FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Accounting for Receivables

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 1

Short Answer

Review LaterAdd Note

Review Later

If the balance of Phillips Company's gross Accounts Receivable is $150,000 on December 31 and the balance of the Allowance for Doubtful Accounts has a credit balance of $35,000 after the year end bad debts adjustment was made, what is the net realizable value of accounts receivable on December 31?

Correct Answer

verified

$150,000 - $35,000 = NRV of $115,000

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

When an interest bearing note is dishonoured at maturity and ultimate collection of the principal and interest is expected, the entry for the dishonouring-assuming no previous accrual of interest-should include:

A) a debit to Allowance for Doubtful Accounts.
B) only a credit to Notes Receivable.
C) a credit to Notes Receivable and Interest Revenue.
D) a credit to Notes Receivable and Interest Receivable.

Correct Answer

verified

Show Answer

Question 3

Essay

Review LaterAdd Note

On November 1, 2015, Amie accepted a $6,000, 6-month, 5% note from a customer as payment of an outstanding account receivable. Amie's year end is December 31. a. Prepare the November 1 journal entry. b. How much interest would Amie earn in 2015? c. How much interest would Amie earn in 2016?

On March 5, 2015 Amie decided that the $500 receivable from a customer, Baker Company, was uncollectible. Prepare the journal entry to write-off the account.

The amount of cash collected at maturity on a $4,000 note is $4,200. If $120 of the interest has been accrued prior to maturity, the entry to record the honouring of the note at maturity should include a credit to Interest Revenue for $80.

Before adjustments, Amie Company had the following balances on December 31, 2014: a.Prepare the journal entry to record the estimated uncollectible accounts assuming Amie uses the percentage of receivables approach. An aging of the accounts receivable estimated the net realizable value of the receivables at December 31, 2014 is $57,800. b.What is the Bad Debts Expense for 2014 if Amie uses the percentage of sales approach, and estimates that 1% of net credit sales will be uncollectible.

Receivables are classified as accounts receivable, notes receivable, or other receivables.

The higher the receivables turnover, the less liquid are the company's receivables.

The principal amount of a 7% note receivable is $500,000. The note is dated January 1, 2014 and is due January 1, 2017. The interest revenue to be recognized on December 31, 2014, the company's year-end, is $105,000.

The Allowance for Doubtful Accounts account is a contra account asset account.

The percentage of sales approach is the most common method used by companies in estimating uncollectible accounts

A company has a balance in Accounts Receivable of $600,000 at the end of the year and it estimates that uncollectible accounts will be 2% of accounts receivable. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of:

Net credit sales are normally sold on terms of n/30. Net credit sales total $50,000 and average gross accounts receivable total $5,000 in the current period. The collection period is:

On July 1, 2015 Amie receives a payment of $500 from Baker for the amount that had been previously written off on March 5, 2015. Prepare the required journal entries.

On June 5, Phillips Company decided that Connor Company would never pay the $500 it owes. Phillips uses the allowance method of accounting for bad debts. Prepare the journal entry to write off Connor's balance as uncollectible.

The interest due at the maturity of a two month, 10%, $600 note is calculated by multiplying $600 × 10% × 2/12.

When a firm writes off a bad debt under the allowance method of accounting for bad debts:

The net realizable value of the receivables is calculated by subtracting the Allowance for Doubtful Accounts from the Accounts Receivable.

Under the allowance method, the entry to write-off an uncollectible account results in a debit to:

An aging schedule shows a required balance in Allowance for Doubtful Accounts of $9,600. If there is a credit balance in the allowance account of $2,500 prior to adjustment, the adjustment amount is $7,100.