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Exam 8: Receivables

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Question 21

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Stephanie Roe utilizes the direct write-off method of accounting for uncollectible receivables. On September 15 she is notified by the attorneys for Jacob Marley that Jacob Marley is bankrupt and no cash is expected in the liquidation of Jacob Marley. Write off the $675 of accounts receivable due from Jacob Marley.

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Sept. 15 Bad Debt Ex...

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Question 22

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When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method

A) uses a percentage of sales method to estimate uncollectible accounts
B) is used primarily by large companies with many receivables
C) is used primarily by small companies with few receivables
D) uses an allowance account

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

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Question 23

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When a company receives an interest-bearing note receivable, it will

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct regarding the entry to record estimated uncollectible receivables?

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no sales returns or sales discounts during the year. After the adjusting entry, the December 31, balance in the Bad Debt Expense will be

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year before adjustment) , and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively.

Match each description to the appropriate term a-h) . -The stated rate charged for using the money of another party

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

The party promising to pay a note at maturity is the maker.

When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.

At the end of a period before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year before adjustment) , and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?

At the end of the current year, Accounts Receivable has a balance of $675,000; Allowance for Doubtful Accounts has a debit balance of $5,400; and sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000. Determine a) the amount of the adjusting entry for bad debt expense; b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and c) the net realizable value of accounts receivable.

Journalize the following transactions in the accounts of Simmons Company: Mar. 1 Received a $60,000, 60-day, 6% note dated March 1 from Bynum Company on account. Mar. 18 Received a $25,000, 60-day, 9% note dated March 18 from Solo Company on account. Apr. 30 The note dated March 1 from Bynum Company is dishonored, and the customer's account is charged for the note, including interest. May 17 The note dated March 18 from Solo Company is dishonored, and the customer's account is charged for the note, including interest. July 29 Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 8% on the total amount debited to Bynum Company on April 30. Aug. 23 Wrote off against the allowance account the amount charged to Solo Company on May 17 for the dishonored note dated March 18.

Match each description to the appropriate term a-i) . -Measures how frequently during the year accounts receivables are being turned into cash

Blackwell Industries received a 120-day, 9% note for $180,000, dated August 10 from a customer on account. Required: 1. Determine the due date of the note. 2. Determine the maturity value of the note. 3. Journalize the entry to record the receipt of the payment of the note at maturity.

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each. a)Bad Debt Expense 900 Accounts Receivable, Billings 900 b)Allowance for Doubtful Accounts 900 Accounts Receivable, Grover 900

Based on the following data and using a 365-day year, compute a) the accounts receivable turnover and b) the number of days' sales in receivables for year 2 to 2 decimal places. The industry average turnover is 20 times during the year, and the number of days' sales in receivables averages 25. c) Comment on this situation.