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Exam 9: Receivables

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Question 31

True/False

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Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

A) True
B) False

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Question 32

Multiple Choice

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

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) A) and G)

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Question 33

Multiple Choice

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Allowance for Doubtful Accounts is classified as a (n) ______ account and has a normal ______ balance.​

Match each description to the appropriate term (a-d) . Each term may be used more than once. -This method is based on the theory that older accounts are less likely to be collected.

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

Trade receivables occur when two companies trade or exchange notes receivable.

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? a. Bad Debt Expense $\quad 17,000$ Allowance for Doubtful Accounts $\quad 17,000$ b. Bad Debt Expense $\quad 19,500$ Allowance for Doubtful Accounts $\quad 19,500$ c. Bad Debt Expense $~~~~$ 22,000 Allowance for Doubtful Accounts $\quad 22,000$ d. Bad Debt Expense $~~~~~$ 65,000 Allowance for Doubtful Accounts $\quad 65,000$

Given the following information, compute accounts receivable turnover. $\begin{array}{|lr|ll|}\hline \text { Gross sales } & \$ 150,000 & \text { Accounts receivable, beginning of year } & \$ 18,000 \\\hline \text { Sales } & 135,000 & \text { Accounts receivable, end of year } & 22,000 \\\hline\end{array}$

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.?Feb. 20 Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible.May 10 Reinstated the account of Andrew Warren and received $4,000 cash in full payment.

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

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account. (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.

Which statement is not true?

Match each description to the appropriate term (a-i) . -Operating expense recorded as a result of receivables becoming uncollectible

If a promissory note is dishonored, the payee should still record interest revenue.

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Credit sales for the period total $800,000. If bad debt expense is estimated at 1% of credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

The following are the current assets of Barnes Co. as of December 31:?Accounts receivable$ 38,000Allowance for doubtful accounts5,000Cash45,000Interest receivable5,500Merchandise inventory88,000Notes receivable100,000?Prepare the Current assets section of the balance sheet.

A company is selling its receivables when it issues its own credit card.

An alternative name for Bad Debt Expense is

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