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Exam 8: Receivables

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Question 1

True/False

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Receivables not currently collectible are reported in the investments section of the balance sheet.

A) True
B) False

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Question 2

Multiple Choice

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Match each description to the appropriate term a-h) . -A note that is not paid when it is due

A) Face amount
B) Term
C) Interest
D) Maturity value
E) Dishonored note
F) Maker
G) Notes receivable
H) Interest rate

I) D) and F)
J) A) and B)

Correct Answer

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E

Question 3

Multiple Choice

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Match each description to the appropriate term a-h) . -The time between the date a note is issued and the due date of the note

When does an account become uncollectible?

At the end of the current year, Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts has a credit balance of $5,500; 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.

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

Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12 the company receives a $550 check from Chad Thomas in settlement of Thomas's $1,100 outstanding accounts receivable. Due to Thomas's failing health he is closing his company and is expecting to make no further payments to Discount Mart. Journalize this declaration.

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

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

For the fiscal years 1 and 2, Grange Co. reported the following: Year Ended December 31, a. Compute the accounts receivable turnover for Year 2. Round to two decimals. b. Compute the number of days' sales in receivable at the end of Year 2. Round to two decimals.

Notes Receivable and Accounts Receivable can also be called trade receivables.

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

Journalize the following transactions of Upton Drugs: July 8 Received a $180,000, 90-day, 8% note dated July 8 from Miracle Chemical on account. Oct. 6 The note is dishonored by Miracle Chemical. Nov. 5 Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Miracle Chemical on Oct. 6.

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.

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

In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?

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

Watson Company issued a 60-day, 8% note for $18,000, dated April 5, to Laker Company on account. Assume a 360-day year when calculating interest. a) Determine the due date of the note. b) Determine the maturity value of the note. c) Journalize the entries to record the following: 1) Receipt of the note by the payee 2) Receipt by the payee of the amount due on the note at maturity. Round answers to the nearest $1.

At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, $120 of previously written off accounts are reinstated and accounts totaling $740 are written-off as uncollectible. The end-of-year balance before adjustment) in Allowance for Doubtful Accounts should be

On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the