Exam 8: Reporting and Analyzing Receivables

You have just received notice that a customer with an Accounts Receivable balance of $500 has gone bankrupt and will not make any future payments. Assuming you use the allowance method for uncollectible accounts, the entry you make is to

Under the allowance method for uncollectible accounts, Bad Debts Expense is recorded

Under the allowance method for uncollectible accounts, the recovery of an account receivable previously written off results in a credit to the Bad Debt Expense account.

A note receivable is honoured when

A promissory note

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

Notes or accounts receivables that result from sales transactions are often called

A note receivable is issued in December, with interest due at maturity. When the note is paid the following February, the payee's entry includes (assuming a calendar-year accounting period when adjusting entries are recorded) a

The Allowance for Doubtful Accounts is shown under

Interest accrued on a note receivable is

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

When a company receives an interest-bearing note receivable, it will

The sale of receivables by a business

A high receivables turnover ratio indicates that

When an account is written off using the allowance method for uncollectible accounts, the

The total interest on a $6,000, 4%, 2-month note receivable is

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

Interest revenue is never earned on accounts receivable.

When collecting a previously written-off account

When an account becomes uncollectible and must be written off