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Exam 9: Receivables

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Question 61

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

A) understates accounts receivable on the balance sheet
B) violates the matching principle
C) is too difficult to use for many companies
D) is based on estimates

E) A) and B)
F) None of the above

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Question 62

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Discuss the two methods for recording bad-debt expense. What type of company uses each method?

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The first method is the direct write-off...

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Question 63

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

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

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?

Journalize the following transactions for Solley Company that occurred during 2011 and 2012. November 14, 2011 Received a $4,800.00, 90-day, 9% note from Alan Hibbetts in payment of his account. December 31, 2011 Accrued interest on the Hibbetts note. February 12, 2012 Received the amount due from Hibbetts on his note.

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3rd to Valley Co. on account. (Assume a 360-day year when calculating interest.) a. Determine the due date of the note. b. Determine the interest. c. Determine the maturity value of the note. d. Journalize the entry to record the issuance of the note by Potts on Feb. 3. e. Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.

Other than accounts receivable and notes receivable, name other receivables that might be included in the general ledger.

The equation for computing interest on an interest-bearing note is as follows: interest equals maturity value times interest rate times time.

Match each of the following descriptions with their own terms.

Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.

For the fiscal years 2009 and 2010, Apple Co. reported the following: a. Compute the accounts receivable turnover for 2010. b. Compute the number of days' sales in receivable at the end of 2010.

What is the type of account and normal balance of Allowance for Doubtful Accounts?

a) The aging of Torme Designs shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible. b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year.

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.

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

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

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.