Exam 9: Accounting for Receivables

When using the allowance method of accounting for uncollectible accounts, the entry to write off Jeannie's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable-Jeannie.

What are some of the considerations management should make when assessing the accounts receivable turnover ratio?

The materiality constraint, as applied to bad debts:

A credit sale of $5,275 to a customer would result in which of the following?

All of the following statements regarding valuation of receivables under U.S. GAAP and IFRS are true except:

The accounts receivable turnover is calculated by:

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments)in the allowance for doubtful accounts is an $800 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the sales transaction is:

A maker who dishonors a note is one who does not pay it at maturity.

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made. The journal entry to record this sale transaction would be:

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the maturity date for the note.

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable \ 375,000 debit Allowance for unco llectible accounts 500 credit Net Sales 800,000 credit All sales are made on credit. Based on past experience, the company estimates 0.6% of net credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. Music World's journal entry to record the sales transaction is:

The expense recognition (matching)principle requires use of the allowance method of accounting for bad debts.

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit)and sales of $925,000. If uncollectible accounts are estimated to be 4% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

The accounts receivable turnover indicates how often accounts receivable are received and collected during the period.

A Company had net sales of $23,000, and its average account receivables were $5,700. Its accounts receivable turnover is 0.24.