Exam 7: Reporting and Analyzing Receivables

The accounts receivable method to estimate bad debts obtains the estimated balance in the Allowance for Doubtful Accounts in one of two ways: (1)computing the percent uncollectible from the total accounts receivable or (2)aging accounts receivable.

Factoring receivables is beneficial to a seller for all of the following reasons except:

The allowance method based on the idea that a given percent of a company's credit sales for the period is uncollectible is:

Valley Spa purchased $7,800 in plumbing components from Tubman Co.Valley Spa Studios signed a 60-day,10% promissory note for $7,800.If the note is dishonored,what is the amount due on the note? (Use 360 days a year.)

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The unadjusted balance in Allowance for Doubtful Accounts is a $500 credit.The estimated amount of bad debts expense is $3,000.

As long as a company accurately records total credit sales information,it is not necessary to have separate accounts for specific customers.

At December 31,Yarrow Company reports the following results for its calendar year from the adjusted trial balance. Credit sales \ 2,300,000 Aash sales 1,050,000 Accounts Receivable 295,000 Allowance for doubtful accounts (credit balance) 750 a.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 1.1% of credit sales. b.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be .8% of total sales. c.Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7.0% of year-end accounts receivable.

On November 19,Nicholson Company receives a $15,000,60-day,8% note from a customer as payment on account.What adjusting entry should be made on the December 31 year-end? (Use 360 days a year.)

The expense recognition (matching)principle requires use of the allowance method of accounting for bad debts.

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record the collection on account would be:

Explain the options a company may use to convert its receivables to cash before they are due.

The quality of receivables refers to:

Which of the following is not true about the Allowance for Doubtful Accounts?

A finance company or bank that purchases and takes ownership of another company's accounts receivable is called a:

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The total interest due on the maturity date is: (Use 360 days a year.)

If a customer owes interest on accounts receivable,Interest Receivable is debited and Accounts Receivable is credited.

Uniform Supply accepted a $4,800,90-day,10% note from Tracy Janitorial on October 17.What entry should Uniform Supply make on December 31,to record the accrued interest on the note?

The account receivable turnover measures:

A company has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.Experience suggests that 6% of outstanding receivables are uncollectible.The current debit balance (before adjustments)in the allowance for doubtful accounts is $1,200.The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $6,000.

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. All sales are made on credit.Based on past experience,the company estimates 1% of credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?