118.Oliver Furniture factors $600,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 2% service charge on the amount of receivables sold. Oliver Furniture factors its receivables regularly with Kwik Factors. What journal entry does Oliver make when factoring these receivables?
a.Cash.........................................588,000
Loss on Sale of Receivables.................................12,000
Accounts Receivable......................................600,000
b.Cash.........................................588,000
Accounts Receivable......................................588,000
c.Cash.........................................600,000
Accounts Receivable......................................588,000
Gain on Sale of Receivables.................................12,000
d.Cash.........................................588,000
Service Charge Expense....................................12,000
119.When customers make purchases with a national credit card, the retailer
a.is responsible for maintaining customer accounts.
b.is not involved in the collection process.
c.absorbs any losses from uncollectible accounts.
d.receives cash equal to the full price of the merchandise sold from the credit card company.
120.The retailer considers Visa and MasterCard sales as
a.cash sales.
b.promissory sales.
c.credit sales.
d.contingent sales.
121.The basic issues in accounting for notes receivable include each of the following except
a.analyzing notes receivable.
b.disposing of notes receivable.
c.recognizing notes receivable.
d.valuing notes receivable.
122.A 60-day note receivable dated June 13 has a maturity date of
a.August 13.
b.August 12.
c.August 11.
d.August 10.
123.The maturity value of a $60,000, 10%, 60-day note receivable dated July 3 is
a.$60,000.
b.$66,000.
c.$70,000.
d.$61,000.
124.A 90-day note dated June 14 has a maturity date of
a.September 14.
b.September 12.
c.September 13.
d.September 15.
125.A 30-day note dated July 14 has a maturity date of
a.August 14.
b.August 13.
c.August 15.
d.August 12.
126.A promissory note
a.is not a formal credit instrument.
b.may be used to settle an accounts receivable.
c.has the party to whom the money is due as the maker.
d.cannot be factored to another party.
127.Which of the following is not true regarding a promissory note?
a.Promissory notes may not be transferred to another party by endorsement.
b.Promissory notes may be sold to another party.
c.Promissory notes give a stronger legal claim to the holder than accounts receivable.
d.Promissory notes may be bearer notes and not specifically identify the payee by name.