ACC, Ch.9 Receivables

Which method of accounting for uncollectible accounts receivable uses an estimate based on a percentage of sales?

Allowance method

The accounts receivable turnover is computed as _____.

sales divided by average accounts receivable

Which of the following accounts is used only with the allowance methods of accounting for uncollectible accounts receivable?

Allowance for Doubtful Accounts

Under the allowance method for uncollectible accounts, the journal entry to record the estimate of uncollectible accounts would include a credit to

Allowance for Doubtful Accounts.

The interest on a $5,400, 3%, 45-day note is

$20.25

Which is usually the first course of action a business takes to collect a bill?

Contacts the person to ask about why they haven't paid and adjust terms to maximize the potential for collection.

All receivables that are expected to be realized in cash within a year are reported in the __________ section of the balance sheet.

Current Assets

Noncurrent receivables are reported on the balance sheet under

Investments.

Which is usually the last course of action a business takes to collect a bill?

Turns the bill over to a collection agency.

The days' sales in receivables is calculated as _____.

average accounts receivable divided by average daily sales

Under the allowance method for uncollectible accounts, the journal entry to record the write-off of an account receivable would include a

credit to Accounts Receivable.

Assume that the J. P. Moore account written off on April 4 is later collected on June 21. The journal entry to reinstate the receivable would include a

credit to Bad Debt Expense.

The journal entry to record the adjusting entry for accrued interest on a note receivable would include a

credit to Interest Revenue.

On April 4, a $2,000 account receivable from J. P. Moore has been determined to be uncollectible. Using the direct write-off method, the entry to write off the account would include a

debit to Bad Debt Expense.

The allowance for doubtful accounts is reported as a(n) __________ on the balance sheet.

deduction from accounts receivable

The __________ records bad debt expense only when an account is determined to be worthless.

direct write-off method

The estimate for uncollectible accounts is normally based on which of the following?

past experience industry averages forecasts of the future

Generally accepted accounting principles (GAAP) require companies with a large amount of receivables to use

the allowance method

The direct write-off method is acceptable for use by businesses when

they sell most of their goods or service for cash or credit card.