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Exam 8: Receivables

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Question 61

Multiple Choice

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Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

A) credit to Bad Debt Expense
B) credit to Accounts Receivable
C) debit to Allowance for Doubtful Accounts
D) debit to Accounts Receivable

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Question 62

Multiple Choice

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Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

A) at the end of each accounting period.
B) when a credit sale is past due.
C) whenever a pre-determined amount of credit sales have been made.
D) when an account is determined to be worthless.

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Question 63

Multiple Choice

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If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $1,200 debit balance, the adjustment to record the bad debt expense for the period will require a

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 Receivable and Accounts Receivable can also be called trade receivables.

Watson Company issued a 60-day, 8% note for $18,000, dated April 5, to Laker Company on account. (Assume a 360-day year when calculating interest.)

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

One of the weaknesses of the direct write-off method is that it

Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables.

Receivables currently collectible are reported in the investments section of the balance sheet.

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables: Feb 20 Received $500 from Andrew Warren and wrote off the remainder owed of $2,500 as uncollectible. May 10 Reinstated the account of Andrew Warren and received $2,500 cash in full payment.

The receivable that is usually evidenced by a formal instrument of credit is a(n)

The equation for computing interest on an interest-bearing note is as follows: interest equals maturity value times interest rate times time.

At the end of the current year, Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $3,500,000. Bad debt expense is estimated at 1/2 of 1% of net sales. Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $640. During the year, $350 of previously written-off accounts were reinstated and accounts totaling $410 are written-off as uncollectible. The end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be

Accounts Receivable Turnover measures

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

For each of the following notes receivables held by Rogers Company determine the interest revenue to be reported on the income statements for 2011 and 2012. Round answers to nearest whole dollar.

When referring to a note receivable or promissory note