EXPENSE for the year?
DEBIT to Allowance for Bad Debts for $75
DEBIT to Bad Debt Expense for $75
DEBIT to Allowance for Bad Debts for $55
DEBIT to Bad Debt Expense for $55
DEBIT to Allowance for Bad Debts for $95
DEBIT to Bad Debt Expense for $95
Answer: DEBIT to Bad Debt Expense for $75
The following data are for Soderstrom’s for the most recent year:
Credit sales for the year = $3,000
Beginning Allowance for Bad Debts = $100
Write-offs during the year = $80
Ending accounts receivable = $800
Soderstrom’s uses aging analysis to estimate the appropriate ending balance in the Allowance account. The appropriate allowance for bad debts as a percentage of ending accounts receivable is 7.0%.
Which ONE of the following is included in the journal entry Soderstrom’s must make to record BAD DEBT EXPENSE for the year?
DEBIT to Allowance for Bad Debts for $56
DEBIT to Bad Debt Expense for $56
DEBIT to Allowance for Bad Debts for $36
DEBIT to Bad Debt Expense for $36
DEBIT to Allowance for Bad Debts for $76
DEBIT to Bad Debt Expense for $76
Answer: DEBIT to Bad Debt Expense for $36
The following data are for Plex Company.
Beginning Accounts Receivable = $1,000
Beginning Allowance for Bad Debts = $80
Ending Accounts Receivable = $1,500
Ending Allowance for Bad Debts = $100
Given these data, which ONE of the following statements is true with respect to the creditworthiness of the credit customers of Plex Company? [Note: The word “creditworthiness” refers to the ability of Plex Company’s credit customers to pay the amounts they owe to Plex Company.]
The average creditworthiness of the credit customers DECLINED during the year.
The average creditworthiness of the credit customers IMPROVED during the year.
The average creditworthiness of the credit customers STAYED THE SAME during the year.
These data do not allow us to draw ANY conclusions about the average creditworthiness of the Plex Company credit customers.
Answer: The average creditworthiness of the credit customers IMPROVED during the year.
