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Exam 8: Receivables

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Question 41

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Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?

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Question 42

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Two methods of accounting for uncollectible accounts are the

A) direct write-off method and the allowance method
B) allowance method and the accrual method
C) allowance method and the net realizable method
D) direct write-off method and the accrual method

E) A) and D)
F) C) and D)

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Question 43

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On the basis of the following data related to assets due within one year for Webb Co., prepare a partial balance sheet in good form at December 31. Show total current assets.

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?

When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?

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 (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.

The number of days' sales in receivables is an estimate of the length of time the accounts receivable have been outstanding.

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

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

A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

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

The balance in Allowance for Doubtful Accounts at the end of the year includes the total of all accounts written off since the beginning of the year.

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.

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

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

Match each description to the appropriate term (a-h). -A formal, written instrument of credit that represents amounts due from customers A)Face amount B)Term C)Interest D)Maturity value E)Dishonored note F)Maker G)Notes receivable H)Interest rate

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

Match each description to the appropriate term (a-i). -A receivable created from selling merchandise or services on account A)Accounts receivable turnover B)Net realizable value C)Accounts receivable D)Aging report E)Receivables F)Direct write-off method G)Allowance for doubtful accounts H)Bad debt expense I)Factoring

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000.