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Exam 8: Receivables

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Question 41

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Notes or accounts receivable that result from sales transactions are often called

A) nontrade receivables
B) trade receivables
C) merchandise receivables
D) sales receivables

E) B) and D)
F) B) and C)

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Question 42

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The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

A) True
B) False

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Question 43

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When companies sell their receivables to other companies,the transaction is called factoring.

The journal entry to record a note received from a customer to replace an account is

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 for Doubtful Accounts,respectively. ​

Other receivables include nontrade receivables such as loans to company officers.

The term "receivables" includes all

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?

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

If the direct write-off method of accounting for uncollectible receivables is used,what general ledger account is credited to write off a customer's account as uncollectible?

When a note is received from a customer on account,it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment) ,and bad debt expense is estimated at 3% of credit sales.If credit sales are $300,000,the amount of the adjusting entry to record the estimated uncollectible accounts receivable is

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

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 ​

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

The interest on a 6%,60-day note for $5,000 is $300.

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

To record estimated uncollectible receivables using the allowance method,the adjusting entry would be a

Journalize the following transactions for Lucite Company. November 14 Received a $4,800.00,90-day,9% note from Alan Albertson in payment of his account. December 31 Accrued interest on the Albertson note. February 12 Received the amount due from Albertson on his note.

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