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Exam 8: Receivables

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Question 51

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Discuss the similarities and differences between accounts receivable, notes receivable, and other receivables.

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Accounts receivable result from the sale...

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Question 52

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Match each description to the appropriate term a-d) . Each term may be used more than once. -This method is based on the theory that older accounts are less likely to be collected.

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

E) None of the above
F) B) and D)

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Question 53

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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.

The journal entry to record a note received from a customer to replace an account is

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?

The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

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

Match each description to the appropriate term a-i) . -The difference between accounts receivable and allowance for doubtful accounts

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. a) Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $8,500. b) Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 2% of credit sales, which totaled $1,000,000 for the year.

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

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables. April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400. June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder. Oct. 11 Reinstated the account of Jim Dobbs for and received cash in full payment.

The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

a) The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible. b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year.

Match each description to the appropriate term a-d) . Each term may be used more than once. -This method records bad debts when specific accounts are deemed uncollectible.

On June 30 the end of the period), Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.

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

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

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.