Exam 8: Reporting and Analyzing Receivables

Assuming that the allowance method is being used, prepare general journal entries without explanations to record the following transactions. January 1 $\quad$ Sold merchandise to Mary Baden for $500 on account. February 1 $\quad$ Received $300 from Baden. July 1 $\quad$ $\quad$ Wrote off Baden's account as uncollectible. September 1 $\quad$ Unexpectedly received payment in full from Baden.

Donaldson Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500. During August, the following transactions occurred. Oct. 15 Sold $30,000 of accounts receivable to Fast Factors, Inc. who assesses a 3% finance charge. 25 Made sales of $900 on Visa credit cards. The credit card service charge is 2%. Instructions Journalize the transactions.

YZ Company accepted a national credit card for a $7,500 purchase. The cost of the goods sold is $6,000. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

Selling accounts receivables to factors and allowing credit terms such as 2/10, n/30

The financial statements of the Melton Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

What criteria are used to determine how to record a factoring transaction?

M. Cornett is a corporation that sells breakfast cereal. Based on the accounts listed below, what are M. Cornett's total trade receivables?

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

ABC Company accepted a national credit card for a $7,000 purchase. The cost of the goods sold is $5,600. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

The expense recognition principle relates to credit losses by stating that bad debt expense should be recorded

The sale of receivables by a business

Windsor Corporation sells its goods on terms of 2/10, n/30. It has an accounts receivable turnover of 8. What is its average collection period (days)?

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

A company has an ending accounts receivable balance of $900,000 and it estimates that uncollectible accounts will be 2% of the receivable balance. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

Which of the following is least likely to help a company minimize losses as credit standards are relaxed?

The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts.

If a promissory note is dishonored, the payee should not record interest income.

Which requires a two-tiered approach to test whether the value of loans and receivables are impaired?

A write off of a specific accounts receivable under the allowance method