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Exam 8: Receivables

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Question 51

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Match each description to the appropriate term (a-d). Each term may be used more than once. -This method focuses on the balance sheet. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

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Question 52

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Journalize the following transactions for the Scott Company: November 4 Received a $6,500, 90-day, 6% note from Tim's Co.in payment of the account.December 31 Accrued interest on the Tim's Co. note.February 2 Received the amount due from Tim's Co. on the note.

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$6,500 × 6% × 57/36...

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Question 53

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Journalize the following transactions in the accounts of Simmons Company: Mar. 1 Received a $60,000, 60-day, 6% note dated March 1 from Bynum Company on account.Mar. 18 Received a $25,000, 60-day, 9% note dated March 18 from Solo Company on account.Apr. 30 The note dated March 1 from Bynum Company is dishonored, and the customer's account is charged for the note, including interest.May 17 The note dated March 18 from Solo Company is dishonored, and the customer's account is charged for the note, including interest.July 29 Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 8% on the total amount debited to Bynum Company on April 30.Aug. 23 Wrote off against the allowance account the amount charged to Solo Company on May 17 for the dishonored note dated March 18.

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment) , and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?

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

On October 1, Black Company receives a 9% 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 a promissory note is dishonored, the payee should still record interest revenue.

Match each description to the appropriate term (a-i). -All money claims against other entities 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

An alternative name for Bad Debt Expense is

The party promising to pay a note at maturity is the maker.

The interest on a 6%, 60-day note for $5,000 is $300.

Match each description to the appropriate term (a-h). -The amount due that must be paid at the due date of a note receivable A)Face amount B)Term C)Interest D)Maturity value E)Dishonored note F)Maker G)Notes receivable H)Interest rate

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

Based on the following data and using a 365-day year, compute (a) the accounts receivable turnover and (b) the number of days' sales in receivables for year 2 to 2 decimal places. The industry average turnover is 20 times during the year, and the number of days' sales in receivables averages 25. (c) Comment on this situation.12/31/Year 1 accounts receivable $ 100,000 12/31/Year 2 accounts receivable 70,000 For the year ended 12/31/Year 1, sales 1,050,000 For the year ended 12/31/Year 2, sales 1,200,000

Under the direct write-off method of uncollectible accounts, if a written off account is later collected, the effect on the accounting equation is

Under the allowance method of uncollectible accounts, how does the adjusting entry to estimate the amount that will become uncollectible affect the accounting equation?

Journalize the following transactions (assume a 360-day year when calculating interest): Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account.May 30 The note of March 1 was dishonored.

The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is

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

Blackwell Industries received a 120-day, 9% note for $180,000, dated August 10 from a customer on account.Required: (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.