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Question 7 a: The journal entry to record the write off of an account receivable of $500 would include ________.
| a | | a debit to Allowance for Bad Debts for $500 |
| b | | a credit to Allowance for Bad Debts for $500 |
| c | | a debit to Bad Debts Expense for $500 |
| d | | a credit to Bad Debts Expense for $500 |
| e | | None of the above |
b: Which of the following is the correct way to estimate the uncollectible allowance based on the percentage-of-sales method?
| a | | The percentage of uncollectible accounts receivable to total outstanding accounts receivable. |
| b | | The percentage of total outstanding accounts receivable to total sales. |
| c | | The percentage of total sales to credit sales. |
| d | | The percentage of uncollectible accounts receivable to total sales |
c: Which of the following statements is true regarding the discounting of a note receivable?
| a | | Discounting occurs when a note receivable is transferred to a financial institution in order to obtain immediate cash. |
| b | | When selling a note receivable, financial institutions value the sale at the amount of the note's maturity value minus a financing fee discount |
| c | | If the note receivable is sold before the midpoint of its maturity term, the buyer receives a discount on the sale price. |
| d | | both A and B |
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