Exam 8: Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Daley Company uses the allowance method.At December 31,2015,the company's balance sheet reports Accounts Receivable,Net in the amount of $17,000.On January 2,2016,Daley writes off a $1,500 customer account balance when it becomes clear that the customer will never pay.What is the amount of Accounts Receivable,Net after the write-off?

When a company has earned interest in the current period but has not yet recorded the interest,what type of adjustment is the company required to make?

Consider each of the following transactions. Required: Indicate how each transaction will affect the elements of the accounting equation by answering increase,decrease,or no effect.

Mills Corporation's balance sheet included the following information: If the Allowance account had a credit balance of $27,500 immediately before the year-end adjustment for bad debts and no accounts were written-off or allowed for during the year,what was the amount of Bad Debt Expense recognized during the year?

The balance of the Allowance for Doubtful Accounts was $12,656 at the beginning of the year and $14,348 at the end of the year.Bad Debt Expense was $3,879 for the year.Recoveries in the amount of $100 were recorded during the year.Which of the following statements is correct?

If a company factors its receivables,its receivables turnover ratio will be lower than it would have been if the receivables had not been factored.

The entry that includes a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable is a(n):

Which of the following statements about extending credit is not correct?

On January 1,a company lends a corporate customer $80,000 at 6% interest.The amount of interest revenue that should be recorded for the quarter ending March 31 equals:

Wechsler Company uses the aging of accounts receivable method.The company performed an aging of accounts receivable on December 31 and gathered the following information: What is the amount of Accounts Receivable,Net that will be reported on the balance sheet at December 31?

The following summarizes the aging of accounts receivable for Johnston Supplies,Inc.as of July 31,2016: Required: Part a.The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies,Inc.is a credit balance in the amount of $28,947 on July 31,2016.Prepare the required adjusting entry to record Bad Debt Expense for the year. Part b.Johnston Supplies,Inc.writes off $3,081 of uncollectible accounts during on August 15,2016.Prepare the required adjusting entry to record the write-off. Part c.Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15,2016.

All of the following will likely be incurred by a company that extends credit except:

Which of the following is recorded with a debit to Cash and a credit to Notes Receivable?

Factoring refers to an arrangement in which a company sells its receivables to another company and receives cash immediately.

On November 1,2015,Lendem,Inc.loaned an employee $100,000 at 6% with both the interest and principal due in one year.The adjusting entry to record the interest earned but not received as of December 31,2015 includes a:

What effect does the adjusting entry for interest earned but yet not received have on the accounting equation?

To ensure that the Allowance for Doubtful Accounts account does not become materially misstated over time,companies revise overestimates of prior periods by:

On October 1,a company lends $10,000 to an employee who signs a 9%,6-month promissory note.The company is preparing its year-end financial statements on December 31.No adjusting entries have been recorded in connection with this note.What adjusting entry should be recorded before the financial statements are prepared?

The direct write-off method for uncollectible accounts is required:

Why are estimates of bad debts used to record uncollectible amounts of accounts receivable?