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Exam 8: Receivables

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Question 81

Multiple Choice

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Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?

A) debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
B) debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
C) debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800
D) debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600

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

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Question 82

Multiple Choice

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Match each description to the appropriate term a-h) . -A formal, written instrument of credit that represents amounts due from customers

A) Face amount
B) Term
C) Interest
D) Maturity value
E) Dishonored note
F) Maker
G) Notes receivable
H) Interest rate

I) B) and H)
J) D) and H)

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Question 83

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Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. Assume a 360-day year when calculating interest.) a. Determine the due date of the note. b. Determine the maturity value of the note. c. Journalize the entry to record the receipt of the payment of the note at maturity.

At the end of a period before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000.

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

If collection of another receivable is expected beyond one year, it is classified as an)

Journalize the following transactions assume a 360-day year when calculating interest): Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account. May 30 The note of March 1 was dishonored.

Small companies can use either the direct write-off method or the allowance method.

The number of days' sales in receivables

On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

Match each description to the appropriate term a-h) . -The amount due that must be paid at the due date of a note receivable

Match each description to the appropriate term a-i) . -Records bad debt expense only when a specific customer's account is deemed worthless

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Match each description to the appropriate term a-i) . -All money claims against other entities

Match each description to the appropriate term a-i) . -Term for selling receivables

Allowance for Doubtful Accounts is a liability account.

The equation for computing interest on an interest-bearing note is as follows: Interest = Maturity Value × Interest Rate × Time.

At the end of the current year, Accounts Receivable has a balance of $90,000; Allowance for Doubtful Accounts has a credit balance of $850; and sales for the year total $300,000. Bad debt expense is estimated at 2.5% of sales. Determine a) the amount of the adjusting entry for uncollectible accounts; b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and c) the net realizable value of accounts receivable.

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year before adjustment) . The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?