On August 1, 2014, Miles Company Accepted from Another Company

question 19

Multiple Choice

On August 1, 2014, Miles Company accepted from another company a one-year note receivable with a face amount of $4,000 and an interest rate of 8%.
What would be the total amount of assets (related to the note receivable) reported on Muller's balance sheet dated December 31, 2014?

• A) $4,000
• B) $4,133
• C) $4,320
• D) $4,187

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Definitions:

Accounts Receivable

Outstanding payments due to a company from its customers for delivered or utilized goods and services.

Bad Debt Expense

An estimate of loss due to customers' inability to make payments, recognized as an expense in accounting.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts, providing an allowance for accounts receivable that may not be collectible.

Uncollectible Account

A receivable that a company has given up on collecting due to the debtor's inability to pay, also known as a bad debt.