Exam 7: Reporting and Analyzing Receivables

Prepare general journal entries for the following transactions of Norman Company, assuming they use the allowance method to account for uncollectible accounts.

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

Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit?

On November 1, Orpheum Company accepted a $10,000, 90-day, 8% note from a customer to settle a past-due account. What entry should be made on November 1 to record the note acceptance?

Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the transaction should be:

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. All sales are made on credit. Based on past experience, the company estimates 1% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

The person who signs a note receivable and promises to pay the principal and interest is the:

Installment Accounts Receivable are classified as non-current assets if the installment period is more than one year, even if the seller regularly offers customers such terms.

The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on matching.

MacKenzie Company sold $180 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 4% service charge for sales on its credit cards. MacKenzie electronically remits the credit card sales receipts to the credit card company and receives payment in approximately 5 days. The journal entry to record the collection from the credit card company would be:

Driver Company expects that $17,500 of its $437,500 Accounts Receivable balance is uncollectible. The Allowance for Doubtful Accounts before adjustment has a debit balance of $2,400. The amount of the adjusting entry needed by Driver is:

The ____________________ of a note is the day the principle plus interest of a note must be repaid.

The _________________________ method of computing uncollectible accounts uses income statement relationships to estimate bad debts and is based on the idea that a given percent of a company's credit sales for a period are uncollectible.

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: Prepare the adjusting entry to estimate bad debts assuming bad debts are estimated to be 2.5% of credit sales.

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

The accounts receivable turnover is calculated by:

The maturity date of a note refers to the date the note must be repaid.

Under IFRS, the term provision:

All of the following statements regarding recognition of receivables under U.S. GAAP and IFRS are true except:

Credit sales are recorded by crediting an Accounts Receivable.