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CHAPTER 8: RECEIVABLES
1. Notes Receivable and Accounts Receivable can also be called trade receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. Receivables not currently collectible are reported in the investments section of the balance sheet.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
3. Trade receivables occur when two companies trade or exchange notes receivables.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
4. Other receivables include nontrade receivables such as loans to company officers.

a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8: Receivables
5. Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
6. When companies sell their receivables to other companies, the transaction is called factoring.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
7. Of the two methods of accounting for uncollectible receivables, the allowance method provides in
advance for uncollectible receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
8. A disadvantage of factoring is that the company selling its receivables immediately receives cash.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
9. Small companies can use either the direct write-off method or the allowance method.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
10. GAAP requires companies with a large amount of receivables to use the allowance method.
a. True
b. False
ANSWER: True
DIFFICULTY: Bloom’s:
Remembering
Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.ACBSP.APC.12 - Receivables
Reporting ACCT.AICPA.FN.03 -
Measurement BUSPROG: Analytic
11. The direct write-off method records bad debt expense when an account is determined to be uncollectible.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCT.WARD.16.09-03 - 09-03
BUSPROG: Analytic
12. Generally accepted accounting principles do not normally allow the use of the direct write-off
method of accounting for uncollectible accounts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
13. The direct write-off method records bad debt expense in the year the specific account receivable is
determined to be uncollectible.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCT.WARD.16.09-03 - 09-03
BUSPROG: Analytic
14. No allowance account is used with the direct write-off method.

a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
15. When using the direct write-off method of accounting for uncollectible receivables, the account
Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
16. When an account receivable that has been written off is subsequently collected, the account receivable
must first be reinstated before recording the receipt of payment.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCT.WARD.16.09-04 - 09-04
BUSPROG: Analytic
17. Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a
credit balance before adjusting entries are recorded at the end of the accounting period.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
18. Allowance for Doubtful Accounts is a liability account.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
19. When using the percent of sales method of estimating uncollectibles the entry to record bad debt expense
includes a credit to Accounts Receivable.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
20. The difference between the balance in Accounts Receivable and the balance in the Allowance for
Doubtful Accounts is called the net realizable value of the receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
21. When the allowance method for accounting for uncollectible receivables is used, net income is reduced
when a specific receivable is written off.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
22. At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250.
The net credit sales for the period total $500,000. If the company estimates uncollectible accounts expense
at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Applying
BUSPROG: Analytic
23. At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500.
Net credit sales for the period total $800,000. If bad debt expense is estimated at 1% of net credit sales, the
amount of bad debt expense to be recorded in the adjusting entry is $8,500.
a. True
b. False
ANSWER: False
Bloom’s: Applying
BUSPROG: Analytic
24. At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of
$2,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to
be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is
$15,000.
a. True
b. False
ANSWER: False
Bloom’s: Applying
BUSPROG: Analytic
25. At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of
$5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to
be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the Bad Debt Expense is
$45,000.
a. True
b. False
ANSWER: True
Bloom’s: Applying
BUSPROG: Analytic
26. When using the analysis of receivables method for estimating uncollectible receivables, the amount
computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
27. The balance in Allowance for Doubtful Accounts at the end of the year includes the total of all accounts
written off since the beginning of the year.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
28. When accounting for uncollectible receivables and using the percentage of sales method, the matching
principle is violated.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
29. A primary difference between the direct write-off and allowance method is whether or not bad debts is based
on a percentage of sales.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
30. The due date of a 60-day note dated July 10 is September 10.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
31. The maturity value of a 12%, 60-day note for $5,000 is $5,600.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
32. The maturity value of a note receivable is always the same as its face value.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
33. The interest on a 6%, 60-day note for $5,000 is $300.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
34. The party promising to pay a note at maturity is the maker.

a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
35. In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
36. If a promissory note is dishonored, the payee should still record interest revenue.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
37. The equation for computing interest on an interest-bearing note is as follows: Interest = Maturity Value ×
Interest Rate × Time.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
38. If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
39. When a note is received from a customer on account, it is recorded by debiting Notes Receivable and
crediting Accounts Receivable.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions
40. When a note is written to settle an open account, no entry is necessary.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
41. The balance of Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements
42. Receivables that are expected to be collected in cash in eighteen months or less are reported in the current
asset section of the balance sheet.
a. True
b. False
ANSWER: False
BUSPROG: Analytic
43. The accounts receivables turnover ratio is computed by dividing total gross sales by the average net
receivables during the year.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.23 - Financial Statement Analysis
BUSPROG: Analytic
44. The accounts receivable turnover measures the length of time in days it takes to collect a receivable.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
45. The number of days’ sales in receivables is an estimate of the length of time the accounts receivables have been
outstanding.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
46. A note receivable due in 18 months is listed on the balance sheet under the caption
a. long-term liabilities
b. fixed assets
c. current assets
d. investments
ANSWER: d
DIFFICULTY: Easy
ACCT.ACBSP.APC.13 - Long-term Assets Reporting
BUSPROG: Analytic
47. The receivable that is usually evidenced by a formal, written instrument of credit is a(n)
a. trade receivable
b. note receivable
c. accounts receivable
d. income tax receivable
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
48. Which of the following receivables would not be classified as an "other receivable”?
a. advance to an employee
b. interest receivable
c. refundable income tax
d. notes receivable
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
49. Other receivables includes all of the following except

a. notes receivable
b. receivables from employees
c. taxes receivable
d. interest receivable
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
50. Notes or accounts receivables that result from sales transactions are often called
a. nontrade receivables
b. trade receivables
c. merchandise receivables
d. sales receivables
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
51. Which statement is not true?

a. Current assets are normally reported in order of their liquidity.
b. Disclosures related to receivables are reported on the financial statement notes.
c. Cash and cash equivalents are the first items reported under current assets.
d. All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current
assets section.
ANSWER: d
BUSPROG: Analytic
52. The term "receivables" includes all

a. money claims against other entities
b. merchandise to be collected from individuals or companies
c. cash to be paid to creditors
d. cash to be paid to debtors
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
53. If collection of another receivable is expected beyond one year, it is classified as a(n)
a. other receivable under noncurrent assets
b. other receivable under current assets
c. investment under current assets
d. investment under noncurrent assets
ANSWER: d
BUSPROG: Analytic
54. When does an account become uncollectible?

a. when accounts receivable is converted into notes receivable
b. when a discount is availed on notes receivable
c. there is no general rule for when an account becomes uncollectible
d. at the end of the fiscal year
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
55. The two methods of accounting for uncollectible receivables are the allowance method and the
a. equity method
b. direct write-off method
c. interest method
d. cost method
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
56. The direct write-off method of accounting for uncollectible accounts

a. emphasizes balance sheet relationships
b. is often used by small companies and companies with few receivables
c. emphasizes cash realizable value
d. emphasizes the matching of expenses with revenues
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
57. Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
a. at the end of each accounting period
b. when a credit sale is past due
c. whenever a predetermined amount of credit sales have been made
d. when an account is determined to be worthless
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
58. An alternative name for bad debt Expense is a(n)

a. collection expense
b. credit loss expense
c. uncollectible accounts expense
d. deadbeat expense
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
59. Two methods of accounting for uncollectible accounts are the

a. direct write-off method and the allowance method
b. allowance method and the accrual method
c. allowance method and the net realizable method
d. direct write-off method and the accrual method
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
60. The operating expense recorded from uncollectible receivables can be called all of the following except
a. accounts receivable
b. bad debt expense
c. doubtful accounts expense
d. uncollectible accounts expense
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
61. Indications that an account may be uncollectible include all of the following except
a. the customer closes its business
b. the customer is making small but regular payments
c. the customer files for bankruptcy
d. the customer cannot be located
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
62. Selling receivables is called

a. factoring
b. sales revenue
c. a factor
d. sold receivables
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
63. If the direct write-off method of accounting for uncollectible receivables is used, what general ledger
account is credited to write off a customer's account as uncollectible?
a. Uncollectible Accounts Expense
b. Accounts Receivable
c. Allowance for Doubtful Accounts
d. Interest Expense
ANSWER: b
DIFFICULTY: Easy
64. One of the weaknesses of the direct write-off method is that it

