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Exam 8: Receivables

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Question 101

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Receivables that are expected to be collected in cash in eighteen months or less are reported in the current asset section of the balance sheet.

A) True
B) False

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Question 102

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Given the following information, compute accounts receivable turnover:

A) 6.75
B) 7.50
C) 6.13
D) 6.82

E) B) and C)
F) A) and D)

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Question 103

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When using the direct write-off method of accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

A debit balance in the Allowance for Doubtful Accounts

A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable

What is the type of account and normal balance of Allowance for Doubtful Accounts?

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year before adjustment) , and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?

Journalize the following transactions using the allowance method of accounting for uncollectible receivables. April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400. June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder. Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

Financial statement data for the years ended December 31 for Parker Corporation are as follows: a) Determine the accounts receivable turnover for each year. Round to one decimal place. b) Determine the number of days' sales in receivables for each year. Round to whole days. c) Does the change in accounts receivable turnover and number of days' sales in receivables from the first year to the second year indicate a favorable or unfavorable trend?

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

When companies sell their receivables to other companies, the transaction is called factoring.

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

At the end of a period before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The net credit sales for the period total $500,000. If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.

Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables.

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3 to Valley Co. on account. Assume a 360-day year when calculating interest.) a. Determine the due date of the note. b. Determine the interest. c. Determine the maturity value of the note. d. Journalize the entry to record the receipt of the note from Potts on Feb. 3. e. Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.