Exam 7: Reporting and Analyzing Receivables

The maturity date of a note refers to the date the note is signed.

Welles Company uses the direct write-off method of accounting for uncollectible accounts receivable.On December 6,2013,Welles sold $6,300 of merchandise to the Fleming Company.On August 8,2014,after numerous attempts to collect the account,Welles determined that the $6,300 account of the Fleming Company was uncollectible. a.Prepare the general journal entries required to record the transactions on August 8,2014. b.Assuming that the $6,300 is material,explain how the direct write-off method violates the matching principle in this case.

TechCom's customer RDA paid off an $8,300 balance on its account receivable.TechCom should record the transaction as a debit to Accounts Receivable-RDA and a credit to Cash.

The accounting principle that requires financial statements (including notes) to report all relevant information about the operations and financial condition of a company is called:

____________________________ are amounts owed by customers from credit sales where payment is required in periodic amounts over an extended time period.

Acme Company has an agreement with a major credit card company that calls for cash to be received immediately upon deposit of Acme customers' credit card sales receipts.The credit card company receives 3.5% of card sales as its fee.If Acme has $2,000 in credit card sales,which of the following statements are true?

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?

Writing off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit _______________________ and credit accounts receivable.

Define a note receivable and explain how interest is calculated on a short-term note receivable.

The amount due on the date of maturity for a $6,000,60-day,8%,note receivable is:

The following information is from the annual financial statements of Duke Company. Calculate the accounts receivable turnover ratio for 2013 and 2014.

Hasbro had net sales of $7,875 and average accounts receivables of $1,350.Calculate Hasbro's accounts receivable turnover:

A dishonored note receivable is usually reclassified as an account receivable.

Each December 31,Davis Company ages its accounts receivable to determine the amount of its adjustment for bad debts.At the end of the current year,management estimated that $16,900 of the accounts receivable balances would be uncollectible.The Allowance for Doubtful Accounts account had a debit balance of $3,200 before any year-end adjustment for bad debts.Prepare the adjusting journal entry that Davis Company should make on December 31 of the current year to estimate bad debts expense.

Corona Company has credit sales of $4.60 million for year 2014.The company estimates that 1.42% of accounts receivable will be uncollectible.On December 31,2014,the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $13,164.Corona prepares a schedule of its December 31,2014,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 accounts receivable method,determine the amount that should be recorded for bad debt expense on December 31,2014.

The Connecting Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred: 1. Prepare the general journal entries to record these transactions. 2. If the balance of the allowance for uncollectible accounts was an $8,000 credit on January 1 of the current year, determine the balance of the allowance for doubtful accounts at December 31 of the current year. Assume that the transactions above are the only transactions affecting the allowance for doubtful accounts during the year.

The buyer who pays cash for an account receivable is referred to as a:

If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off,the entry to record the write-off against the allowance account results in:

What is the amount of interest that is due on a $36,000,3-month,4% note receivable?

Tecom had net sales of $315,000 and average accounts receivable of $75,600.Its competitor,ZCom,had net sales of $299,000 and average accounts receivables of $81,350.Calculate the accounts receivable turnover for both companies.Which company is doing a better job of managing its accounts receivables?