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Exam 9: Receivables

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Question 71

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Notes Receivable and Accounts Receivable can also be called trade receivables.

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Question 72

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When a company receives an interest-bearing note receivable, it will

A) debit Notes Receivable for the maturity value of the note.
B) debit Notes Receivable for the face value of the note.
C) credit Notes Receivable for the maturity value of the note.
D) credit Notes Receivable for the face value of the note.

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Question 73

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Fill in the blanks related to the characteristics of a promissory note:

The amount of a promissory note is called the

Discuss the (1) focus and (2) financial statement emphasis of (a) the percent of sales and (b) the analysis of receivables methods of estimating bad debts.

For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded in 2014, the balance in Allowance for Doubtful Accounts after adjustment at December 31, 2014, and the net realizable value of Accounts Receivable at December 31, 2014: a) Based on an analysis of Simmon's Company's $380,000 balance in Accounts Receivable at December 31, 2014, is was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment. b) Blake Company had net credit sales of $900,000 during 2014, and has an Accounts Receivable balance of $425,000 at December 31, 2014, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates Bad Debt Expense as 3/4 of 1% of net credit sales. c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31, 2014. An analysis of those receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, the Allowance for Doubtful Accounts has a debit balance of $750.

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000.

A debit balance in the Allowance for Doubtful Accounts

The interest on a 6%, 60-day note for $5,000 is $300.

The maturity value of a note receivable is always the same as its face value.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

The balance of the Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.

Allowance for Doubtful Accounts is a liability account.

Discuss the similarities and differences between accounts receivables, notes receivables and other receivables.

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment) , and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, 2010, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2010, Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no Sales Returns or Sales Discounts during the year. After the adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be

Based on the following data and using a 365-day year, compute (a) the accounts receivable turnover and (b) the number of days' sales in receivables. The industry average is a collection period of once every 20 days, and the number of days' sales in receivables averages 25. (c) Comment on this situation.

Notes or accounts receivables that result from sales transactions are often called