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Exam 8: Receivables

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Question 31

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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 B)

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Question 32

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Match each description to the appropriate term (a-h). -The dollar amount stated on a promissory note A)Face amount B)Term C)Interest D)Maturity value E)Dishonored note F)Maker G)Notes receivable H)Interest rate

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Question 33

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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.

Fill in the blanks related to the characteristics of a promissory note. 1.The party promising to pay the note is called the ________. 2.The amount for which the note is written is called the _______ amount. 3.The date the note is to be paid is the _______ date. 4.The time between the date when a note is written and the time it must be paid is called the _____ of the note.

The amount for which a promissory note is written is called the

Under the direct write-off method of uncollectible accounts, the effect on the accounting equation of writing off a customer's account is

For a business that uses the allowance method of accounting for uncollectible receivables: (a)Journalize the entries to record the following: (1)Record the adjusting entry at December 31, the end of the first fiscal year, to record the bad debt expense. The accounts receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of $600. Analysis of the receivables indicates uncollectible receivables of $18,000.(2)In March of the next year, the $350 owed by Fronk Co. on account is written off as uncollectible.(3)In November of the next year, $200 of the Fronk Co. account is reinstated and payment of that amount is received.(4)In December of the next year, $400 is received on the $600 owed by Dodger Co. and the remainder is written off as uncollectible.(b)Redo the entries in steps (2), (3), and (4) assuming the company uses the direct write-off method.

For each of the following scenarios, indicate the amount of the adjusting journal entry for bad debt expense to be recorded, the balance in Allowance for Doubtful Accounts after adjustment at December 31, and the net realizable value of accounts receivable at December 31.(a) Based on an analysis of Simmon's Company's $380,000 balance in Accounts Receivable at December 31, it was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment.(b) Blake Company had credit sales of $900,000 at year-end, and has an Accounts Receivable balance of $425,000 at December 31, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates bad debt expense as 3/4 of 1% of credit sales.(c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31. An analysis of those receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, the Allowance for Doubtful Accounts has a debit balance of $750.

GAAP requires companies with a large amount of receivables to use the allowance method.

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?

The accounts receivable turnover measures

If a note receivable is dishonored, what is the effect on the accounting equation?

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

A debit balance in the Allowance for Doubtful Accounts

Selling receivables is called

Match each description to the appropriate term (a-h). -The party promising to pay a note A)Face amount B)Term C)Interest D)Maturity value E)Dishonored note F)Maker G)Notes receivable H)Interest rate

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.

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of 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. After the adjusting entry, the December 31 balance in Bad Debt Expense will be

The maturity value of a note receivable is always the same as its face value.

Match each description to the appropriate term (a-i). -Records bad debt expense only when a specific customer's account is deemed worthless A)Accounts receivable turnover B)Net realizable value C)Accounts receivable D)Aging report E)Receivables F)Direct write-off method G)Allowance for doubtful accounts H)Bad debt expense I)Factoring