Liberty University - ACCT 211 LUO

1)A company has net sales of $1,780,800 and average accounts receivable of $424,000. What is its accounts receivable turnover for the period?

Multiple Choice

Accounts Receivable Turnover = Net Sales/Average Accounts Receivable Accounts Receivable Turnover = $1,246,200/$402,000 = 3.10

a)   0.32

b)   7.40

c)   23.60

d)   77.80

e) 4.20

2. Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 3.5% charge on sales for using its card. On June 28, Jervis had $5,600 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit?

Multiple Choice

1. 1. Debit Cash $5,600; credit Sales $5,600
   2. Debit Accounts Receivable $5,600; credit Sales $5,600
   3. Debit Cash $5,796.00; credit Credit Card Expense $196.00; credit Sales $5,600
   4. Debit Cash $5,404.00; debit Credit Card Expense $196.00; credit Sales $5,600
   5. Debit Accounts Receivable $5,404.00; debit Credit Card Expense $196.00; credit Sales $5,600

3. Jax Recording Studio purchased $7,900 in electronic components from Music World. Jax signed a 90- day, 8% promissory note for $7,900. Music World's journal entry to record the sales transaction is:

Multiple Choice

1. 1. Debit Accounts Receivable $7,900; credit Sales $7,900
   2. Debit Notes Receivable $8,058; debit Interest Receivable $158; credit Sales $7,900
   3. Debit Accounts Receivable $8,058; credit Sales $8,058
   4. Debit Notes Receivable $7,900; credit Sales $7,900
   5. Debit Notes Receivable $8,058; credit Sales $8,058

4. A company receives a 5%, 90-day note for $1,800. The total interest due on the maturity date is: (Use 360 days a year.)

Multiple Choice a) $22.50

b)   $52.50

c)   $30.00

d)   $45.00

e)   $90.00

5. Jasper makes a $45,000, 90-day, 6.5% cash loan to Clayborn Co. The amount of interest that Jasper will collect on the loan is: (Use 360 days a year.)

Multiple Choice

a) $2,925

b)   $243.75

c)   $731.25

d) $32.50

e) $1,462.50

6. A company borrowed $14,000 by signing a 180-day promissory note at 12%. The total interest due on the maturity date is: (Use 360 days a year.)

Multiple Choice a) $70.00

b)   $420.00

c)   $840.00

d)   $1,260.00

e)   $1,680.00

7. Winkler Company borrows $91,000 and pledges its receivables as security. The journal entry to record this transaction would be:

Multiple Choice

1. 1. Debit Cash of $91,000 and credit Accounts Receivable $91,000
   2. Debit Cash of $91,000 and credit Accounts Payable $91,000
   3. Debit Note Receivable $91,000 and credit Accounts Receivable $91,000
   4. Debit Cash $91,000 and credit Notes Payable $91,000
   5. Debit Accounts Receivable $91,000 and credit Notes Payable $91,000

8. A company has $110,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is a(n) $1,000 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Multiple Choice a) $5,600

b)   $6,600

c)   $7,600

d)   $1,000

e) None of these is correct

9. A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: