Accounts Multiple Questions



1. Balances at year-end
From the balance sheet 2013 2012
Accounts Receivable $1,560,200 $1,210,920
Allowance for doubtful accounts $79,000 $64,600
Murray recorded no write offs or recoveries during 2013. what was the amount of bad debt expense reported in 2013?

2. IBM signs an agreement to lend one of its customers $200,000 to be repaid in one year at 5.5% interest. IBM would recognize:
(Choices) Unearned Revenue, Notes Receivable, note payable, accounts payable

3. A company lends its supplier $150,000 for 3 years at a 6% annual interest rate. Interest payments are to be made twice a year. Each interest payment will be for
(Choices) $27000, $4500, $9000, $13500

4. Company A lends $100,000 to company B. The interest on the loan is reported
(Choices) as a revenue to company A and an expense to Company B
as an expense to company A and a revenue to Company B
as an asset to Company A and a revenue to Company B
as a liability to Company A and an asset to Company B

5. The Splendor in the Grass Corporation provides $6000 worth of lawn care on account during the month. Experiences suggests that about 2 % of net credit sales will not be collected. According to the revenue recognition principle and the matching principle, the company should
(Choices) wait until the accounts are determined to be uncollectible before making an entry for bad debt expense
record an estimate of bad debt expense in the same period as the lawn care is provided
not report the sales revenue until it collects payment
increase the value of its liabilities with an adjustment

6. When a company that uses the allowance method writes off an uncollectible account
(choices) total assets, revenues, and expense remain the same
total assets decrease
total liabilities increase
total expenses increase and total revenues increase

7. On April 1, 2013 a company lends a corporate customer $80,000 at 7% interest. The amount of interest revenue that should be recorded for the year ended December 31, 2013 is:
(Choices) $5600, $0, $4200, $1400

8. The amount of uncollectible accounts at the end of the year is estimated to be $25000 using the aging of accounts receivable method. The balance in the Allowance for Doubtful Accounts account is an $8000 DEBIT before adjustment. Assuming no accounts are written off during the period. What will be the amount of bad debt expense for the period?
(Choices) $33,000, $8000, $17000, $25000


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