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Exam 8: Receivables

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Question 1

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Match each description to the appropriate term (a-d). Each term may be used more than once. -This method is most often used by small companies with few receivables. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

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Question 2

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A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

A) debit Cash, $6,120; credit Notes Receivable, $6,120
B) debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120
C) debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
D) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120

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

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Question 3

Multiple Choice

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Which of the following receivables would not be classified as an "other receivable"?

Journalize the following transactions of Upton Drugs:

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

Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account

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

The receivable that is usually evidenced by a formal, written instrument of credit is a(n)

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment) , and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on this estimate, which of the following adjusting entries should be made?

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

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

Trade receivables occur when two companies trade or exchange notes receivable.

The following information was taken from the books of Olmeck, Inc. (a) Determine the accounts receivable turnover for Year 1 and Year 2.​ (b) Determine the number of days' sales in receivables for Year 1 and Year 2.​ (c) The industry average for the accounts receivable turnover is 8.0. How does Olmeck, Inc. compare?

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?

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The credit sales for the period total $500,000. If the company estimates uncollectible accounts at 1% of credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

For each of the following notes receivable held by Christensen Company determine the interest revenue to be reported on the income statements for the year ended December 31. Round answers to nearest whole dollar.

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles