Exam 9: Accounting for Receivables

On April 30, Steinbeck Co. has $448,800 of accounts receivable. 1. Prepare journal entries to record the following selected May transactions. The company uses the perpetual inventory system. 2. Also prepare any footnotes to the May 31 financial statements that result from these transactions. 3. Calculate the balance in the Accounts Receivable account as of May 10.

The materiality constraint permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.

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:

If a 60-day note receivable is dated September 22, what is the maturity date of the note?

Dart reported net sales of $8,739 million and average accounts receivable of $864 million. Its accounts receivable turnover is:

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.

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

A company uses the percent of receivables 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 3.5% 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?

Accounts receivable occur from credit sales to customers.

Converting receivables to cash before they are due is usually done by either _______________________ or ______________________________.

A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:

The materiality constraint:

The quality of receivables refers to the likelihood of collection without loss.

Explain how to record the receipt of a note receivable.

MixRecording Studios purchased $7,800 in electronic components from TechCom. MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom's journal entry to record the sales portion of the transaction is:

ABC Co. sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee. Prepare the journal entry for ABC Co. to record the sale.

Loma Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $550 credit. c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300 debit.

The account receivable turnover measures:

If a customer owes interest on accounts receivable, Interest Revenue is debited and Accounts Receivable is credited.

The formula for computing interest on a note is principal of the note times the annual interest rate times time expressed in fraction of year.