Exam 8: Reporting and Analyzing Receivables

The following information is available from the annual reports of Nite and Day Companies. Instructions (a) Based on the preceding information, compute the following for each company: 1. Accounts receivable turnover. (Assume all sales were credit sales.) 2. Average collection period. (b) What conclusion concerning the management of accounts receivable can be drawn from these data?

The two accounting problems with accounts receivable are: (1) recognizing and (2) disposing.

Determine the interest on the following notes: (a) $5,000 at 6% for 90 days. (b) $800 at 9% for 5 months. (c) $6,000 at 8% for 60 days (d) $1,600 at 7% for 6 months

In 2014 Wilkinson Company had net credit sales of $1,500,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $36,000. During 2014, $60,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $400,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2014?

The retailer considers Visa and MasterCard sales as

Advances to employees are referred to as accounts receivable.

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

The maturity value of a $40,000, 12%, 3-month note receivable is

When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded

Compute the maturity value as indicated for each of the following notes receivable.

All of the following statements are true regarding the average collection period except:

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

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 debit balance, the adjustment to record bad debts for the period will require a

Benson Products uses the allowance method in estimating uncollectible accounts. On December 31, 2014, the balance in Accounts Receivable was $650,000. An aging analysis of the accounts receivable indicated that $29,500 in accounts are expected to be uncollectible. Prepare the adjusting entry to record estimated bad debts expense using the percentage of receivables basis under each of the following independent assumptions: (a) Allowance for Doubtful Accounts has a credit balance of $3,000 before adjustment. (b) Allowance for Doubtful Accounts has a debit balance of $830 before adjustment.

The basic formula for computing interest on an interest-bearing note is face value of note x annual interest rate x time in terms of one year = interest.

A 90-day note dated June 30, 2014, would mature on:

Simonic Retailers accepted $90,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $90,000 and a debit(s) to

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Great Plains Supply Co. has the following transactions related to notes receivable during the last 2 months of the year. Instructions Journalize the transactions for Great Plains Supply Co.

A factor buys receivables from businesses for a fee and collects the payment directly from customers.