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echo Company's 20X1 beginning and ending accounts receivable balances were $72,500 and $41,250 respectively. During 20X1, the company's credit sales amounted to $857,250. Per Echo's 20X1 cash flow statement, $873,500 was collected from customers while $18,750 related to uncollectible accounts was listed among the "non-cash expenses."If Echo's beginning balance in the allowance for credit losses was $17,600, the ending balance in this account must be

$21,350

On January 2, 20X1, Jensen Corporation sells equipment it manufactured to Lewisburg Fabricators in exchange for an $80,000 note due in five years. The note bears no stated interest rate, but requires the entire $80,000 to be repaid at the end of five years. Jensen recently sold the same equipment to another company for $54,447. When Lewisburg Fabricators sought bank financing for this purchase the company was offered the funds at 8%, but decided to let Jensen hold the note. What amount will Jensen recognize as interest income during 20X1?

$4,356

On January 2, 20X1, Jensen Corporation sells equipment it manufactured to Lewisburg Fabricators in exchange for an $80,000 note due in five years. The note bears no stated interest rate, but requires the entire $80,000 to be repaid at the end of five years. Jensen recently sold the same equipment to another company for $54,447. When Lewisburg Fabricators sought bank financing for this purchase the company was offered the funds at 8%, but decided to let Jensen hold the note.What amount will Jensen recognize as interest income during 20X2?

$4,704

Corona Industries purchased a stamping machine on January 2, 20X1, for $100,000. It made an initial payment of $20,000 and financed the balance over 5 years at State Bank. The loan terms were for annual payments of $16,000 plus 10% interest, payable on December 31 each year. The year 20X4 proves to be a difficult year and on December 1, 20X4 Corona negotiates a debt restructuring with State Bank. The settlement calls for cash payment of accrued interest plus $4,000 on December 1 and the transfer of 200 acres of land held by Corona that cost $15,000. The land has a current fair value of $22,000.What is the amount of the restructuring gain or loss to Corona?

$6,000 gain

On January 2, 20X1, Jensen Corporation sells equipment it manufactured to Lewisburg Fabricators in exchange for an $80,000 note due in five years. The note bears no stated interest rate, but requires the entire $80,000 to be repaid at the end of five years. Jensen recently sold the same equipment to another company for $54,447. When Lewisburg Fabricators sought bank financing for this purchase the company was offered the funds at 8%, but decided to let Jensen hold the note.What will be the balance in the Notes Receivable—Lewisburg Fabricators account at the end of 20X2?

$63,507

Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 20X1. Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the note on October 1, 20X3.What effective interest rate will Island use for the restructured note?

8.9%

Consistent with IFRS No. 7, the fair value must be disclosed for receivables and loans with the following characteristics:

All of these choices are correct

Which of the following is false regarding uncollectible accounts?

Companies are generally not able to adopt stringent credit standards to keep credit losses at a minimum.

Which of the following statements is true regarding a troubled debt restructuring?

In a troubled debt restructuring, there is a lack of symmetry in the financial reporting of the borrower and lender.

An analyst notes that ABC Inc.'s allowance for credit losses as a percentage of year-end accounts receivable has changed. Which of the followingwould not be a plausible explanation for the change?

The company has stopped making sales on credit.

Which one of the following explanations for the growth of accounts receivable outstripping the growth of sales represents a red flag?

The firm adopts an aggressive revenue recognition policy.

Regarding accounts receivable and an allowance for credit losses account, which of the following statements is false?

The net realizable value of accounts receivable is decreased when a credit loss is written off.

In a troubled debt restructuring, the restructured loan can differ from the original loan in any of the ways listed below except:

The repayment schedule is shortened and the interest rate is significantly increased.

Which of the following statements is false regarding factoring receivables?

When a company factors its receivables with recourse, it cannot be required to make a payment to the factor if a customer's account proves to be uncollectible.

Which of the following statements is false regarding accounts receivable reporting?

When a firm's sales growth exceeds its growth in receivables, it could be an indication of aggressive revenue recognition policies.

With a loan collateralized by receivables,

a company receives cash and is responsible for repaying the loan.

Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 20X1. Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the note on October 1, 20X3.Mutual Bank will record this transaction to recognize:

a debt restructuring loss of $2,214.

Regan, Inc. implemented a program to improve the collection of its receivables. Over the past two years, the company has collected 88% of its receivables, up from 80%. A review of the company's financial statements would be expected to show:

a reduction in the percentage of the allowance for credit losses to receivables.

Consistent with ASC topic 326, expected credit losses are recognized as

a separately reported loss.

Information about credit quality, amortization cost by credit quality indicator for the prior five years and in the aggregate, and the methodology for estimating credit losses must be disclosed for

all receivables reported at amortized cost

Accounts receivables initially are recognized at

amortized cost.

Net realizable value of receivables is gross receivables minus

estimated provision for credit losses and estimated returns and allowances.

Donau Inc. performs services with a normal contract price of $265,000 for a new customer. The customer signs a non-interest bearing note of $300,000. The differences between the normal contract price and the face amount of the note is considered

imputed interest.

If a bank sells a mortgage portfolio at a price that yields the purchasers a return that is lower than the average yield on the mortgages in the portfolio, the selling price:

is higher than the carrying value of the mortgages on the bank's books.

Ambiguity can arise as to whether receivables have been sold or instead are being used as collateral for a loan whenever certain obligations, duties, or rights regarding the transferred receivables are retained by the transferor. In distinguishing between sales and collateralized borrowings using receivables, the critical issue:

is whether the transferor surrenders control over the receivables.

Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 20X1. Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the note on October 1, 20X3.Island will record this transaction to recognize:

neither a gain nor a loss from debt restructuring.

When the sum of the future cash flows of a restructured note is above the current note's carrying value, the debtor recognizes:

neither a gain nor a loss on the debt restructure.

Management must periodically assess the reasonableness of the allowance for credit losses if it uses the

percent of sales or the percent of gross receivables method.

When a firm does not adopt the fair value option, it

still must disclose the fair value of its long-term notes receivable but need not disclose the accounts receivable fair value if the fair values approximates the reported value

Under current U.S. GAAP, the transferor of receivables to a securitization entity (SE) that it has formed should treat the transfer as a collateralized borrowing instead of a saleif the transferor has:

the power to direct the activities of the SE and the right to participate in the SE's gains and losses.

Per authoritative accounting literature, the determination of whether a transfer of receivables is a sale or collateralized borrowing hinges on whether the:

transferor surrenders control over the receivable.