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Exam 8: Receivables

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Question 91

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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. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

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Question 92

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The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

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Question 93

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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.

At the end of the current year, Accounts Receivable has a balance of $90,000; Allowance for Doubtful Accounts has a credit balance of $850; and sales for the year total $300,000. Bad debt expense is estimated at 2.5% of sales.​ Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Financial statement data for the years ended December 31 for Parker Corporation are as follows: (a) Determine the accounts receivable turnover for each year. Round to one decimal place.(b) Determine the number of days' sales in receivables for each year. Round to whole days.(c) Does the change in accounts receivable turnover and number of days' sales in receivables from the first year to the second year indicate a favorable or unfavorable trend?

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

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3 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 receipt of the note from Potts on Feb. 3.(e) Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.

When using the percent of sales method of estimating uncollectibles, the entry to record bad debt expense includes a credit to Accounts Receivable.

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?

When a company accepts a note in settlement of a past due account, the effect on the accounting equation is

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

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

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

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

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer 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 entry to record the receipt of the payment of the note at maturity.

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.

The direct write-off method of accounting for uncollectible accounts

The maturity value of a 12%, 60-day note for $5,000 is $5,600.

Match each description to the appropriate term (a-i). -Term for selling receivables 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

For each of the following notes receivable held by Winter Company, determine the interest revenue to be reported on the income statements. Round answers to nearest whole dollar.