Review 9-16 Wrong Answers

Question 0

What’s the journal entry for a recovery?

Answer 0

Accounts receivable. Xxx
Allowance for uncollectible accounts Xxx

Cash Xxx
Accounts receivable. Xxx

Question 1

What is the journal entry for a write off?

Answer 1

Allowance for uncollectible accounts. Xxx

Accounts receivable. Xxx

Question 2

What’s the journal entry for the provision for uncollectible accounts expense at year end?

Answer 2

Uncollectible accounts expense. Xxx

Allowance for uncollectible accounts. Xxx

Question 3

What is the journal entry for the creditor to record a loan restructure?

Answer 3

Bad debt expense. Xxx
Loan receivable. Xxx
Interest receivable. Xxx
Valuation allowance for loan impairment Xxx

Question 4

What is the journal entry for the first interest payment to the creditor after a loan restructure?

Answer 4

Cash Xxx
Valuation allowance for loan impairment Xxx
Interest income. Xxx

Question 5

How do you calculate interest income for the creditor on the first interest payment received after a loan restructuring? (Equation)

Answer 5

Interest income =

Note receivable principle - valuation allowance for loan impairment

Question 6

If fair value of plan assets is less than PBO, and pension costs exceed pension contributions for the year by $30,000, what amount is recognized in accumulated OCI? Why?

Answer 6

PBO - FV of plan assets - $30,000

Subtract the $30,000 because it is already included in the income
Statement

Question 7

Over what period of time are leasehold improvements depreciated, if a renewal option exists but, the company is uncertain if they want to renew? Why?

Answer 7

Over the life of the lease, because renewed is uncertain

Question 8

When a lease agreement is made at the beginning of the year, and the first payment isn’t due, until the end of the year, is there an interest expense for that year?

Answer 8

Yes

Question 9

What is the journal entry for making a lease payment on a capital lease?

Answer 9

Capital lease liability. Xxx

Cash. Xxx

Question 10

Free or uneven lease payments received by the lessor should be…

Answer 10

Recognized as revenue and prorated over the life of the lease

Question 11

How should initial direct costs be treated?

Answer 11

Capitalized and amortized straight line over life of the lease

Question 12

Under the par value method, what is the journal entry for buying back shares at a price less than original issuance?

Answer 12

Treasury stock. Xxx
Paid in Capital. Xxx
Cash. Xxx
Paid in Capital- T/S. Xxx

Question 13

Under the par value method, when stock is repurchased at a price $3 lower than issuance, how is PiC (from common stock) calculated?

Answer 13

Number of shares bought back x $3 in excess of par at issuance

Question 14

If cumulative preferred stock paid $10,000, when $16,000/yr was owed in the current year and previous year, what would be the disclosure in the current year for dividend in arrears?

Answer 14

$22,000 = $6,000 + $16,000