Question

16. Rosen Company receives a $3,000, 3-month, 6% promissory note from Bay Company in settlement of an open accounts receivable. What entry will Rosen Company make A) Neceiving the neen accounts remonth, 6% 3,000 3,000 A) Notes Receivable Accounts Receivable Bay Company 3,000 B) Notes Receivable 3,045 Accounts Receivable-Bay Company Interest Revenue C) Notes Receivable 3,000 Interest Receivable 45 Accounts Receivable Bay Company Interest Revenue D) Notes Receivable 3,045 Accounts Receivable Bay Company 3,000 45 3,045 17. The sale of receivables by a business: a. always indicates that the business is in financial difficulty. b. is generally the major revenue item on its income statement. c. can be a quick way to generate cash for operating needs. d. lengthens the cash-to-cash operating cycle of a business. 18. The maturity value of a $22,000, 9%, 40-day note receivable dated July 3 is A) $22.000 B) $22,220. C) $23,980. D) $20,200. 19. Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $11,000. If the balance of the Allowance for Doubtful Accounts is $3,000 debit before adjustment what is the balance after adjustment? A) $11,000 C) $8,000 B) $12,000 D) $2,000 debit bet 17.000 B) 20. Manning Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The journal entry to record this transaction by Manning Retailers will include a credit to Sales of $75,000 and a debit(s) to: a. Cash $72,000 and Service Charge Expense $3,000. b. Accounts Receivable $72,000 and Service Charge Expense $3,000. c. Cash $72,000 and Interest Expense $3,000. d. Accounts Receivable $75,000.

Answer 1

Correct option is a Date Credits Debit S 3,000 3,000 Accounts title and explanation Notes receivable Accounts receivable (To record receipt of the 3-Month, 6% promissory note for accounts receivable) Interest revenue would not be recognized on the day the note is received as it is not earned yet. Interest revenue would be recorded at the end of every month (till the 3-month period ends).