140. Under the allowance method of accounting for bad debts, why must uncollecti

Question

140. Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period?

a. To match bad debt expense to the period in which the revenues were earned.

b. To allow the collection department to schedule work for the next accounting period.

c. To determine the gross realizable value of accounts receivable.

d. The IRS rules require the company to make the estimate.



148. The interest on a $6,000, 10%, 1-year note receivable is

a. $50.

b. $600.

c. $6,600.

d. $6,000.



154. 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 upon receiving the note?


a. debit Notes Receivable 3,000
credit Accounts Receivable-Bay Company 3,000


b. debit Notes Receivable 3,045
credit Accounts Receivable-Bay Company 3,045


c. debit Notes Receivable 3,045
credit Accounts Receivable-Ray Company 3,000
credit Interest Revenue 45


d. debit Notes Receivable 3,000
debit Interest Receivable 45
credit Accounts Receivable-Bay Company 3,000
credit Interest Revenue 45

Explanation / Answer

140 a. To match bad debt expense to the period in which the revenues were earned. 148 b. The interest on a $6,000, 10%, 1-year note receivable is = 6000*10% = $600 154 a. debit Notes Receivable 3,000 credit Accounts Receivable-Bay Company 3,000

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