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Exam 8: Receivables

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Question 21

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No allowance account is used with the direct write-off method.

A) True
B) False

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Question 22

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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 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.

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Question 23

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When a company uses the allowance method of accounting for uncollectible receivables,which entry would not be found in the general journal?

For a business that uses the allowance method of accounting for uncollectible receivables: a- Journalize the entries to record the following: 1. Record the adjusting entry at December 31,the end of the first fiscal year,to record the bad debt expense.The accounts receivable account has a balance of $800,000,and the contra asset account before adjustment has a debit balance of $600.Analysis of the receivables indicates uncollectible receivables of $18,000. 2. In March of the next year,the $350 owed by Fronk Co.on account is written off as uncollectible. 3. In November of the next year,$200 of the Fronk Co.account is reinstated and payment of that amount is received. 4. In December of the next year,$400 is received on the $600 owed by Dodger Co.and the remainder is written off as uncollectible. b- Redo the entries in steps 2,3,and 4 assuming the company uses the direct write-off method.

At the end of a period before adjustment,Allowance for Doubtful Accounts has a debit balance of $2,000.The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $15,000.The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.

Financial statement data for the years ended December 31 for Parker Corporation are as follows: $\begin{array}{lrr}&\underline {\text { Current Year }}&\underline {\text { Prior Year}}\\\text { Sales } & \$ 2,595,600 & \$ 2,409,500 \\\text { Accounts receivable: } & & \\\text { Beginning of the year } & \$ 390,000 & \$ 400,000 \\\text { End of the year } & 434,000 & 390,000\end{array}$ a Determine the accounts receivable turnover for each year.Round to one decimal place. b Determine the number of days' sales in receivables for each year.Round to whole days. c Does the change in accounts receivable turnover and number of days' sales in receivables from the first year to the second year indicate a favorable or unfavorable trend?

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

The two methods of accounting for uncollectible receivables are the allowance method and the

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

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000.If Allowance for Doubtful Accounts has a $800 credit balance,the adjustment to record the bad debt expense for the period will require a

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 net credit sales.If net credit sales are $800,000,the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Current assets are usually listed in order

When referring to a note receivable or promissory note

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.

On the basis of the following data related to assets due within one year for Webb Co.,prepare a partial balance sheet in good form at December 31.Show total current assets.

Tanning Company analyzes its receivables to estimate bad debt expense.The accounts receivable balance is $390,000 and credit sales are $1,300,000.An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible.What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Determine the due date and the amount of interest due at maturity on the following notes:

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.

a The aging of Torme Designs' accounts receivable is shown below.Calculate the amount of each periodicity range that is deemed to be uncollectible. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\text { Est Uncollectible Accts }$$\quad$ $\begin{array}{|l|r|r|r|}\hline \text { Age Interval: } & \text { Balance: } & \text { Percentage: } & \text { Amount: } \\\hline \text { Not past due } & 850,000 & 3.50 \% & \\\hline 1 \sim 30 \text { days past due: } & 47,500 & 5.00 \% & \\\hline 31 \sim 60 \text { days past due: } & 21,750 & 10.00 \% & \\\hline 61 \sim 90 \text { days past due: } & 11,250 & 20.00 \% & \\\hline 91 \sim 180 \text { days past due: } & 5,065 & 30.00 \% & \\\hline 181 \sim 365 \text { days past due: } & 2,500 & 50.00 \% & \\\hline \text { Over 365 days past due: } & 1,145 & 95.00 \% & \\\hline \text { Total: } & \underline{939,210} & & \\\hline\end{array}$ 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.