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Exam 9: Accounting for Receivables

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Question 81

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Electron borrowed $75,000 cash from TechCom by signing a promissory note.TechCom's entry to record the transaction should include a:

A) Debit to Notes Receivable for $75,000.
B) Debit to Accounts Receivable for $75,000.
C) Credit to Notes Receivable for $75,000.
D) Debit Notes Payable for $75,000.
E) Credit to Sales for $75,000.

F) D) and E)
G) A) and E)

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Question 82

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The person to whom a note is payable is known as the ______________.

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Question 83

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Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $4,800,90-day,10% note.If the note is dishonored,what entry should TechCom make on January 15 of the next year?

A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1,including a $720 sale to Helen Sweet.On December 31,Year 1,the company estimated its bad debts at 1.5% of its credit sales.On June 1,Year 2,the company wrote off,as uncollectible,the $720 account of Helen Sweet.On December 21,Year 2,Helen Sweet unexpectedly paid her account in full.Prepare the necessary journal entries: (a)On December 31,Year 1,to reflect the estimate of bad debts expense. (b)On June 1,Year 2,to write off the bad debt. (c)On December 21,Year 2,to record the unexpected collection.

Darby uses the allowance method to account for uncollectible accounts.Its year-end unadjusted trial balance shows Accounts Receivable of $104,500,allowance for doubtful accounts of $665 (credit) and sales of $925,000.If uncollectible accounts are estimated to be 4% of accounts receivable,what is the amount of the bad debts expense adjusting entry?

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.Experience suggests that 6% of outstanding receivables are uncollectible.The current credit balance (before adjustments)in the allowance for doubtful accounts is $800.The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $7,000.

Describe how accounts receivable arise and how they accounted for,including the use of a subsidiary ledger and an allowance account.

Darby uses the allowance method to account for uncollectible accounts.Its year-end unadjusted trial balance shows Accounts Receivable of $104,500,allowance for doubtful accounts of $665 (credit) and sales of $925,000.If uncollectible accounts are estimated to be .5% of sales,what is the amount of the bad debts expense adjusting entry?

The matching principle requires use of the direct write-off method of accounting for bad debts.

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

The percent of accounts receivable method for bad debts estimation uses only income statement account balances to estimate bad debts.

Tecom had net sales of $315,000 and average accounts receivable of $75,600.Its competitor,ZCom,had net sales of $299,000 and average accounts receivables of $81,350.Calculate the accounts receivable turnover for both companies.Which company is doing a better job of managing its accounts receivables?

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.

Explain the options a company has to convert its receivables to cash.

What is the maturity date of a 6-month note receivable dated February 5?

A promissory note:

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Companies use two methods to account for uncollectible accounts,the direct write-off method and the allowance method.

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).