a. understates accounts receivable on the balance sheet
b. violates the matching principle
c. is too difficult to use for many companies
d. is based on estimates
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
65. The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable.
Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible.
The entry to write off this account would be which of the following?
a. debit Allowance for Doubtful Accounts; credit Accounts Receivable
b. debit Sales Returns and Allowance; credit Accounts Receivable
c. debit Bad Debt Expense; credit Allowance for Doubtful Accounts
d. debit Bad Debt Expense; credit Accounts Receivable
ANSWER: d
66. If the direct write-off method of accounting for uncollectible receivables is used, what general ledger
account is debited to write off a customer's account as uncollectible?
a. Uncollectible Accounts Receivable
d. Bad Debt Expense
ANSWER: d
DIFFICULTY: Easy
67. If the allowance method of accounting for uncollectible receivables is used, what general ledger account is
debited to write off a customer's account as uncollectible?
b. Allowance for Doubtful Accounts
c. Accounts Receivable
d. Interest Expense
ANSWER: b
DIFFICULTY: Easy
68. After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance
of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable
value of the accounts receivable?
a. $51,000
b. $289,000
c. $340,000
d. $391,000
ANSWER: b
DIFFICULTY: Easy
Bloom’s: Applying
69. If the allowance method of accounting for uncollectible receivables is used, what general ledger account is
credited to write off a customer's account as uncollectible?
d. Interest Expense
ANSWER: b
DIFFICULTY: Easy
70. On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the
a. uncollectible accounts expense for the year
b. total of the accounts receivables written-off during the year
c. total estimated uncollectible accounts as of the end of the year
d. sum of all accounts that are past due
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
71. What is the type of account and normal balance of Allowance for Doubtful Accounts?
a. contra asset, credit
b. asset, debit
c. asset, credit
d. contra asset, debit
ANSWER: a
DIFFICULTY: Easy
72. When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when
a. a customer's account becomes past due
b. an account becomes bad and is written off
c. a sale is made
d. management estimates the amount of uncollectibles
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
73. A debit balance in the Allowance for Doubtful Accounts

a. is the normal balance for that account
b. indicates that actual bad debt write-offs have been less than what was estimated
c. cannot occur if the percentage of receivables method of estimating bad debts is used
d. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
ANSWER: d
BUSPROG: Analytic
74. To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a
a. debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts
b. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
c. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable
d. debit to Loss on Credit Sales and a credit to Accounts Receivable
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
75. Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts
a. liabilities decrease
b. net income is unchanged
c. total assets are unchanged
d. total assets decrease
ANSWER: d
BUSPROG: Analytic
76. Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is
$390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of
the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the
Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?
a. Bad Debt Expense 17,000

Allowance for Doubtful Accounts 17,000
b. Bad Debt Expense 19,500
c. Bad Debt Expense 22,000
d. Bad Debt Expense 65,000
ANSWER: a
Bloom’s: Applying
BUSPROG: Analytic
77. You have just received notice that a customer of yours with an Account Receivable balance of $100 has
gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry
you make is to
a. debit Bad Debt Expense and credit Allowance for Doubtful Accounts
b. debit Bad Debt Expense and credit Accounts Receivable
c. debit Allowance for Doubtful Accounts and credit Accounts Receivable
d. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
ANSWER: c
DIFFICULTY: Easy
Bloom’s: Applying
78. The balance in Allowance for Doubtful Accounts will directly impact the end-of-period adjustment for the
bad debt expense when using which of the following methods?
a. allowance method based on aging the receivables
b. direct write-off method
c. accrual method
d. declining value method
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
79. An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900.
If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense
for the period will require a
a. debit to Bad Debt Expense for $8,600
b. debit to Bad Debt Expense for $7,900
c. debit to Bad Debt Expense for $7,200
d. credit to Allowance for Doubtful Accounts for $700
ANSWER: c
BUSPROG: Analytic
80. An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals
$6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad
debt expense for the period will require a
a. debit to Bad Debt Expense for $7,700
c. debit to Bad Debt expense for $5,100
d. credit to Allowance for Doubtful Accounts for $1,300
ANSWER: a
BUSPROG: Analytic
81. An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts
totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record
the bad debt expense for the period will require a
a. debit to Allowance for Doubtful Accounts for $3,200
c. debit to Allowance for Doubtful Accounts for $4,000
d. credit to Allowance for Doubtful Accounts for $4,000
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
82. The collection of an account that had been previously written off under the allowance method of
accounting for uncollectibles
a. will increase net income in the period it is collected
b. will decrease net income in the period it is collected
c. does not affect net income in the period it is collected
d. requires a correcting entry for the period in which the account was written off
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
83. Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment),
and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the
following entries records the proper adjustment for bad debt expense?
a. debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
b. debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
c. debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800
d. debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600
ANSWER: d
Bloom’s: Applying
BUSPROG: Analytic
84. Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment),
and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the
following entries records the proper adjustment for bad debt expense?
a. debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
c. debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800
ANSWER: a
Bloom’s: Applying
BUSPROG: Analytic
85. Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment),
and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which
of the following entries records the proper adjusting entry for bad debt expense?
a. debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600
b. debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400
c. debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600
ANSWER: d
Bloom’s: Applying
BUSPROG: Analytic
86. At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the
year, $120 of previously written off accounts are reinstated and accounts totaling $740 are written-off as
uncollectible. The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be
a. $760
b. $120
c. $140
d. $740
ANSWER: c
Bloom’s: Applying
BUSPROG: Analytic
87. Jefferson uses the percent of method of estimating uncollectible expenses. Based on past history, 2% of
credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the
following is correct?
a. Uncollectible accounts are estimated to be $55,500.
b. Uncollectible accounts are estimated to be $111,000.
c. Bad debt expense is estimated to be $5,550.
d. Bad debt expense is estimated to be $11,100.
ANSWER: b
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
88. Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history,
2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of
the following is correct regarding the entry to record estimated uncollectible receivables?
a. Cash will be debited
b. Bad Debt Expense will be credited
c. Allowance for Doubtful Accounts will be credited
d. Accounts Receivable will be debited
ANSWER: c
DIFFICULTY: Easy
89. Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial
payment on the account of James. The journal entry to record the initial write-off includes a
a. debit to Allowance for Doubtful Accounts
b. credit to Cash
c. debit to Accounts Receivable, James
d. credit to Bad Debt Expense
ANSWER: a
DIFFICULTY: Easy
90. Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific
receivable previously written off would include a
a. credit to Bad Debt Expense
b. credit to Accounts Receivable
c. debit to Allowance for Doubtful Accounts
d. debit to Accounts Receivable
ANSWER: d
DIFFICULTY: Easy
91. Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has
determined that the Irish Company account is uncollectible. To write off this account, Dalton should debit
a. Bad Debt Expense and credit Accounts Receivable
b. Bad Debt Expense and credit Allowance for Doubtful Accounts
c. Allowance for Doubtful Accounts and credit Accounts Receivable
d. Accounts Receivable and credit Allowance for Doubtful Accounts
ANSWER: c
DIFFICULTY: Easy
92. In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly
impact the amount of the adjustment when applying which method?
a. direct write-off method
b. percentage of sales method
c. analysis of receivables method
d. both percentage of sales and analysis of receivables methods
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
93. Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that
3% of net credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a
credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made
credit sales of $100,000. There were no sales returns or sales discounts during the year. After the adjusting
entry, the December 31, balance in the Bad Debt Expense will be
a. $1,200
b. $3,000
c. $3,600
d. $7,200
ANSWER: b
Bloom’s: Applying
BUSPROG: Analytic
94. A company uses the allowance method to account for uncollectible accounts receivables. When the firm
writes off a specific customer's account receivable
a. total current assets are reduced
b. total expenses for the period are increased
c. net realizable value of accounts receivable increases
d. there is no effect on total current assets or total expenses
ANSWER: d
BUSPROG: Analytic
95. Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before adjustment).
The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts
of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for
the year?
a. debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600
c. debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200
ANSWER: d
Bloom’s: Applying
BUSPROG: Analytic
96. Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before
adjustment). The company prepares an analysis of customers' accounts and estimates the amount of
uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the
Bad Debt Expense for the year?
a. debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
c. debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600
ANSWER: a
Bloom’s: Applying
BUSPROG: Analytic
97. Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment),
and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of
the adjusting entry to record the estimate of the uncollectible accounts is
a. $29,500
b. $34,500
c. $32,000
d. cannot be determined
ANSWER: c
Bloom’s: Applying
BUSPROG: Analytic
98. Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment),
and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts
should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?
a. debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800
b. debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200
c. debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800
ANSWER: b
Bloom’s: Applying
BUSPROG: Analytic
99. The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables
shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a
debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for
Doubtful Accounts in the amount of:
a. $110
b. $640
c. $530
d. $750
ANSWER: d
Bloom’s: Applying
BUSPROG: Analytic
100. Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment),
and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of
the adjusting entry to record the estimated uncollectible accounts receivables is
a. $8,500
b. $9,500
c. $9,000
d. Cannot be determined
ANSWER: c
Bloom’s: Applying
BUSPROG: Analytic
101. Allowance for Doubtful Accounts is classified as a(n) and has a normal balance.
a. owners’ equity, credit
b. contra asset, debit
c. owners’ equity, debit
d. contra asset, credit
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
102. Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account.
a. affects only income statement accounts
b. is not an acceptable practice
c. affects only balance sheet accounts
d. affects both balance sheet and income statement accounts
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
103. When comparing the direct write-off method and the allowance method of accounting for uncollectible
receivables, a major difference is that the direct write-off method
a. uses a percentage of sales method to estimate uncollectible accounts
b. is used primarily by large companies with many receivables
c. is used primarily by small companies with few receivables
d. uses an allowance account
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
104. When a company uses the allowance method of accounting for uncollectible receivables, which entry would
not be found in the general journal?
a. Bad Debt Expense 500
Allowance for Doubtful Accounts 500
b. Bad Debt Expense 500
Accounts Receivable, Bob Smith 500
c. Cash 300
d. Cash 500
ANSWER: b
DIFFICULTY: Easy
Bloom’s: Applying
105. When a company uses the allowance method of accounting for uncollectible receivables, the entry to
reinstate a previously written off account would include a
a. credit to Bad Debt Expense
b. debit to Bad Debt Expense
c. debit to Allowance for Doubtful Accounts
d. credit to Allowance for Doubtful Accounts
ANSWER: d
106. The amount for which a promissory note is written is called the
a. realizable value
b. maturity value
c. face value
d. proceeds
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
107. The amount of the promissory note plus the interest earned on the due date is called the
a. interest value
b. maturity value
c. face value
d. issuance value
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
108. A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account. The face value of
the note is
a. $6,860
b. $7,140
c. $7,840
d. $7,000
ANSWER: d
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
109. A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value
of the note is
a. $10,000
b. $10,150
c. $10,900
d. $9,100
ANSWER: b
Bloom’s: Applying
BUSPROG: Analytic
110. Interest on a note can be calculated without knowledge of the

