INTERMEDIATE ACCOUNTING 1 QUIZ
RECEIVABLES
NAME ;
YEAR AND SECTION;
SELECT THE CORRECT ANSWER (PLEASE SHOW YOUR COMPUTATIONS )
1. In calculating the carrying amount of loan receivable, the lender adds to the principal
a. Interest incurred by the borrower
b. Loan origination fee charged to the borrower
c. Direct loan origination cost incurred by the lender .
d. Indirect loan origination costs incurred by the lender
2. STATEMENT 1 A debit balance in the allowance for doubtful accounts may happen before the
year end entry for doubtful accounts expense
Statement 2 Generally , doubtful accounts expense is presented as a selling expense since it is
related to the collection function of the business
Statement 3 The aging method of estimating doubtful accounts is a variation of the
percentage of ending receivables method ‘
a. True; false; false
b. False; false; true
c. True; false ; true
d. False ; true ; true
e. True; true ; false
3. The entry to record a note receivable discounted with a bank most likely includes
a. Debiting cash equal to the maturity value of the note
b. Crediting note receivable equal to the maturity value of the note
c. Debiting cash equal to the face amount of the note
d. Crediting note receivable equal to the face amount of the note
4. Which of the following freight terms creates an allowance for freight charges ?
a. Fob shipping point freight prepaid
b. Fob shipping point freight collect
c. Fob destination freight prepaid
d. Fob destination freight collect
5. Which of the following is true regarding non interest bearing note receivable ?
a. They are always discounted to their present value on initial recognition .
b. They include a specified principal amount but an unspecified interest amount
c. They include a specified principal and specified interest
d. They cause no interest income to be recognized over their term
e. They include an unspecified principal and an unspecified interest
6. On July 1, of the current year , an entity received a one year note receivable bearing interest
at the market rate. The face amount of the note receivable and the entire amount of the
interest are due on June 30 of next year. On December 31 of the current year , the entity
should report in the statement of financial position
a. No interest receivable
b. A deferred credit for interest applicable to next year
c. Interest receivable for the interest accruing this year
d. Interest receivable for the entire amount of the interest due on June 30 of next year
7. Assignment of receivables
a. Are disclosed only
b. Are recognized by debiting accounts receivable assigned
c. Give rise to receivables from factor
d. B and d
8. Why is the allowance method preferred over the direct write off method of accounting for bad
debts ?
a. Estimates are used
b. The allowance method is used for tax purposes
c. Improved matching of bad debts expense with revenue is achieved
d. Determining worthless accounts under direct write off method is difficult to do.
9. Which of the following statements is true in relation to presentation of receivables in the
statement of financial position .
a. Non trade receivables are presented as non current assets
b. Trade receivables and non trade receivables are shown separately
c. Trade accounts receivable and trade notes receivable shall be presented separately
d. Trade receivables and non trade receivables which are currently collectible shall be
presented as one line item called trade and other receivables .
10. 1. Pledge of receivables is non formal , thus reclassification entry is not required
2. Assignment involves general receivables that serve as collateral for a loan obtained .
a. True; false
b. False ; true
c. False; false
d. True; true
11. David corporation started operations . During the period , David uses allowance method of
accounting for bad debts. The following summary schedule was prepared from an aging of
accounts receivable outstanding on December 31, of the current year .
NO. OF DAYS OUTSTANDING AMOUNT PROBABILITY OF COLLECTION
0-30 Days 500,000 .98
31-60 days 200,000 .90
Over 60 days 100,000 .80
The following additional information is available for the current year
- Accounts deemed worthless 5,000
- Accounts recovered 2,000
What is the recoverable historical cost of accounts receivable at year end ?
a. 750,000
b. 800,000
c. 747,000
d. 745,000
12. On December 31, 2024 , MINDANAO CORPORATION reported that the current receivables
consisted of the following ;
Trade accounts receivable 930,000
Allowance for uncollectible accounts (20,000)
Claims against shipper for goods lost in transit ( November 2024) 30,000
Selling price of unsold goods sent by MIAMI on consignment at 130 % of cost (not included in
MIAMI’s ending inventory 260,000
Security deposit on lease of warehouse used for storing some inventories 300,000
Total 1,500,000
On December 31, 2024 what total amount should be reported as trade and other receivables
under current assets ?
a. 940,000
b. 1,200,000
c. 1,240,000
d. 1,500,000
13. On January 1, 2024 MANALO corporation reported the following balances
Note receivable from sale of building 7,500,000
Note receivable from an officer 2,000,000
The 7,500,000 note receivable is dated MAY 1, 2024 . The 2,000,000 note receivable is dated
December 31, 2021, bears interest at 8 percent and is due on December 31, 2026. Interest is
payable annually on December 31 and all interest payments were made through December
31, 2024 . On July 1, 2024 Manalo corporation sold a parcel of land to Jose corporation for
4,000,000 under an installment sale contract . Jose made a 1,200,000 cash downpayment on
July 1, 2024 , and signed a 4 year 10 percent note for the 2,800,000 balance. The equal annual
payments of principal and interest on the note totaled 880,000 payable on July 1 of each year
from 2025 through 2028.
What is the total amount of notes receivable including accrued interest that should be
classified as current assets on December 31, 2024?
What is the total amount of notes receivable including accrued interest that should be
classified as current assets on December 31, 2024 ?
a. 2,940,000
b. 3,080,000
c. 3,540,000
d. 3,820,000
14. What is the total amount of notes receivable that should be classified as non current assets on
December 31, 2024?
a. 4,500,000
b. 6,420,000
c. 6,700,000
d. 7,300,000
15. On August 31, 2024 , BUNNY corporation discounted with recourse a note at the bank at
discount rate of 15 percent. The note was received from the customer on August 1,2024 is 90
days , has a face value of 5,000,000 and carries an interest rate of 12 percent. The customer
paid the note to the bank on October 30, 2023, the date of maturity. If the discounting is
accounted for as a secured borrowing , what is the interest expense to be recognized on
August 31, 2024 ?
A. 21,250
B. 25,000
C. 28,750
D. 50,000
16. Hanz company accepted a 200,000 , 90 day 12 percent interest bearing note dated November
15, 2025 from a customer. On December 15, 2025 , HANZ company discounted the note of
HSBC BANK at 15 percent discount rate. Hanz company informed the maker of the note
regarding the discounting arrangement . ON maturity date , the maker of the note did not pay
the note and as a result HSBC changed HSBC for the total amount due plus 2,000 protest fee.
How much should hanz company pay to hsbc bank , when the maker fails to pay the note
upon its maturity?
a. None
b. 202,000
c. 206,000
d. 208,000
17. George Company factored 4,000,000 of accounts receivable without a guarantee for a finance
charge of 5 percent. The finance entity retained an amount equal to 10 percent of accounts
receivable for possible adjustments .
what amount should be recorded as gain or loss on the transfer of accounts receivable ?
a. 200,000 gain
b. 200,000 loss
c. 600,000 gain
d. 600,000 loss
18. Autocard corporation is located in Quezon but does business throughout Metro Manila . The
company builds and sells equipment used in manufactur ing pharmaceuticals. On December
31, 2024 Autocard ‘s accounts receivable are as follows;
INDIVIDUALLY SIGNIFICANT RECEIVABLES ;
