Exam 7: Reporting and Analyzing Receivables

On December 31 of the current year,a company's unadjusted trial balance included the following: Accounts Receivable,debit balance of $97,250; Allowance for Doubtful Accounts,credit balance of $951.What amount should be debited to Bad Debts Expense,assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?

On August 1,2013,Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965.The note is due in 90 days and has an interest rate of 8%.What would be the appropriate journal entry to record the receipt of cash at the maturity date?

A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.

Vine Company began operations on January 1,2013.During its first year,the company completed a number of transactions involving sales on credit,accounts receivable collections,and bad debts.These transactions are summarized as follows: What is the amount required for the adjusting journal entry to record bad debt expense?

Assume that this company's bad debts are estimated and recorded as 1.5% of credit sales. On December 31,of the current year,a company's unadjusted trial balance revealed the following: accounts receivable of $185,600; sales revenue of $1,280,000; (75% were on credit) and allowance for doubtful accounts of $1,600 (credit balance). a.Show how accounts receivable and the allowance for doubtful accounts would appear on the balance sheet after adjustment. b.Prepare the entry to write off a $1,500 account receivable on January 1 of the next year. c.Show how accounts receivable and the allowance for doubtful accounts would appear on the balance sheet immediately after writing off the account in part 2.

After adjustment,the allowance for doubtful accounts has the effect of reducing accounts receivable to its estimated realizable value.

Corona Company has credit sales of $4.60 million for year 2014.The company estimates that 2% of sales 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 used the percent of sales method determine the amount that should be recorded for bad debt expense on December 31,2014.

On November 15,2013,Betty Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $138,460.The note is due in 90 days and has an interest rate of 7.5%.What is the appropriate journal entry to record at maturity?

The aging of accounts receivable involves classifying each account receivable by how long it is past its due date and estimating the amount that is uncollectible.

What is the accounts receivable turnover ratio? How is it calculated? How is it used to assess financial condition?

A payee of a note will always honor a note and pay it in full.

At December 31 of the current year, a company reported the following: Total sales for the current year: $780,000, includes $160,000 in cash sales. Accounts receivable balance at Dec. 31, current year: $190,000. Bad debts written off during the current year: $6,800. Balance of allowance for doubtful accounts at January 1, current year: $8,300 credit. Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal: a. 1.5% of credit sales b. 5% of accounts receivable

The use of an allowance for bad debts is required under the materiality constraint.

The matching principle requires:

On December 31 of the current year,a company's unadjusted trial balance included the following: Accounts Receivable,debit balance of $88,790; Allowance for Doubtful Accounts,credit balance of $1,245.What amount should be debited to Bad Debts Expense,assuming 4% of outstanding accounts receivable at the end of the current year are considered uncollectible?

A promissory note received from a customer in exchange for an account receivable: