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Exam 8: Receivables

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Question 51

Multiple Choice

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The number of days' sales in receivables

A) is an estimate of the length of time the receivables have been outstanding
B) measures the number of times the receivables turn over each year
C) is Net Credit Sales divided by Average Receivables
D) is not meaningful and therefore is not used

E) C) and D)
F) B) and D)

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Question 52

Multiple Choice

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

A) Uncollectible Accounts Expense
B) Accounts Receivable
C) Allowance for Doubtful Accounts
D) Interest Expense

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

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Question 53

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When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account.

For each of the following scenarios, indicate the Bad Debt Expense to be recorded in 2011, the balance in the Allowance for Doubtful Accounts Account at December 31, 2011, and the net realizable value of the Accounts Receivable at December 31, 2011:

Allowance for Doubtful Accounts has a credit balance of $1,400 at the end of the year (before adjustment) . The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $17,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?

The amount of the promissory note plus the interest earned on the due date is called the

An alternative name for Bad Debts Expense is

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

On October 1, Black Company receives a 6% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

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

Journalize the following transactions (Assume a 360-day year when calculating interest.):

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

Interest on a note can be calculated without knowledge of the

Allowance for Doubtful Accounts is classified as a(n) ______ and has a normal ______ balance.

Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.

A debit balance in the Allowance for Doubtful Accounts

A 60-day, 10% note for $9,000, dated April 15, is received from a customer on account. The face value of the note is

The due date of a 60-day note dated July 10 is September 10.

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

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