Exam 18: Receivables

When a bad debt that has been written off is recovered an account called Bad Debts Recovered is credited/debited.

How many of these are an issue in a firm's management of its accounts receivable? .Deciding which customers to offer credit to .Minimising the costs of carrying accounts receivables .Following up slow paying customers

In calculating the discount on a bill of exchange the discount rate is applied to what?

It is not true that:

The general journal entry to provide for estimated bad debts under the allowance method is:

These are the balances for Johnson Co at 12 December: Accounts Receiv able $\quad \$ 23,452$ Allowance for Doubtful Debts $\quad 1,252 \quad \$ 22,200$ If an account for $300 is written off on 15 December what is the estimated realisable value of Accounts Receivable after the write-off? Ignore any GST adjustment for the purposes of this question.

Simpson Inc recorded sales of $180 000 during the year net of GST).Of these,$80 000 were on credit.Bad debts have averaged one half of one percent of credit sales.The entry to estimate bad debt expense for the year is: a. $\quad$ Bad Debts Expense $\quad$$\quad$ $400 $\quad$$\quad$ Allow ance for Doubtfiul Debts $\quad$$\quad$ 400 b. $\quad$ Bad Debts Expense $\quad$$\quad$ 900 $\quad$$\quad$ Allowance for Doubtful Debts $\quad$$\quad$ 900 c. $\quad$ Bad Debts Expense $\quad$$\quad$ 400 $\quad$$\quad$ Accounts Receiv able $\quad$$\quad$ 400 d. $\quad$ Bad Debts Expense $\quad$$\quad$ 900 $\quad$$\quad$ Accounts Receivable $\quad$$\quad$ 900

When the balance sheet approach is used to estimate bad debts expense a schedule of debts is prepared.The preparation of this schedule is called the a___________ of accounts receivable.

The holder of a bill receivable can collect the full amount of the bill at maturity date or can obtain the money sooner by arranging to d____________ the bill.

Cheung Ltd has an account receivable for $12 000 from R.Morris that is overdue.Morris requests a 60-day extension of the payment date and Cheung Ltd agrees by accepting a fixed 60-day,12% promissory note in exchange for the accounts receivable.The entry Cheung Ltd makes on receipt of the note is:

The statement that is incorrect is:

Allowance for Doubtful Debts is a c___________ asset account.

The selling of accounts receivable as a means of quickly raising cash,minimising debt collecting expenses and minimising bad debt losses is known as:

A bill of exchange which represents the right to receive cash in the future is a:

The sale of accounts receivable to a firm who will then collect the debts on their own behalf is known as f_________________.

Which of these is the most likely way a bills receivable would be settled?

The two methods of estimating bad debts expense for a given period are the balance sheet method and the i_________ statement method.

When a credit sale involving GST is recorded,the sales account:

Jarrod Co has the following balances in its general ledger: Accounts receivable \ 42000 Less Allowance for doubtful debts - \ 38000 If a debt for $1 000,previously provided for as doubtful,is written off as bad,what is the estimated net realisable value of accounts receivable after the write off?

Amaud Company calculates that this year's estimated bad debts expense will be $7500.When Amaud makes the adjusting entry the effect will be: Bad Debt Allowance for Doubtful Debts Gross Accounts Expense Receivable a. No affect Increase Decrease b. No affect Decrease No affect c. Increase Increase No affect d. Increase No effect Decrease