a. fair value of the note
b. rate of interest
c. note duration
d. principal amount
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
111. On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a
$20,000 account receivable. The note is due in six months. At December 31, Black should record
interest revenue of
a. $0
b. $450
c. $900
d. $1,800
ANSWER: b
Bloom’s: Applying
BUSPROG: Analytic
112. If the maker of a promissory note fails to pay the note on the due date, the note is said to be
a. displaced
b. disallowed
c. dishonored
d. discounted
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
113. The journal entry to record a note received from a customer to replace an account is
a. debit Notes Receivable; credit Accounts Receivable
b. debit Accounts Receivable; credit Notes Receivable
c. debit Cash; credit Notes Receivable
d. debit Notes Receivable; credit Notes Payable
ANSWER: a
DIFFICULTY: Easy
114. A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal
entry to recognize this event is
a. debit Cash, $6,120; credit Notes Receivable, $6,120
b. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Receivable, $120
c. debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
d. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120
ANSWER: d
Bloom’s: Applying
115. When referring to a note receivable or promissory note

a. the maker is the party to whom the money is due
b. the note is not considered a formal credit instrument
c. the note cannot be factored to another party
d. the note may be used to settle an accounts receivable
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
116. When a company receives an interest-bearing note receivable, it will

a. debit Notes Receivable for the maturity value of the note
b. debit Notes Receivable for the face value of the note
c. credit Notes Receivable for the maturity value of the note
d. credit Notes Receivable for the face value of the note
ANSWER: b
DIFFICULTY: Easy
117. Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of
an open accounts receivable. What entry will Paper Company make upon receiving the note?
a.
Notes Receivable 6,000
Accounts Receivable—Dame Company 6,000
b.
c.
Interest Revenue 90
d.
Interest Revenue 90
Interest Revenue 90
ANSWER: a
DIFFICULTY: Easy
Bloom’s: Applying
118. The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is
a. $40,000
b. $40,400
c. $43,600
d. $44,000
ANSWER: b
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
119. Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note.
Harper Company prepares financial statements on March 31. What adjusting entry should be made before
the financial statements can be prepared?
a. Cash 200
Interest Revenue 200
b. Interest Receivable 800

c. Interest Receivable 200
d. Note Receivable 40,000
Cash 40,000
ANSWER: c
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
120. On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu
Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal
entry to record the collection of the note should include a
a. credit to Notes Receivable for $20,300
b. debit to Interest Receivable for $300
c. credit to Interest Revenue for $300
d. debit to Notes Receivable for $20,000
ANSWER: c
Bloom’s: Applying
121. Current assets are usually listed in order

a. of the due date
b. of the size
c. alphabetically
d. of liquidity
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
122. The accounts receivable turnover measures

a. how frequently during the year the accounts receivable are converted to cash
b. the number of days of accounts receivable outstanding
c. the fair market value of accounts receivable
d. the efficiency of the accounts payable function
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
123. The number of days' sales in receivables

a. is an estimate of the length of time the receivables have been outstanding
b. measures the number of times the receivables turn over each year
c. is net credit sales divided by average receivables
d. is not meaningful and therefore is not used
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
124. Given the following information, compute accounts receivable turnover:
Gross sales $150,000 Accounts receivable, beginning of year $18,000
Sales 135,000 Accounts receivable, end of year 22,000

a. 6.75
b. 7.50
c. 6.13
d. 6.82
ANSWER: a
Bloom’s: Applying
BUSPROG: Analytic
125. At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful
Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables
estimates uncollectible receivables as $25,000.
Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of
Allowance of Doubtful Accounts, respectively.
a. $19,500 and $25,000 b. $30,500 and $525,000
c. $19,500 and $525,000 d. $30,500 and $25,000
ANSWER: a
Bloom’s: Applying
BUSPROG: Analytic
Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of
the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts.)
a. $550,000 b. $544,500
c. $525,000 d. $575,000
ANSWER: c
Bloom’s: Applying
BUSPROG: Analytic
127. Other than Accounts Receivable and Notes Receivable, name other receivables that might be
included in the general ledger.
ANSWER: Interest Receivable, Receivables from Officers or Employees, Taxes
Receivable
DIFFICULTY: Easy
Bloom’s: Understanding
BUSPROG: Analytic
128. Discuss the similarities and differences between accounts receivable, notes receivable, and other receivables.
ANSWER: Accounts receivable result from the sale of goods and services on credit.
They are normally collected within a short period of time (30–60 days)
and are classified as current assets on the balance sheet.
Notes receivable can also result from the sale of goods, generally when
the amount owed is due in more than 60 days. Notes can also be used to
settle accounts receivable. Notes are formal written instruments of
credit. When collection is expected to be in less than one year, they are
classified as current assets on the balance sheet.
Other receivables result from non-trade transactions (interest, taxes,

amounts due from employees). They are generally reported separately on
the balance sheet. If collection is expected in less than one year, they are
classified as current assets. If not, they are classified as investments.
BUSPROG: Analytic
129. List at least three indicators that a receivable may be uncollectible.
ANSWER: Answers may vary and should include three of the following:
1. The receivable is past due.
2. The customer does not respond to the company’s attempts to collect.
3. The customer files for bankruptcy.
4. The customer closes its business.
5. The company cannot locate the customer.
BUSPROG: Analytic
130. Discuss the two methods for recording bad debt expense. What type of company uses each method?
ANSWER: The first method is the direct write-off method. Under this method, bad
debt expense is recorded only when an account is deemed uncollectible.
This method is most often used by small companies and those with few
receivables. The second method is the allowance method. Under this
method, bad debt expense is recorded by estimating bad debts at the end
of the accounting period. Companies that have a large amount of
receivables are required to use this method under generally accepted
accounting principles (GAAP).
DIFFICULTY: Easy
ACCT.WARD.16.09-05 - 09-05
BUSPROG: Analytic
131. Journalize the following transactions using the direct write-off method of accounting for uncollectible
receivables.
April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs for and received cash in full payment.
ANSWER:
April 1 Accounts Receivable 7,200

Sales 7,200
1
Cost of Merchandise Sold 5,400
Merchandise Inventory 5,400
June 10 Cash 2,400

Bad Debt Expense 4,800
Accounts Receivable—Jim Dobbs 7,200
Oct. 11 Accounts Receivable—Jim Dobbs 4,800

11
Cash 4,800
DIFFICULTY: Challenging
Bloom’s: Applying
BUSPROG: Analytic
132. Stephanie Roe utilizes the direct write-off method of accounting for uncollectible receivables. On September
15 she is notified by the attorneys for Jacob Marley that Jacob Marley is bankrupt and no cash is expected in
the liquidation of Jacob Marley. Write off the $675 of accounts receivable due from Jacob Marley.
ANSWER: Sept. 15 Bad Debt Expense 675

Accounts Receivable—Jacob Marley 675
DIFFICULTY: Easy
Bloom’s: Applying
ACCT.ACBSP.APC.12 - Receivables Reporting
BUSPROG: Analytic
133. Journalize the following transactions using the direct write-off method of accounting for uncollectible
receivables:
Feb. 20 Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible.
May 10 Reinstated the account of Andrew Warren and received $4,000 cash in full payment.
ANSWER:
Feb. 20 Cash 1,000
Accounts Receivable—Andrew Warren 5,000
May 10 Accounts Receivable—Andrew Warren 4,000

10
Cash 4,000
Accounts Receivable—Andrew Warren 4,000
DIFFICULTY: Easy
Bloom’s: Applying
ACCT.ACBSP.APC.12 - Receivables Reporting
BUSPROG: Analytic
134. The following journal entries would be used in one of the two methods of accounting for
uncollectible receivables. Identify each.
(a)
Bad Debt Expense 900
Accounts Receivable, Billings 900
(b)
Accounts Receivable, Grover 900
ANSWER: (a) Direct Write-Off Method

