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Exam 8: Receivables

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Question 91

Multiple Choice

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The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

A) $110
B) $640
C) $530
D) $750

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

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Question 92

Multiple Choice

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Other receivables includes all of the following except

A) notes receivable
B) receivables from employees
C) taxes receivable
D) interest receivable

E) All of the above
F) A) and B)

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Question 93

Multiple Choice

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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?

Determine the due date and amount of interest due at maturity on the following notes:

Match each description to the appropriate term a-h) . -The party promising to pay a note

Match each description to the appropriate term a-h) . -The dollar amount stated on a promissory note

Match each description to the appropriate term a-i) . -A receivable created from selling merchandise or services on account

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

Match each description to the appropriate term a-d) . Each term may be used more than once. -When using this method, estimated bad debts are added to the existing allowance balance.

Match each description to the appropriate term a-d) . Each term may be used more than once. -Offers two methods of estimating uncollectible accounts.

Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James. The journal entry to record the initial write-off includes a

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

No allowance account is used with the direct write-off method.

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

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

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

Current assets are usually listed in order

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.

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

One of the weaknesses of the direct write-off method is that it