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Exam 8: Receivables

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Question 1

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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.

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Question 2

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The direct write­off method records bad debt expense when an account is determined to be uncollectible.

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Question 3

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

Interest on a note can be calculated without knowledge of the

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.

An alternative name for bad debt Expense is an

The due date of a 60-day note dated July 10 is September 10.

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Other than Accounts Receivable and Notes Receivable,name other receivables that might be included in the general ledger.

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

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.

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year before adjustment,and an analysis of customers' accounts indicates uncollectible receivables of $12,900.Which of the following entries records the proper adjustment for bad debt expense?

For each of the following notes receivables held by Winter Company , determine the interest revenue to be reported on the income statements.Round answers to nearest whole dollar. $\begin{array}{|c|r|r|r|r|r|}\hline \text { Date } & \text { Face } & \text { Rate } & {\text { Time }} & \begin{array}{r}\text { Year 1 } \\\text { Interest } \\\text { Revenue }\end{array} & \begin{array}{c}\text { Year 2 } \\\text { Interest } \\\text { Revenue }\end{array} \\\hline \text { Aug. 8, Year 1 } & \$ 15,000 & 7 \% & 180 \text { days } & \\\hline \text { Oct. 7, Year 1 } & \$ 22,000 & 8 \% & 60 \text { days } & \\\hline \text { Jan. 6, Year 2 } & \$ 30,000 & 8 \% & 90 \text { days } & \\\hline \text { Nov. 12, Year 1 } & \$ 28,000 & 9 \% & 60 \text { days } & \\\hline\end{array}$

Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year before adjustment.The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900.Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?

Two methods of accounting for uncollectible accounts are the

At the end of the current year,Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a debit balance of $6,200; and sales for the year total $3,500,000.Bad debt expense is estimated at 1/2 of 1% of sales. 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.

Paper Company receives a $6,000,3-month,6% promissory note from Dame Company in settlement of an open accounts receivable.What entry will Paper Company make upon receiving the note?

Which statement is not true?

The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

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.