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Exam 8: Receivables

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Question 51

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The term "receivables" includes all

A) money claims against other entities
B) merchandise to be collected from individuals or companies
C) cash to be paid to creditors
D) cash to be paid to debtors

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Question 52

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Small companies can use either the direct write-off method or the allowance method.

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Question 53

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When using the direct write-off method of accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

A partially completed aging of receivables schedule for Torme Designs is shown below. ​ (a) Determine the amount estimated to be uncollectible by completing the aging of receivables schedule. Round calculations to the nearest dollar. ​ ​ (b) If the Allowance for Doubtful Accounts has a credit balance of $1,135, record the adjusting entry for the bad debt expense for the year. ​

Match each description to the appropriate term.

At the end of the current year, Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $3,500,000. Bad debt expense is estimated at 1/2 of 1% of net sales. ​ 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.

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.

Other receivables include nontrade receivables such as loans to company officers.

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

At the end of the current year, Accounts Receivable has a balance of $675,000; Allowance for Doubtful Accounts has a debit balance of $5,400; and sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000. ​ 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.

Under the direct write-off method of uncollectible accounts, the effect on the accounting equation of writing off a customer's account is

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?

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

Discuss the (a) focus and (b) financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.

GAAP requires companies with a large amount of receivables to use the allowance method.

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

Which statement is not true?

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

Suppose that at the end of the year there is an outstanding note receivable. The adjusting entry to recognize the interest to be paid has what effect on the accounting equation?