Reference no: EM132611096

Questions -

Q1. The principal amount of a $2800, 9%, 1-month note receivable is

$2842.

$2809.

$2800.

$3052.

Q2. At December 31, 2021, Waterway Equipment has gross accounts receivable of $127000. There is a $9500 credit balance in the allowance for doubtful accounts. Bad debt are estimated to be 13% of accounts receivable. The allowance for doubtful accounts at December 31, 2021 is

$9500.

$16510.

$1235.

$15275.

Q3. During 2021, Tamarisk's sales increased by 19.5%. If accounts receivable increased by 40.5%, this may indicate that

the company's collections have improved.

the company may be increasing sales by loosening its credit policies.

the company's collection policies have become more aggressive.

the company's management is focusing on cash sales.

Q4. Concord Construction Co. receives a note receivable from Tamarisk Plastics Inc. as settlement of an overdue account receivable. The note is for three months and bears an annual interest rate of 8%. The original accounts receivable balance was $900. When the note is collected, Concord Construction Co. will recognize interest revenue of

$72.

$972.

$18.

$918.

Q5. When the allowance method of accounting for uncollectible accounts is used, bad debt expense is recorded

in the year after the credit sale is made.

in the same year as the credit sale.

as each credit sale is made.

when an account is written off as uncollectible.