(b) Allowance Method
DIFFICULTY: Easy
ACCT.WARD.16.09-04 - 09-04
BUSPROG: Analytic
135. Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and
indicate the ending balance in each case.
(a) Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of
Accounts Receivable indicates uncollectible receivables of $8,500.
(b) Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible
receivables are estimated at 2% of credit sales, which totaled $1,000,000 for the year.
ANSWER: (a) Amount added: $8,200 Ending balance: $8,500

(b) Amount added: $20,000 Ending balance: $20,500
BUSPROG: Analytic
136. Journalize the following transactions using the allowance method of accounting for uncollectible
receivables.
April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.
ANSWER:
April 1 Accounts Receivable 7,200

Sales 7,200
Cost of Merchandise Sold 5,400

June 10 Cash 2,400

Oct. 11 Accounts Receivable—Jim Dobbs 4,800

11 Cash 4,800
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
Accounts has a credit balance of $5,500; and sales for the year total $3,500,000. Bad debt expense is
estimated at 1/2 of 1% of sales.
Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts
Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of
accounts receivable.
ANSWER:
(a) $17,500 ($3,500,000 × 0.005)
Adjusted Balance
(b) Accounts Receivable $700,000
Allowance for Doubtful Accounts ($5,500 + $17,500) 23,000
(c) Net realizable value ($700,000 – $23,000) $677,000

Bloom’s: Applying
BUSPROG: Analytic
Accounts has a debit balance of $6,200; and sales for the year total $3,500,000. Bad debt expense is
estimated at 1/2 of 1% of sales.
ANSWER:
(a) $17,500 ($3,500,000 × 0.005)
Adjusted Balance
Allowance for Doubtful Accounts ($17,500 – $6,200) 11,300

Bloom’s: Applying
BUSPROG: Analytic
Accounts has a credit balance of $850; and sales for the year total $300,000. Bad debt expense is estimated
at 2.5% of sales.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of
Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable
value of accounts receivable.
ANSWER:
(a) $7,500 ($300,000 × 0.025)
Adjusted Balance
Allowance for Doubtful Accounts ($850 + $7,500) 8,350

Bloom’s: Applying
BUSPROG: Analytic
ANSWER:
(a) $19,500 ($25,000 – $5,500)
Adjusted Balance
Allowance for Doubtful Accounts ($5,500 + $19,500) 25,000

Bloom’s: Applying
BUSPROG: Analytic
Accounts has a debit balance of $5,400; and sales for the year total $3,000,000. An analysis of receivables
indicates the uncollectible receivables are estimated to be $45,000.
ANSWER:
(a) $50,400 ($45,000 + $5,400)
Adjusted Balance
Allowance for Doubtful Accounts ($50,400 – $5,400) 45,000

Bloom’s: Applying
BUSPROG: Analytic
142. Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12
the company receives a $550 check from Chad Thomas in settlement of Thomas’s $1,100 outstanding
accounts receivable. Due to Thomas’s failing health he is closing his company and is expecting to make no
further payments to Discount Mart. Journalize this declaration.
ANSWER: Dec. 12 Cash 550

Accounts Receivable, Chad Thomas 1,100
Bloom’s: Applying
BUSPROG: Analytic
143. On June 30 (the end of the period), Brown Company has a credit balance of $2,275 in Allowance for
Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be
$30,025. Journalize the appropriate adjusting entry.
ANSWER: June 30 Bad Debt Expense 27,750
$30,025 – $2,275 = $27,750

DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
144. a) The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each
periodicity range that is deemed to be uncollectible.
Est. Uncollectible Accts

Age Interval: Balance: Percentage: Amount:
Not past due 850,000 3.50%
1~30 days past due: 47,500 5.00%
31~60 days past due: 21,750 10.00%
61~90 days past due: 11,250 20.00%
91~180 days past due: 5,065 30.00%
181~365 days past due: 2,500 50.00%
Over 365 days past due: 1,145 95.00%
Total: 939,210
b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry
for the bad debt expense for the year.
ANSWER:
Est. Uncollectible Accts
Age Interval: Balance: Percentage: Amount:
Not past due 850,000 3.50% 29,750.00
1~30 days past due: 47,500 5.00% 2,375.00
31~60 days past due: 21,750 10.00% 2,175.00
61~90 days past due: 11,250 20.00% 2,250.00
91~180 days past due: 5,065 30.00% 1,519.50
181~365 days past due: 2,500 50.00% 1,250.00
Over 365 days past due: 1,145 95.00% 1,087.75
Total: 939,210 40,407.25
Dec. 31 Uncollectible Accounts Expense 39,272.25

Allowance for Doubtful Accounts 39,272.25
Calculation of expense: Amount of calculated uncollectible accounts $40,407.25

Less credit balance of account 1,135.00
Bad debt expense $39,272.25
Bloom’s:
Applying
BUSPROG: Analytic
145. For each of the following scenarios, indicate the amount of the adjusting journal entry for bad debt
expense to be recorded, the balance in allowance for doubtful accounts after adjustment at December 31,
and the net realizable value of accounts receivable at December 31.
a) Based on an analysis of Simmon’s Company’s $380,000 balance in Accounts Receivable at December

31, it was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance
for Doubtful Accounts before adjustment.
b) Blake Company had net credit sales of $900,000 at year-end, and has an Accounts Receivable balance of
$425,000 at December 31, and an Allowance for Doubtful Accounts credit balance of $11,000 before
adjustment. Blake estimates bad debt expense as 3/4 of 1% of net credit sales.
c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31. An analysis of those
receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, the
Allowance for Doubtful Accounts has a debit balance of $750.
ANSWER: a) Bad Debt Expense $ 14,300

Allowance for Doubtful Accounts at Dec. 31 15,500
Net Realizable Value of A/R at Dec. 31 364,500
b) Bad Debt Expense $ 6,750

c) Bad Debt Expense $ 24,750

Bloom’s: Applying
BUSPROG: Analytic
146. A partially competed aging of receivables schedule for Lindy Designs’ is shown below. Calculate the amount
that is estimated to be uncollectible.
a) Determine the amount estimated to be uncollectible by completing the aging of receivables schedule.
Round calculations to the nearest dollar.
Est. Uncollectible
Accounts
Age Interval Balance Percentage Amount
Not past due 550,000 2.50%
1~30 days past due 96,500 4.00%
31~60 days past due 43,750 9.50%
61~90 days past due 22,250 16.00%
91~180 days past due 5,600 31.00%
181~365 days past due 3,100 60.00%
Over 365 days past due 1,250 95.00%
Total 722,450
b) If the Allowance for Doubtful Accounts has a credit balance of $9,700, record the adjusting entry for
the bad debt expense for the year.
c) If the Allowance for Doubtful Accounts has a debit balance of $9,700, record the adjusting entry for
the bad debt expense for the year.
ANSWER: a)
Est. Uncollectible Accounts
Age Interval Balance Percentage Amount
Not past due 550,000 2.50% 13,750
1~30 days past due 96,500 4.00% 3,860
31~60 days past due 43,750 9.50% 4,156
61~90 days past due 22,250 16.00% 3,560
91~180 days past due 5,600 31.00% 1,736
181~365 days past due 3,100 60.00% 1,860
Over 365 days past due 1,250 95.00% 1,188
Total 722,450 30,110
b) Dec. 31 Bad Debt Expense 20,410

Calculation of expense:
Amount of calculated uncollectible accounts $30,110
Less credit balance of account 9,700
Bad debt expense $20,410
c) Dec. 31 Bad Debt Expense 39,810

Calculation of expense:
Amount of calculated uncollectible accounts $30,110
Plus debit balance of account 9,700
Bad debt expense $39,810
Bloom’s:
Applying
147. Discuss the (1) focus and (2) financial statement emphasis of (a) the percent of sales and (b) the
analysis of receivables methods of estimating bad debts.
ANSWER: (a) Bad debt expense is the focus of the percent of sales method. It places
more emphasis on matching revenues and expenses and thus emphasizes
the income statement.
(b) The allowance for doubtful accounts is the focus of the analysis of
receivables method. It places more emphasis on the net realizable value
of receivables and thus emphasizes the balance sheet.
BUSPROG: Analytic
148. Morry Company wrote off the following accounts receivable as uncollectible for the first year of its
operations ending December 31:
Required:
Customer Amount
J. Jackson $10,000
L. Stanton 9,500
C. Barton 13,100
S. Fenton 2,400
Total $35,000
(1) Journalize the write-offs for the current year under the direct write-off method.
(2) Journalize the write-offs for the current year under the allowance method. Also,
journalize the adjusting entry for uncollectible receivables assuming the
company made $2,400,000 of credit sales during the year and the industry
average for uncollectible receivables is 1.50% of credit sales.
(3) How much higher or lower would Morry Company’s net income have been under the direct write-off
method than under the allowance method?
ANSWER: (1) Bad Debt Expense 40,000

Accounts Receivable—J. Jackson 10,000
Accounts Receivable—L. Stanton 9,500
Accounts Receivable—C. Barton 13,100
Accounts Receivable—S. Fenton 7,400
(2) Allowance for Doubtful Accounts 40,000

Accounts Receivable—J. Jackson 10,000
Accounts Receivable—L. Stanton 9,500
Accounts Receivable—C. Barton 13,100
Accounts Receivable—S. Fenton 7,400

Uncollectible accounts estimate.
($2,400,000 × 1 1/2% = $36,000)
(3) Net income would have been $5,000 higher under the
direct write-off method, because bad debt expense is
$5,000 higher under the allowance method ($36,000
expense under the allowance method vs. $40,000 expense
under the direct write-off method).
Bloom’s: Applying
BUSPROG: Analytic
149. Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is
uncollectible. Compare the journal entry that is required under the direct write-off method to the journal
entry that is required using the allowance method.
ANSWER: Under the direct write-off method, Bad Debt Expense will be debited for
$2,700. Under the allowance method, the debit will be made to the Allowance
for Doubtful Accounts. Under both methods, Accounts Receivable, Andrew
Stephens will be credited for $2,700.
BUSPROG: Analytic
150. For a business that uses the allowance method of accounting for uncollectible receivables:
(a) Journalize the entries to record the following:
(1) Record the adjusting entry at December 31, the end of the first fiscal year, to
record the bad debt expense. The accounts receivable account has a balance of
$800,000, and the contra asset account before adjustment has a debit balance of
$600. Analysis of the receivables indicates uncollectible receivables of
$18,000.
(2) In March of the next year, the $350 owed by Fronk Co. on account is written
off as uncollectible.
(3) In November of the next year, $200 of the Fronk Co. account is reinstated
and payment of that amount is received.
(4) In December of the next year, $400 is received on the $600 owed by Dodger
Co. and the remainder is written off as uncollectible.
(b) Redo the entries in steps (2), (3), and (4) assuming the company uses the direct
write-off method.
ANSWER:
(a)
(1) Uncollectible Accounts Expense 18,600
(2) Allowance for Doubtful Accounts 350

Accounts Receivable—Fronk Co. 350
(3) Accounts Receivable—Fronk Co. 200

Cash 200
(4) Cash 400

Accounts Receivable—Dodger Co. 600
(b)
(2) Uncollectible Accounts Expense 350
(3) Accounts Receivable—Fronk Co. 200

Uncollectible Accounts Expense 200
Cash 200
(4) Cash 400

Uncollectible Accounts Expense 200
Accounts Receivable—Dodger Co. 600
Bloom’s: Applying
ACCT.WARD.16.09-04 - 09-04
ACCT.WARD.16.09-05 - 09-05
BUSPROG: Analytic
151. Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.
a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entry to record the receipt of the payment of the note at maturity.
ANSWER: a. August 10 determined as follows:
April 18 days (30-12)days

May 31 days
June 30 days
July 31 days
August 10 days
Total 120 days
b. $40,800 [$40,000 + ($40,000 × 6% × (120/360)]
c.
Aug. 10 Cash 40,800
Note Receivable 40,000
Bloom’s: Applying
BUSPROG: Analytic
152. Fill in the blanks related to the characteristics of a promissory note.

1. The party promising to pay the note is called the .
2. The amount for which the note is written is called the amount.
3. The date the note is to be paid is the date.
4. The time between the date when a note is written and the time it must be paid is called the of the
note
ANSWER: 1 maker
2. face
3. maturity or due
4. term
DIFFICULTY: Easy
BUSPROG: Analytic
153. Determine the due date and amount of interest due at maturity on the following notes:
Origination Face Term Interest Maturity Interest

Date Amount of Note Rate Date Amount
(a) Mar. 15 $8,000 60 days 9% _______ _______
(b) May 1 $12,000 90 days 8% _______ _______
ANSWER: (a) May 14; $120 ($8,000 × 0.09 × 60/360)
(b) July 30; $240 ($12,000 × 0.08 × 90/360)
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
154. Blackwell Industries received a 120-day, 9% note for $180,000, dated August 10 from a customer on account.
Required:
1. Determine the due date of the note.
2. Determine the maturity value of the note.
3. Journalize the entry to record the receipt of the payment of the note at maturity.
ANSWER: 1. The due date for the note is December 8, determined as follows:
August (31 - 10) 21 days
September 30 days
October 31 days
November 30 days
December 8 days
Total 120 days
2. $185,400 [$180,000 + ($180,000 × 9% × 120/360)]
3. Dec. 8 Cash 185,400

Interest Revenue 5,400
Bloom’s: Applying
BUSPROG: Analytic
155. Determine the due date and the amount of interest due at maturity on the following notes:
Date of Note Face Amount Interest Rate Term of Note

(1) October 1 $21,000 8% 60 days
(2) August 30 9,000 10% 120 days
(3) May 30 12,000 12% 90 days
(4) March 6 15,000 9% 60 days
(5) May 23 9,000 10% 60 days
ANSWER: Due Date Interest

(1) Nov. 30 $280 [$21,000 × 0.08 × (60/360)]
(2) Dec. 28 300 [$9,000 × 0.10 × (120/360)]
(3) Aug. 28 360 [$12,000 × 0.12 × (90/360)]
(4) May 5 225 [$15,000 × 0.09 × (60/360)]
(5) July 22 150 [$9,000 × 0.10 × (60/360)]
Bloom’s: Applying
BUSPROG: Analytic
156. Journalize the following transactions for Lucite Company.

November 14 Received a $4,800.00, 90-day, 9% note from Alan Albertson in payment of his account.
December 31 Accrued interest on the Albertson note.
February 12 Received the amount due from Albertson on his note.
Post.
Date Description Debit Credit
Ref.
ANSWER:
Nov. 14 Notes Receivable, Alan Albertson 4,800.00

Accounts Receivable, Alan Albertson 4,800.00
Dec. 31 Interest Receivable 56.40

Interest Revenue 56.40
Feb. 12 Cash 4,908.00

Interest Receivable 56.40
Notes Receivable, Alan Albertson 4,800.00
Bloom’s: Applying
BUSPROG: Analytic
157. For each of the following notes receivables held by Winter Company, determine the interest revenue to be
reported on the income statements. Round answers to nearest whole dollar.
Year 1 Year 2
Interest Interest
Date Face Rate Time Revenue Revenue
Aug. 8, Year 1 $15,000 7% 180 days
Oct. 7, Year 1 $22,000 8% 60 days
Jan. 6, Year 2 $30,000 8% 90 days
Nov. 12, Year 1 $28,000 9% 60 days
ANSWER:
Year 1 Year 2
Interest Interest
Date Face Rate Time Revenue Revenue
Aug. 8, Year 1 $15,000 7% 180 days $423* $102**
Oct. 7, Year 1 $22,000 8% 60 days 293 0
Jan. 6, Year 2 $30,000 8% 90 days 0 600
Nov. 12, Year 1 $28,000 9% 60 days 343 77
*$15,000 × 0.07 × 145/360 = $423 (rounded)

**$15,000 × 0.07 × 180/360 = $525 – $423 = $102
Bloom’s: Applying
158. Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3 to Valley Co. on account. (Assume a
360-day year when calculating interest.)
b. Determine the interest.
c. Determine the maturity value of the note.
d. Journalize the entry to record the receipt of the note from Potts on Feb. 3.
e. Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.
ANSWER: a. May 4
Feb. 4 – Feb. 28 25 days (28 - 3)
March 31 days
April 30 days
May 4 days
90 days
b. Interest = Face Amount (or principal) × Rate × Time

Interest = $200,000 × 0.07 × 90/360
Interest = $3,500
c. Maturity Value = Face Amount + Interest
Maturity Value = $200,000 + 3,500
Maturity Value = $203,500
d. Notes Receivable, Mr. Potts 200,000

Accounts Receivable, Mr.Potts 200,000
e. Cash 203,500
Notes Receivable, Mr. Potts 200,000
Bloom’s: Applying
BUSPROG: Analytic
159. Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on
account. (Assume a 360-day year when calculating interest.)
b. Determine the maturity value of the note.
c. Journalize the entry to record the receipt of the payment of the note at maturity.
ANSWER:
a. June 10 determined as:

March 19 days (31 – 12)
April 30 days
May 31 days
June 10 days
Total 90 days
b. $81,200 [$80,000 + ($80,000 × 6% × (90/360)]
c.
June 10 Cash 81,200
Note Receivable 80,000
Bloom’s: Applying
BUSPROG: Analytic
160. Watson Company issued a 60-day, 8% note for $18,000, dated April 5, to Laker Company on account.
Assume a 360-day year when calculating interest.
(a) Determine the due date of the note.
(b) Determine the maturity value of the note.
(c) Journalize the entries to record the following:
(1) Receipt of the note by the payee
(2) Receipt by the payee of the amount due on the note at maturity. Round answers to the nearest $1.
ANSWER: (a) June 4
(b) $18,240
(c) Note Receivable, Watson Co. 18,000

