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

A company lends $10,000 to an employee who signs a 9%,6-month promissory note. What is the total amount of interest on this note?

Specialty Inc.converts an existing account receivable to a note receivable to allow an extended payment period.Specialty receives a $2,000,3-month,12% promissory note from its customer.What entry will Specialty make upon receipt of the note?

Kata Company uses the allowance method.On May 1,Kata wrote off a $22,000 customer account balance when it becomes clear that the particular customer will never pay.The journal entry to record the write-off on May 1 would include which of the following?

Interest on a two-month,7%,$1,000 note would be calculated as $1,000 × 0.07 × 2.

Accounts Receivable,Net (or Net Accounts Receivable)equals Accounts Receivable (gross)minus:

All other things being equal,a company is better off when its receivable turnover ratio:

Bad Debt Expense is a:

ABC Corp.received a 3month,at 8% per year,$1,500 note receivable on November 1.The adjusting entry on December 31 will include a:

Receivables might be sold ("factored")to:

On January 1,a company lends $90,000 to a customer for one year at a 7% annual interest rate.The note requires the payment of interest twice each year on June 30 and December 31.The company records adjusting entries on a monthly basis.At the end of each month in which the company does not receive any interest payments,the company:

A scenario under which a company's credit sales are increasing and its accounts receivable turnover is decreasing might suggest:

Assume ABC sells its receivables to another company for immediate cash on a regular basis.How should the factoring fee be reported in the income statement?

Consider the scenarios listed in the table below. Required: For each scenario below,indicate related impact on revenues,expenses,and net income in the current period by answering increase,decrease,or no effect.

If a company did not extend credit to customers:

Wheeling Inc.uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $5,000.At the end of the year,the balance of Accounts Receivable is $100,000 and the unadjusted debit balance of the Allowance for Doubtful Accounts is $500.Credit sales during the year totaled $150,000.What is the estimated Bad Debt Expense for the current year?

For a note receivable that was created on November 1,2015 and is due for repayment on October 31,2016,what is the time fraction needed to compute interest revenue for the year ended December 31,2015?

The receivables turnover ratio is calculated using the total net receivables.

If your company factors its accounts receivable,it:

Harney Inc.uses the percentage of credit sales method of estimating doubtful accounts.The Allowance for Doubtful Accounts has an unadjusted credit balance of $2,700 and the company had $140,000 of net credit sales during the period.Harney has experienced bad debt losses of 4% of credit sales in prior periods.After making the adjusting entry for estimated bad debts,what is the ending balance in the Allowance for Doubtful Accounts account?

When interest is calculated for periods shorter than a year,the formula to calculate interest is: