Exam 9: Receivables

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.

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

The accounts receivable turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

A company may sell its receivables, but it still assumes the risk of uncollectible accounts.

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of accounts receivable?

For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded, the balance in Allowance for Doubtful Accounts after adjustment at December 31, and the net realizable value of accounts receivable at December 31. (a) Based on an analysis of Simmons Company's $380,000 balance in Accounts Receivable at December 31, it was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment. (b) Blake Company had credit sales of $900,000 at year-end, an Accounts Receivable balance of $425,000 at December 31, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates bad debt expense as ¾ of 1% of credit sales. (c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31. An analysis of those receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, Allowance for Doubtful Accounts has a debit balance of $750.

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.? Apr. 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.? June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.? Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.

On the basis of the following data related to assets due within one year for Simons Co., prepare a partial balance sheet in good form at December 31. Show total current assets. Cash \ 56,000 Accounts receivable 325,000 Allowance for doubtful accounts 25,000 Interest receivable 3,000 Supplies 4,000 Inventory 45,000 Other current assets 10,000

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?

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each. (a)Bad Debt Expense900 Accounts Receivable-Billings900 (b)Allowance for Doubtful Accounts900 Accounts Receivable-Grover900

The balance of Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared? a. Cash 200 $\quad\quad\quad$ Interest Revenue 200 b. Interest Receivable $\quad 800$ $\quad\quad\quad$ Interest Revenue $\quad 800$ c. Interest Receivable 200 $\quad\quad\quad$ Interest Revenue 200 d. Notes Receivable $\quad 40,000$ $\quad\quad\quad$ Cash 40,000

(a) The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible.?? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { Estimated Uncollectible Accounts } } \\ \begin{array} { | l | r | c | c | } \hline \text { Age Interval } & \text { Balance } & \text { Percentage } & \text { Amount } \\ \hline \text { Not past due } & \$ 850,000 & 3.50 \% & \\ \hline 1 - 30 \text { days past due } & 47,500 & 5.00 & \\ \hline 31 - 60 \text { days past due } & 21,750 & 10.00 & \\ \hline 61 - 90 \text { days past due } & 11,250 & 20.00 & \\ \hline 91 - 180 \text { days past due } & 5,065 & 30.00 & \\ \hline 181 - 365 \text { days past due } & 2,500 & 50.00 & \\ \hline \text { Over } 365 \text { days past due } & \underline{1,145} & 95.00 & \\ \hline \text { Total } & \underline{\mathbf { \$939,210 }} & & \\ \hline \end{array} (b) If Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry forthe bad debt expense for the year.

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Match each description to the appropriate term (a-i). -A contra asset that represents the amount of estimated uncollectible receivables

Journalize the following transactions for Lucite Company.Nov. 14 Received a $4,800, 90-day, 9% note from Alan Albertson in payment of his account.Dec. 31 Accrued interest on the Albertson note.Feb. 12 Received the amount due from Albertson on his note. Date Description Post. Ref. Debit Credit

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

For each of the following notes receivables held by Christensen Company, determine the interest revenue to be reported on the income statements for the year ended December 31. Round answers to the nearest whole dollar. Date Face Rate Term Interest Revenue Aug. 8 \ 45,000 7\% 45 days Oct. 7 62,000 5 60 days Jan. 6 28,000 4 120 days Nov. 12 43,000 6 60 days