Exam 7: Reporting and Analyzing Receivables

The interest accrued on $7,500 at 6% for 90 days is:

If a company holds a large number of notes receivable it sometimes sets up a controlling account and a subsidiary ledger for notes.

As long as a company accurately records total credit sales information, it is not necessary to have an accounts receivable ledger with separate accounts for specific customers.

On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the amount due at maturity for the note.

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

The _________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit. Based on past experience, the company estimates that 0.6% of credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

Which of the following is an accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected?

____________________ is the charge for using borrowed money until its due date.

Majesty Productions accepted a $7,200, 120-day, 6% note from Swartz Studio on March 1. On the date the note matures, Swartz is unable to pay, but Majesty intends to continue collection efforts. What entry should Majesty record on the maturity date for this dishonored note?

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

A company factored $30,000 of its accounts receivable and was charged a 2% factoring fee. The journal entry to record this transaction would include a debit to Cash of $30,000, a debit to Factoring Fee Expense of $600, and credit to Accounts Receivable of $30,600.

The following data are taken from the comparative balance sheets of Grayling Company. Compute and interpret its accounts receivable turnover for Year 2. Competitors average a turnover of 7.5. How is the company doing in relation to its competitors?

Which of the following is not true about the Allowance for Doubtful Accounts?

Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 5% factoring fee. What entry should Jervis make to record the transaction?

The allowance method based on the idea that a given percent of a company's credit sales for the period is uncollectible is:

No attempt is made to estimate bad debts expense under the allowance method of accounting for uncollectible accounts receivable.

Explain how to record the receipt (acceptance) of a note receivable.

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

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred: Prepare the general journal entries to record these transactions.