Account Receivable, Watson Co. 18,000
Cash 18,240
Note Receivable, Watson Co. 18,000
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
161. Journalize the following transactions (assume a 360-day year when calculating interest):
Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co.
on account.
May 30 The note of March 1 was dishonored.
ANSWER: Mar. 1 Notes receivable, Batson Co. 24,000

Accounts receivable, Batson Co. 24,000
May 30 Accounts Receivable, Batson Co. 24,600

Bloom’s: Applying
ACCT.AICPA.FN.03 - Measurement BUSPROG:
Analytic
162. Journalize the following transactions of Upton Drugs:
July 8 Received a $180,000, 90-day, 8% note dated July 8 from Miracle Chemical on account.
Oct. 6 The note is dishonored by Miracle Chemical.
Nov. 5 Received the amount due on the dishonored note plus interest for 30 days at 10% on the total
amount charged to Miracle Chemical on Oct. 6.
ANSWER: July 8 Notes Receivable, Miracle Chemical 180,000
Accounts Receivable, Miracle Chemical 180,000
Oct. 6 Accounts Receivable, Miracle Chemical 183,600

Notes Receivable, Miracle Chemical 180,000
Nov. 5 Cash 185,130

Accounts Receivable, Miracle Chemical 183,600
Interest Revenue 1,530*
*$183,600 × 0.10 × 30/360 = $1,530

Bloom’s: Applying
BUSPROG: Analytic
163. Journalize the following transactions for the Scott Company:
November 4 Received a $6,500, 90-day, 6% note from Michael Tim’s in payment of his account.
December 31 Accrued interest on the Tim’s note.
February 2 Received the amount due from Tim’s on his note.
Post.
Date Description Debit Credit
Ref.
ANSWER:
Post.
Date Description Ref. Debit Credit
Nov. 4 Notes Receivable, Tim’s Co. 6,500.00
Accounts Receivable, Tim’s Co. 6,500.00
Dec. 31 Interest Receivable 61.75

Feb. 2 Cash 6,597.50

Interest receivable 61.75
Interest revenue 35.75
Notes receivable, Tim's Co. 6,500.00
$6,500 × 6% × 57/360 = $61.75

$6,500 × 6% × 33/360 = $35.75
Bloom’s: Applying
BUSPROG: Analytic
164. For each of the following notes receivables held by Christensen Company determine the interest
revenue to be reported on the income statements for the year ended December 31. Round answers to
nearest whole dollar.
Date Face Rate Time Interest Revenue

Aug. 8 $45,000 7% 45 days
Oct. 7 $62,000 5% 60 days
Jan. 6 $28,000 4% 120 days
Nov. 12 $43,000 6% 60 days
ANSWER:
Interest
Date Face Rate Time Revenue
Aug. 8 $45,000 7% 45 days $394
Oct. 7 $62,000 5% 60 days $517
Jan. 6 $28,000 4% 120 days $373
Nov. 12 $43,000 6% 49 days $351
Bloom’s: Applying
BUSPROG: Analytic
165. Journalize the following transactions in the accounts of Simmons Company:

Mar. 1 Received a $60,000, 60-day, 6% note dated March 1 from Bynum Company on account.
Mar. 18 Received a $25,000, 60-day, 9% note dated March 18 from Solo Company on account.
Apr. 30 The note dated March 1 from Bynum Company is dishonored, and the customer’s account is charged
for the note, including interest.
May 17 The note dated March 18 from Solo Company is dishonored, and the customer’s account is charged
for the note, including interest.
July 29 Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days
at 8% on the total amount debited to Bynum Company on April 30.
Aug. 23 Wrote off against the allowance account the amount charged to Solo Company on May 17 for
the dishonored note dated March 18.
ANSWER:
Mar. 1 Notes Receivable 60,000
Accounts Receivable—Bynum Co. 60,000
18 Notes Receivable 25,000

Accounts Receivable—Solo Co. 25,000
Apr. 30 Accounts Receivable—Bynum Co. 60,600

Interest Revenue 600*
*($60,000  6%  60/360)
May 17 Accounts Receivable—Solo Co. 25,375

Interest Revenue 375*
*($25,000  9%  60/360)
July 29 Cash 61,812

Accounts Receivable—Bynum Co. 60,600
Interest Revenue 1,212*
*60,600  0.08  90/360 = $1,212
Aug. 23
Accounts Receivable—Solo Co. 25,375
Bloom’s: Applying
ACCT.WARD.16.09-06 - 09-06
BUSPROG: Analytic
166. On the basis of the following data related to assets due within one year for Simons Co., prepare a partial
balance sheet in good form at December 31. Show total current assets.
Cash $ 56,000
Accounts receivable 325,000
Allowance for doubtful accounts 25,000
Interest receivable 3,000
Supplies 4,000
Inventory 45,000
Other current assets 10,000
ANSWER:
Simons Co.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 56,000
Accounts receivable $325,000
Less allowance for doubtful accounts 25,000 300,000
Inventory 45,000
Supplies 4,000
Other current assets 10,000
Total current assets $418,000
Bloom’s: Applying
ACCT.ACBSP.APC.15 - Current Assets Reporting
BUSPROG: Analytic
167. On the basis of the following data related to assets due within one year for Webb Co., prepare a partial
balance sheet in good form at December 31. Show total current assets.
Cash $ 96,000
Notes receivable 50,000
Accounts receivable 275,000
Allowance for doubtful accounts 40,000
ANSWER:
Webb Co.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 96,000
DIFFICULTY: Easy
Bloom’s: Applying
BUSPROG: Analytic
168. The following are the current assets of Barnes Co. as of December 31:
Accounts Receivable $ 38,000

Cash 45,000
Interest Receivable 5,500
Prepare the current assets section of the balance sheet.
ANSWER:
Barnes Co.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 45,000

Merchandise inventory 88,000
Bloom’s: Applying
BUSPROG: Analytic
169. Based on the following data and using a 365-day year, compute (a) the accounts receivable turnover and
(b) the number of days' sales in receivables for year 2 to 2 decimal places. The industry average turnover
is 20 times during the year, and the number of days' sales in receivables averages 25. (c) Comment on this
situation.
12/31/Year 1 accounts receivable $ 100,000

12/31/Year 2 accounts receivable 70,000
For the year ended 12/31/Year 1, sales 1,050,000
For the year ended 12/31/Year 2, sales 1,200,000
ANSWER: (a) $1,200,000 ÷ [($100,000 + $70,000) ÷ 2] = 14.12

(b) [($70,000 + $100,000) ÷ 2] ÷ ($1,200,000 ÷ 365 days) = 25.85 days
(c) This situation is slightly better than the industry average.
Bloom’s: Applying
BUSPROG: Analytic
170. For the fiscal years 1 and 2, Grange Co. reported the following:
Year Ended December 31,
Year 1 Year 2
Sales $44,123,486 $34,124,961
Accounts receivable 749,321 719,365
a. Compute the accounts receivable turnover for Year 2. Round to two decimals.
b. Compute the number of days’ sales in receivable at the end of Year 2. Round to two decimals.
ANSWER:
a. Accounts receivable turnover = Sales/Average accounts receivable
Accounts receivable turnover = $34,124,961/[($749,321 + $719,365)/2]
Accounts receivable turnover = 46.47
b. Number of days’ sales in receivables = Accounts receivable, end of

year/Avg. daily sales
Number of days’ sales in receivables = [($749,321 + $719,365)/2]/
($34,124,961/365 days)
Number of days’ sales in receivables = 7.85
Bloom’s: Applying
BUSPROG: Analytic
171. Financial statement data for the years ended December 31 for Parker Corporation are as follows:
Current Year Prior Year
Sales $2,595,600 $2,409,500

Accounts receivable:
Beginning of the year $390,000 $400,000
End of the year 434,000 390,000
a) Determine the accounts receivable turnover for each year. Round to one decimal place.
b) Determine the number of days’ sales in receivables for each year. Round to whole days.
c) Does the change in accounts receivable turnover and number of days’ sales in receivables from the first year
to the second year indicate a favorable or unfavorable trend?
ANSWER: a) Accounts receivable turnover:

Average Accounts Receivable
(390,000 + 434,000)/2 $412,000
(400,000 + 390,000)/2 $395,000
Accounts Receivable Turnover

2,595,600/412,000 6.3
2,409,500/395,000 6.1
b) Number of days’ sales in receivables:
Average daily sales:

(2,595,600/365 days) $7,111
(2,409,500/365 days) $6,601
Number of days’ sales in receivables:

(412,000/7,111) 58 days
(395,000/6,601) 60 days
c) The increase in the accounts receivable turnover from 6.1 to 6.3 times
and the decrease in number of days’ sales in receivables from 60 days
to 58 days indicates a favorable trend in the efficiency of collection of
accounts receivables.
Bloom’s: Applying
BUSPROG: Analytic
Match each description to the appropriate term (a-i).

