Exam 8: Reporting and Analyzing Receivables

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account has been written off.

A receivable is recognized when the sales effort is substantially complete.

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

Trade receivables can be accounts receivable or notes receivable.

Account for notes receivable.

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

The total interest on a $10,000, 4%, 3-month note receivable is

When a subsidiary ledger and a control account are used, each journal entry that affects accounts receivable must be posted twice.

Estimated uncollectibles are recorded as a debit to

When the due date of a note is stated in months, the time factor in calculating interest, if it is due monthly, is the number of months divided by 12.

The receivables turnover ratio is calculated by dividing gross credit sales by the average net receivables during the year.

Receivables are considered to be financial assets.

A dishonoured note receivable

To find the balance due from an individual customer, the accountant would refer to the

Other receivables include nontrade receivables such as loans to company officers.

The journal entry to record a credit card sale using a nonbank credit card (for example, Canadian Tire or Sears) includes a debit to the

Bad Debts Expense is a contra account to the Sales account.

Bad Debts Expense is reported on the income statement as

Under the allowance method for uncollectible accounts, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

A subsidiary ledger is a group of accounts that provides details about a control account in the general ledger.