Exam 8: Receivables

At January 1, Davidson Services has the following balances: Davidson has the following transactions during January: Credit sales of $80,000, collections of $76,000, and write-offs of $12,000. Davidson uses the direct write-off method. At the end of January, the balance in Accounts receivable is:

Which of the following entries would be used to account for uncollectible receivables using the allowance method?

GAAP prefers companies to use the:

Which of the following is NOT one of the benefits of a business accepting credit cards from their customers?

The following information is from the 2013 records of Armadillo Camera Shop: Uncollectible accounts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of net Accounts receivable after adjustment?

On December 1, 2014, Parsons Sales sold machinery to a customer for $2,000. The customer could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 12% interest. What was the total amount of cash collected by Parsons when the note matured?

Under the direct write-off method, a customer who doesn't pay their bills is written off with what journal entry?

What is the maturity value of a note?

A company uses the direct write-off method to account for uncollectible receivables. Which of the following is included in the entry to write off an uncollectible account?

On October 1, 2014, Allen Jewelry Company accepted a 4-month, 10% note for $2,400 in settlement of an overdue account receivable. If the company accrues interest at year-end only, how much interest revenue should be accrued on December 31, 2014?

On January 1, Wolfie's Supply sold $222 worth of goods to customer Abe Smith on account. For several months, Wolfie's tried unsuccessfully to collect from the customer, and finally decided to write off the account. (Wolfie's uses the allowance method.) Later in the year, however, the customer came in to Wolfie's, apologized for the late payment and handed over a check for $222. To properly record the recovery of an account previously written off, two journal entries are needed-one to restore the receivable previously written off, and one to record the cash receipt. Please show the second of these two entries.

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the percent-of-sales method to account for uncollectible account expense, and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense. Show the journal entry required to record Uncollectible account expense at the end of the year.

The income statement approach computes uncollectible accounts expense as a percentage of net credit sales.

The direct write-off method would be considered acceptable if uncollectible receivables are very low.

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the aging method to account for uncollectible account expense, and has calculated an amount of $200 as their estimate of uncollectible amounts at year-end. Show the journal entry required to record Uncollectible account expense at the end of the year.

Anchor Sales accepts credit cards from its customers. Assume Anchor makes a sale of $100 and the processor charges a 3% fee. Assume that the credit card processing company uses the gross method of depositing funds. This method employs a sequence of two separate journal entries to record the revenue transaction and settlement with the processor. Please provide the second journal entry made by Anchor to record the completion of the settlement with the processor.

Charlton Sales has a receivable for $92 that they now deem to be uncollectible. Charlton uses the direct write-off method. Which of the following entries correctly records the write-off?

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the percent-of-sales method to account for uncollectible account expense, and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense. At the end of the year, what is the ending balance in Accounts receivable?

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the percent-of-sales method to account for uncollectible account expense, and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense. At the end of the year, what is the ending balance in the Allowance for uncollectible accounts?

A company uses the direct write-off method to account for uncollectible receivables. Which of the following is included in the entry to write off an uncollectible account?