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Exam 8: Receivables

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Question 1

Multiple Choice

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The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is

A) $40,000
B) $40,400
C) $43,600
D) $44,000

E) A) and D)
F) None of the above

Correct Answer

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Question 2

Multiple Choice

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Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

A) Liabilities decrease.
B) Net Income is unchanged.
C) Total Assets are unchanged.
D) Total Assets decrease.

E) C) and D)
F) None of the above

Correct Answer

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D

Question 3

True/False

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When an account receivable that has been written off is subsequently collected, the account receivable is said to be reinstated.

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

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

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively.

Two methods of accounting for uncollectible accounts are the

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

The maturity value of a 12%, 60-day note for $5,000 is $5,600.

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case.

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

a) The aging of Torme Designs shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible. b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year.

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Net credit sales for the period totaled $800,000. If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

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.

The following are the current assets from Hanes Co. as of December 31, 2014: Prepare the current asset section of the balance sheet.

Stephanie Roe utilizes the direct write-off method of accounting for uncollectible receivables. On September 15th she is notified by the attorneys for Jacob Marley that Jacob Marley is bankrupt and no cash is expected in the liquidation of Jacob Marley. Write off the $675 of accounts receivable due Jacob Marley.

Which of the following receivables would not be classified as an "other receivable"?