a. Accounts receivable turnover
b. Net realizable value
c. Accounts receivable
d. Aging report
e. Receivables
f. Direct write-off method
g. Allowance for doubtful accounts
h. Bad debt expense
i. Factoring
DIFFICULTY: Easy
ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCT.WARD.16.09-04 - 09-04
ACCT.WARD.16.09-08 - 09-08
BUSPROG: Analytic
172. A receivable created from selling merchandise or services on account
ANSWER: c
173. A list of customer accounts sorted by age classes
ANSWER: d
174. A contra asset that represents the amount of estimated uncollectible receivables
ANSWER: g
175. Records bad debt expense only when a specific customer’s account is deemed worthless
ANSWER: f
176. Operating expense recorded as a result of receivables becoming uncollectible
ANSWER: h
177. The difference between accounts receivable and allowance for doubtful accounts
ANSWER: b
178. Term for selling receivables
ANSWER: i
179. All money claims against other entities
ANSWER: e
180. Measures how frequently during the year accounts receivables are being turned into cash
ANSWER: a
Match each description to the appropriate term (a-d). Each term may be used more than once.
a. Direct write-off method
b. Aging of receivables method
c. Percent of sales method
d. Allowance method
DIFFICULTY: Easy
ACCT.WARD.16.09-04 - 09-04
ACCT.WARD.16.09-05 - 09-05
BUSPROG: Analytic
181. This method records bad debts when specific accounts are deemed uncollectible.
ANSWER: a
182. When using this method, estimated bad debts are added to the existing allowance balance.
ANSWER: c
183. This method is most often used by small companies with few receivables.
ANSWER: a
184. This method is based on the theory that older accounts are less likely to be collected.
ANSWER: b
185. This method focuses on the balance sheet.
ANSWER: b
186. Offers two methods of estimating uncollectible accounts.
ANSWER: d
187. With this method, there is no allowance account.
ANSWER: a
188. This method focuses on the income statement.
ANSWER: c
Match each description to the appropriate term (a-h).

a. Face amount
b. Term
c. Interest
d. Maturity value
e. Dishonored note
f. Maker
g. Notes receivable
h. Interest rate
DIFFICULTY: Easy
BUSPROG: Analytic
189. A formal, written instrument of credit that represents amounts due from customers
ANSWER: g
190. The amount due that must be paid at the due date of a note receivable
ANSWER: d
191. The amount charged for using the money of another party
ANSWER: c
192. The stated rate charged for using the money of another party
ANSWER: h
193. A note that is not paid when it is due
ANSWER: e
194. The dollar amount stated on a promissory note
ANSWER: a
195. The party promising to pay a note
ANSWER: f
196. The time between the date a note is issued and the due date of the note
ANSWER: b
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This is the style that leads from the stigma that brushes the
bee that gathers the pollen that lies in the anther that grows on the
stamen that lives in the flower so bright and gay.
This is the ovary that stands under the style that

leads from the stigma that brushes the bee that gathers the pollen
that lies in the anther that grows on the stamen that lives in the
flower so bright and gay.
This is the ovule that hides in the ovary that stands under the
style that leads from the stigma that brushes the bee that gathers the
pollen that lies in the anther that grows on the stamen that lives in
the flower so bright and gay.
This is the seed that grows from the ovule
BECAUSE
the ovule hid in the ovary, the ovary stood under the style, the style
led from the stigma, the stigma brushed the bee, the bee gathered the
pollen, the pollen lay in the anther, the anther grew on the stamen,
and the stamen lived in the flower so bright and gay!
THE CALYX.
The calyx is green.
The calyx is strong.
The calyx protects the ovary.
It has five sepals—five green sepals.
They overlap like the tiles on a roof and thus protect the
ovary from rain. They also protect it from insects that
otherwise might destroy it.
The calyx covers the base of the corolla and forms a green
urn, a little vase, in which to hold it secure from harm.
It is not bright and delicate like the corolla, but what would the
flower do without it?
BLOSSOM DEAR.
Blossom dear, what is the power

Draws the shining wings to thee?
Nestled in thy dainty bower
I can always find a bee.
Little friend, my bees find honey

Hidden deep as deep can be.
Without fear and without money
Come they for these sweets to me.
Flower, flower, give me honey,
Give me honey from thy store.
I will pay with love and money;
Stores of money, and love much more.
Dear, I cannot give you honey.
Shall I truly tell you why?
Bees pay better worth than money
As they have wings, but you can’t fly!
So I coax them with my honey,

Feed them with my very best,
While their wings bear life to many
Waiting in the cradle nest.
For the children of the flowers

Need the precious pollen dust,
And the bees have winged powers
To bear to them this sacred trust.
WHAT HAPPENED IN THE GARDEN.
The morning-glory lay rolled up in the bud down under the leaves.
One day it bloomed.
The firm stem held it up, the bud unrolled, and
the blossom stood there, fresh and fair.
The bees saw it from afar, and came as fast as
they could.
They flew to the pink corolla, and, entering,
enjoyed the feast spread for them.
The morning-glory, because of their coming,
had filled the nectar cups and opened the boxes of
snow-white pollen.
One after the other the bees came, drank the
nectar, and carried away the pollen. As fast as the
cups were emptied they were filled again.
The honeybees and the bumblebees were
provided with baskets, which they filled with
pollen; but the other bees carried it away on the
long hairs of their bodies.
The morning-glory glowed in the sunshine all
day long, happy, no doubt, in the consciousness
that the little seed-children had begun to grow. It
was because of them the bees were made so
welcome.
We can imagine the flower might feel like
saying, “This is my seed-children’s birthday party;
come often, dear bees, and sip my nectar and take
my pollen. But be like the good fairies and bring
each a gift to my seed-children.”
The bees buzzed and came and went and came and went.
Each time they took away nectar and pollen to their hives, and
each time left something for the seed-children.
Do you suppose they left a cap of darkness, and a pair of seven-
league boots, and a sword that always conquered, and a magic carpet
that took people wherever they wanted to go, as the fairies used to do
in the times when fairies were alive and came to
the christenings of little children?
I do not think the bees brought any of these
things to the birthday party of the seed-
children.
The bees, not being real fairies, were obliged
to bring what they could.
Now, the day that the pink morning-glory
bloomed, a great many other morning-glories
came out of their buds, and they all gave the
bees a welcome.
They filled their cups with nectar and opened
their boxes of snow-white pollen.
Such a feast as was spread for the bees! Blue
morning-glories, and pink and purple and
white ones, on all sides they stood, fresh and
smiling, and invited the bees to come.
And the bees came. They went from one to
the other as fast as they could. They sucked up
nectar from all, and took it home and made
morning-glory honey of it. And they gathered
snow-white pollen from all, and took it home
and made morning-glory beebread of it.
But they did not carry home all the snow-
white pollen. They bore some of it as gifts to the seed-children.
The seed-children needed the pollen; they could not grow into
seeds without it, and they needed the pollen from another flower, not
that from their own. So the pollen the bees brought them was better
far than caps or boots or carpets or any of those things the fairies
used to bring to human children.
And this is why the morning-glories made the bees so welcome.
They could not take their pollen to each other, for they could not
leave their stems; so they employed the bees to carry it for them.
The morning-glories nodded to each other across the garden. “I
will send my bee to you,” one said to another, and the bee came and
left a few grains of pollen from the friendly flower. In this way the
morning-glories exchanged pollen all day long, so that each had
plenty of fresh neighbors’ pollen to give the seed-
children.
The flowers lasted all day, from sunrise to
sunset, and the nectar lasted all day, and the
snow-white pollen. But when night came the bees
went home to sleep, and the morning-glories, too,
slept. They rolled in the edges of their corollas so
that the way to the nectar cups was closed.
Next day the morning-glories did not open
again. There was no more nectar in their cups and
no more snow-white pollen in their anther cells.
Other morning-glories came out of their buds and
invited the
bees, but these
staid shut.
Soon the
corollas, faded
now and no
longer lovely to
look at, fell off.
Their work was
done. They had
been beautiful
to show how
happy they
were and how
lovely life was;
by their
beauty, too,
they had
brought the bees and gained the pollen they wanted to make other
lovely flowers live. Now, their messages of love and happiness given,
they fell off, and the pollen boxes, empty and withered, fell with
them.
But they left behind life and hope, for each tiny seed had received
its grain of life-assuring pollen. For only the corolla and the stamens
fell. The seed-children still clung to the stem; they lay in their
cradles, nicely wrapped up by the green calyx leaves. And then the
little stems that held the seed-babies’ cradles turned down and hid
the little cradles under the leaves.
The seed-babies grew and grew. They would soon have outgrown
their cradles, only the strange thing is, the cradles grew too! They
grew as fast as the seeds and kept them snug and safe.
So all summer long, until the frost
came and it was time for the morning-
glories to take their long winter sleep,
the buds opened in the morning. All
summer long the bright morning-glories
filled their cups with nectar and opened
their boxes of snow-white pollen for the
bees. And all summer long the seed-
children received their pollen and grew
and grew in their cradles that grew too.
But after a while the green cradles
turned brown. And after another while
the brown cradles opened to let the seed-
children look out, and as soon as this
happened every little black seed—for
they had grown quite black by this time
—fell out of its cradle! It did not hurt it
to fall out, for it tumbled and rolled
down to the earth, where, at last, the
wind came and covered it with leaves, as
the robins covered up the babes in the
woods. And the little black seed-babies
lay there as snug as seed-babies could
be.
Then the snow came and spread a
blanket over them, and the leaves and
the snow kept them as warm as they
wanted to be until springtime came and
the snow went away; and the seeds
began to stretch themselves and think it
was time to wake up and go out and see what was going on in the big
world above.
THE OVULES
When the ovules get ready to grow, the flower
prepares to bloom.
All about the ovules the delicate walls of the
ovary shut tightly.
The white filaments of the stamens group
themselves about it; you cannot see the ovary,
they stand so close to it.
Their anther cells reach halfway up to the
stigma, for the white stigma stands above the
anthers. The anthers and the stigma are there for
the sake of the ovules.
But this is not all.
A delicate corolla of bright
colors surrounds the stamens
and pistil. It holds them in its
white tube, and spreads the
bright border out wide for the
bees to see and come to the
help of the ovules.
The green calyx wraps its sepals about the end of the corolla
tube, and when the corolla falls the calyx covers nicely the
ovary and helps it protect the ovules.
When the bees have been and have left their message
of life, and when the corolla has faded and fallen, the
stems of the flowers turn down and hide the ovary with its
seedlets under the leaves.
The leaves work day and night to make food for the plant, and
some of it goes to the ovules. The leaves eat what is in the air and
change it to food for the rest of the plant and the ovules.
The roots suck food from the hard earth; they help the leaves make
food.
The stems carry the food from the roots to the leaves, and from the
leaves to the flowers, where it gets to the ovules.
Why should so much be done for the sake of the tiny ovules, white
little atoms at the heart of the flower?
Why should the flowers care? Why should they spread bright
corollas and arrange these cunning protections and draw up the sap
for the sake of the tiny white ovules?
Look into the ovary and see them.
Six small white things are they, so small and soft you
would scarcely think they were worth much care.
But look again and think a little. They are very wonderful,
although so small. They grow to the ovary by a little stem;
they get the good sap to grow on through this stem. They
have a little hole through their delicate coats, and through
this hole the pollen enters.
When the pollen is in, the little hole closes, and the ovules feel
strong and alive. They draw in the sap the leaves have made them
through their little stem; they grow larger and firmer. They cease to
be tiny white round things; they get two leaves with a little stem and
a bud between them.
They are no longer ovules, they are seeds. They are little sleeping
vines. In each black little seed is a whole vine packed away.
After a time the old vine will fade away. It will fall and turn brown.
It will do no more work of changing gases and minerals into living
plant. It will not again have green leaves and bear bright flowers.
But there will be more morning-glories, for the vine has stored
some of its life in the seeds, and they will not fade and cease to work.
All that is left of the life of the vine is in the seeds. All the morning-
glories that will grow and delight us with their bright flowers next
summer lie packed away in the dark seeds.
Dear little seeds, live on through the cold winter; without you we
never again could see our bright morning-glories!
And that is why the vines take such care of the seeds; the whole
race of morning-glories is in their keeping.
THE LEAVES.
The leaves of the morning-glory consider each other. They stand
close together, but, as you see, they do not crowd.
They turn a little to one side that all may have as
much room as possible, for each needs all the light
and air it can get.
The leaves also have regard for the roots working
away in the dark earth. Instead of being flat, they
have a channel down the middle, a gutter to convey
the rain water from leaf to leaf, and finally to the
ground above the roots.
Some of the roots, it is true, stray away, but some
stay close to the plant and suck up the rain the leaves
send them.
The young leaves fold together. They are very
tender, and too much cold or too much heat would
harm them; and if they were open, the sun would
draw away too much of their water.
So they lie close and snug, and do not open until
they have grown large and strong enough to meet the
bright sunshine and the cold night.
Then they open wide; they become green and do
their work, which is to make food for the plant.
TO THE MORNING-GLORY.
What do you do with your pollen so white?

