ACCT 213
Mid-term Mock Exam
Q. 1) Choose and circle the best answer on the following questions:
1.
The method of accounting for uncollectible accounts that results in a better
matching of expenses with revenues is the:
a. aging accounts receivable method.
b. direct write-off method.
c. percentage of receivables method.
d. percentage of sales method.
2.
An aging of a company's accounts receivable indicates that SR 4,000 are
estimated to be uncollectible. If Allowance for Doubtful Accounts has a SR
1,200 credit balance, the adjustment to record bad debts for the period will
require a:
a. debit to Bad Debts Expense for SR 4,000.
b. debit to Allowance for Doubtful Accounts for SR 2,800.
c. debit to Bad Debts Expense for SR 2,800.
d. credit to Allowance for Doubtful Accounts for SR 4,000.
3.
Using the percentage of receivables method for recording bad debts
expense, estimated uncollectible accounts are SR 10,000. If the balance of
the Allowance for Doubtful Accounts is SR 2,000 credit before adjustment,
what is the balance of the Allowance for Doubtful Accounts after
adjustment?
a. SR 10,000
b. SR 12,000
c. SR 8,000
d. SR 2,000
4.
Using the percentage of receivables method, the uncollectible accounts for
the year is estimated to be SR 28,000. If the balance for the Allowance for
Doubtful Accounts is a SR 7,000 credit before adjustment, what is the
amount of bad debts expense for the period?
a. SR 7,000
b. SR 21,000
c. SR 28,000
d. SR 35,000
1
Q. 2 ) Newton Company has the following accounts in its general ledger at July
31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500.
During August, the following transactions occurred.
Oct. 15
Sold $15,000 of accounts receivable to Fast Factors, Inc. who assesses
a 3% finance charge.
25
Made sales of $800 on VISA credit cards. The credit card service
charge is 2%.
Instructions:
Journalize the transactions.
Date
Newton Company
General Journal
Account Titles
Dr.
Cr.
2
Q.3) The Bash Company uses the allowance method in accounting for
uncollectible accounts. Past experience indicates that 1% of net credit sales will
eventually be uncollectible. Selected account balances at December 31, 2014, and
December 31, 2015, appear below:
12/31/14
Net Credit Sales
SR 400,000
Accounts Receivable
75,000
Allowance for Doubtful Accounts
5,000
12/31/15
SR 500,000
100,000
?
Instructions
(a) Record the following transactions in 2015.
Aug. 10
Determined that the account of Cairo company for SR 1,000
is uncollectible.
Oct. 10
Received a check for SR 1000 as payment on account from Cairo
company, whose account had previously been written off as
uncollectible.
(b) Prepare the adjusting journal entry to record the bad debt expense for the
year ended December 31, 2015.
Bash Company
General Journal
Account Titles
Date
Dr.
Cr.
__________________________________________
__________________________________________
500,000 × 1% = 5,000
3
Q. 4)
Alsafa Company purchased a delivery truck for SR 35,000 on January 1, 2014. The
truck was assigned an estimated useful life of 100,000 miles ( 5 years) and has a
residual value (salvage value) of SR 10,000. The truck was driven 18,000 miles in
2014 and 22,000 miles in 2015.
Instructions
1)
Compute depreciation expense using the units-of-activity method,
declining balance method and straight line method for the year 2015.
2)
Prepare the journal entry to record the depreciation expense for the
year 2015 using the declining balance method.
3)
Show the delivery truck account on the balance sheet for the year
ended 31 Dec. 2015 using straight line method
1)
units-of-activity method
2014:
2015:
Declining balance method
2014:
2015:
Straight line method
2014:
2015:
2)
Date
Alsafa Company
General Journal
Account Titles
Dr.
Cr.
4
3)
Alsafa Company
Balance Sheet (partial)
December 31, 2015
——————————————————————————————————
Plant Assets
Q. 5)
Carey Enterprises sold equipment on January 1, 2014 for $10,000. The equipment
had cost $48,000. The balance in Accumulated Depreciation at January 1 is
$40,000. What entry would Carey make to record the sale of the equipment?
5
6