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Exam 8: Receivables

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Question 91

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For a business that uses the allowance method of accounting for uncollectible receivables:

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Question 92

Multiple Choice

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Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account

A) affects only income statement accounts
B) is not an acceptable practice
C) affects only balance sheet accounts
D) affects both balance sheet and income statement accounts

E) A) and B)
F) B) and C)

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Question 93

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The direct write-off method

Blackwell Industries received a 120-day, 9% note for $180,000, dated August 10 from a customer on account. Required: (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.

The following are the current assets of Barnes Co. as of December 31: ​ ​ Prepare the current assets section of the balance sheet.

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

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?

Under the allowance method of uncollectible accounts, the entry to write off a customer's account affects the accounting equation by

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. (a) Credit balance of $\$ 300$ in Allowance for Doubtful Accounts just prior to adjustment. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $\$ 8,500$ . (b) Credit balance of $\$ 500$ in Allowance for Doubtful Accounts just prior to adjustment. Bad debt expense is estimated at $2 \%$ of credit sales, which totaled $\$ 1,000,000$ for the year.

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

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

Match each description to the appropriate term. Each term may be used more than once.

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write off this account, Dalton should debit

For each of the following notes receivable held by Christensen Company determine the interest revenue to be reported on the income statements for the year ended December 31. Round answers to nearest whole dollar.

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?

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.

An alternative name for Bad Debt Expense is

Current assets are usually listed in order

Receivables that are expected to be collected in cash in eighteen months or less are reported in the current asset section of the balance sheet.