Exam 7: Reporting and Analyzing Receivables

A company uses the aging of accounts receivable method to estimate its bad debts expense.On December 31 of the current year,an aging analysis of accounts receivable revealed the following: Required: a.Calculate the amount of the allowance for doubtful accounts that should be reported on the current year-end balance sheet. b.Calculate the amount of the bad debts expense that should be reported on the current year's income statement,assuming that the balance of the allowance for doubtful accounts on January 1 of the current year was $44,000 and that accounts receivable written off during the current year totaled $49,200. c.Prepare the adjusting journal entry to record bad debts expense on December 31 of the current year. d.Show how accounts receivable will appear on the current year-end balance sheet as of December 31.

____________________ is the charge for using (not paying) money until a later date.

Temper Company has credit sales of $3.10 million for year 2013.Temper estimates that .9% of the credit sales will not be collected.On December 31,2013,the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $2,222.Assuming the company uses the percent of sales method,what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

The formula for computing interest on a note is the principal of the note times the annual interest rate times time expressed in a fraction of year.

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

According to GAAP,the amount of bad debt expense can be estimated by:

During a given year,a company had net sales of $500,000 and average accounts receivable of $80,000.Its accounts receivable turnover is equal to 6.25.

The party who borrows money and signs a promissory note is referred to as the payee.

On May 31,a company had a balance in its accounts receivable of $103,895.Record the company's following transactions for June:

A company receives a 7.5%,six-month note for $8,900.The total interest due on the maturity date is:

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

A company ages its accounts receivables to determine its end of period adjustment for bad debts.At the end of the current year,management estimated that $39,375 of the accounts receivable balance would be uncollectible.Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a credit balance of $3,285.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

ABC Co.sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee.Prepare the journal entry for ABC Co.to record the sale.

Halsted Inc.uses the allowance method.Previously,the company had written off the account of S.Bullock in full.Nine months later,Halsted collected $1,700,the full amount due,from S.Bullock.How would Halsted Inc.record this transaction?

Explain how to record the receipt of a note receivable.

Chiller Company has credit sales of $5.60 million for year 2013.Chiller estimates that 1.32% of the credit sales will not be collected.Historically,4% of outstanding accounts receivable is uncollectible.On December 31,2013,the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561.Chiller prepares a schedule of its December 31,2013,accounts receivable by age.Based on past experience,it estimates the percent of receivables in each age category that will become uncollectible.This information is summarized here: Assuming the company uses the percent of sales method, -What is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

If a 90-day note receivable is dated June 12,what is the maturity date of the note?

A company that uses the allowance method to account for its bad debts had credit sales of $740,000 in 2013,including a $720 sale to Linda Paul.On December 31,2013,the company estimated its bad debts at 1.5% of its credit sales.On June 1,2014,the company wrote off as uncollectible the $720 account of Linda Paul; and on December 21,2014,Linda Paul unexpectedly paid her account in full.Prepare the necessary journal entries (a) on December 31,2013,to reflect the estimate of bad debts expense; (b) on June 1,2014,to write off the bad debt; and (c) on December 21,2014,to record the unexpected collection.