What do you do with your honey so sweet?
What is the use of your border so bright?
And what is the use of your calyx so neat?
THE CONVOLVULUS FAMILY.
Thi
s is a
large
and,
on the
whole
,
aristo
cratic
family
.
Abo
ut two
thous
and
differ
ent
kinds
of
plants
belon
g to it;
but
not so
many
in our
climat
e.
Perha
ps not
more
than
two
hundred of the Convolvulaceæ, which is the proper name of this
family, come as far North as we live.
They are rather cold-blooded people, these Convolvulaceæ, and
prefer to stay in or near the tropics.
Up our way are the morning-glories, as you know. This is not their
native home, though, as it is of the bloodroots, the bindweeds, and all
the other wild flowers.
They were brought here from the hot part of America, near the
equator. Somebody saw them, no doubt, and of course fell in love
with them and sent some seeds to their friends in the North, or else
took them when they went home.
Perhaps a sailor boy, landing in South America and seeing the
bright flowers in the morning sunshine, thought of the New England
village where he lived and which he often longed for there in that
strange hot country, and perhaps he sent the seeds of these bright
flowers home in a letter. But whoever may have sent the first seeds, it
is certain the morning-glories received a hearty welcome in our
Northern world. And they soon behaved like old settlers.
They grew cheerily where they were planted, and their seeds fell to
the ground, where they managed to survive the cold Northern winter.
This must have been a great surprise to them the first time they
felt it!
Then up they came in the spring just as though they were at home.
They even strayed away from the people’s gardens and grew wild
near the villages.
Perhaps they met their Northern cousins the bindweeds there. And
what a surprise that must have been,—to come up from South
America and find a member of one’s own family who had always
lived in the cold North!
See how astonished the morning-glory at the bottom of the page
looks as it gazes upon its cousin the bindweed!
For the bindweeds, you must know, are like the bloodroots and
mandrakes and other wild flowers; they are natives of our Northern
climate.
There are several kinds of bindweeds just as there are several
kinds of morning-glories; but they are all, morning-glories and
bindweeds alike, descended from some way-back convolvulus
ancestor, just as you and your cousins and your second cousins and
your third cousins and your fourteenth cousins are all descended

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4. Other receivables include nontrade receivables such as loans to company officers.

14. No allowance account is used with the direct write-off method.

18. Allowance for Doubtful Accounts is a liability account.

33. The interest on a 6%, 60-day note for $5,000 is $300.

34. The party promising to pay a note at maturity is the maker.

40. When a note is written to settle an open account, no entry is necessary.

49. Other receivables includes all of the following except

51. Which statement is not true?

52. The term "receivables" includes all

54. When does an account become uncollectible?

56. The direct write-off method of accounting for uncollectible accounts

58. An alternative name for bad debt Expense is a(n)

59. Two methods of accounting for uncollectible accounts are the

62. Selling receivables is called

64. One of the weaknesses of the direct write-off method is that it

73. A debit balance in the Allowance for Doubtful Accounts

a. Bad Debt Expense 17,000

110. Interest on a note can be calculated without knowledge of the

115. When referring to a note receivable or promissory note

116. When a company receives an interest-bearing note receivable, it will

b. Interest Receivable 800

121. Current assets are usually listed in order

122. The accounts receivable turnover measures

123. The number of days' sales in receivables

124. Given the following information, compute accounts receivable turnover:

Gross sales $150,000 Accounts receivable, beginning of year $18,000

Sales 135,000 Accounts receivable, end of year 22,000

Other receivables result from non-trade transactions (interest, taxes,

129. List at least three indicators that a receivable may be uncollectible.

April 1 Accounts Receivable 7,200

June 10 Cash 2,400

Oct. 11 Accounts Receivable—Jim Dobbs 4,800

ANSWER: Sept. 15 Bad Debt Expense 675

May 10 Accounts Receivable—Andrew Warren 4,000

ANSWER: (a) Direct Write-Off Method

ANSWER: (a) Amount added: $8,200 Ending balance: $8,500

April 1 Accounts Receivable 7,200

Cost of Merchandise Sold 5,400

June 10 Cash 2,400

Oct. 11 Accounts Receivable—Jim Dobbs 4,800

(c) Net realizable value ($700,000 – $23,000) $677,000

(c) Net realizable value ($750,000 – $11,300) $738,700

(c) Net realizable value ($90,000 – $8,350) $81,650

(c) Net realizable value ($550,000 – $25,000) $525,000

(c) Net realizable value ($675,000 – $45,000) $630,000

ANSWER: Dec. 12 Cash 550

$30,025 – $2,275 = $27,750

Est. Uncollectible Accts

Dec. 31 Uncollectible Accounts Expense 39,272.25

Calculation of expense: Amount of calculated uncollectible accounts $40,407.25

a) Based on an analysis of Simmon’s Company’s $380,000 balance in Accounts Receivable at December

ANSWER: a) Bad Debt Expense $ 14,300

b) Bad Debt Expense $ 6,750

c) Bad Debt Expense $ 24,750