- The sales method for estimating bad debts is calculated using________.
A) aging of accounts receivable
B) a percentage of credit sales
C) a percentage of net accounts receivable
D) the current balance in accounts receivable
- Team Shirts had a balance in its allowance for uncollectibleaccounts of $(200). Aging the accounts receivable showed that theallowance should be $(1,800). Bad debts expense should be________.
A) $1,400
B) $1,600
C) $1,800
D) $2,000
Learning Objective 4-4
- Credit card sales benefit companies because ________.
A) the risk of uncollectible accounts is transferred to creditcard companies
B) fewer customers will be able to buy products or services
C) the credit card company is not responsible for evaluatingcustomers’ credit-worthiness
D) they will receive less than the full amount of the sale fromthe credit card company
- Timmy’s Tires sold $18,750 worth of tires to customers usingVISA. The credit card fee is 4% of sales. The amount of salesTimmy’s Tires should recognize is ________.
A) $750
B) $19,500
C) $18,750
D) $18,000
- Team Shirts decided to accept bankcards from credit customers.Team Shirts should expect ________.
A) an increase in its allowance for uncollectible accounts
B) a decrease in its bad debts expense
C) a decrease in its credit card expense
D) an increase in its write-off of specific customeraccounts
- Magic Cow Co. made a sale for $5,000 to a customer who paidwith MasterCard. MasterCard charges Magic Cow a fee of 3% of sales.MasterCard will directly deposit the cash from this sale within 24hours. How much cash will MasterCard deposit?
A) $5,000
B) $4,850
C) $150
D) $5,150
- Sally has a new VISA card that was issued by MBNA (MarylandBank of North America). Sally used her VISA card to buy five kegsof beer at Crock‘n’ Keg. Three months later, Sally still has notpaid her VISA bill. Which company carries the account receivablefrom this sale?
A) MBNA
B) Sally
C) Crock‘n’ Keg
D) both Sally and Crock‘n’ Keg
- Magic Cow Co. made a sale for $5,000 to a customer who paidwith MasterCard. MasterCard charges Magic Cow a fee of 3% of sales.How much sales revenue will Magic Cow record?
A) $5,000
B) $4,850
C) $150
D) $5,150
Learning Objective 4-7
- Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of sixmonths. What is the amount of interest that will be paid at the endof the six-month period?
A) $120
B) $240
C) $60
D) $2,060
- Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of sixmonths. When Ace first accepts the note, it should record interestreceivable of ________.
A) $120
B) $0
C) $60
D) $240
- Acme, Inc. accepted a promissory note from NadirCo, whopromised to pay Acme $5,000 plus 6% interest at the end of fourmonths. What is the amount of interest that will be paid at the endof the four-month period?
A) $300
B) $100
C) $600
D) $5,000
