CH 8 Assemenet
A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is
$10,150
Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?
Uncollectible accounts are estimated to be $111,000.
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?
Accounts Receivable
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?
Accounts receivable
Which statement is not true?
All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section.
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
Allowance for Doubtful Accounts and credit Accounts Receivable
Allowance for Doubtful Accounts is classified as a(n) ______ account and has a normal ______ balance.
contra asset, credit
What is the type of account and normal balance of Allowance for Doubtful Accounts?
contra asset, credit
When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include a
credit to Allowance for Doubtful Accounts
On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a
credit to Interest Revenue for $300.
Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a
debit to Accounts Receivable
The amount for which a promissory note is written is called the
face value
Selling receivables is called
factoring
Interest on a note can be calculated without knowledge of the
fair value of the note
The accounts receivable turnover measures
how frequently during the year the accounts receivable are converted to cash
A debit balance in the Allowance for Doubtful Accounts
indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when
management estimates the amount of uncollectibles
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 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 for Doubtful Accounts, respectively.
$19,500 and $25,000
The maturity value of a $180,000, 9%, 40-day note receivable dated July 3 is
$181,800
On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of
$450
At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, $120 of previously written off accounts are reinstated and accounts totaling $740 are written off as uncollectible. The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be
$140
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?
$289,000
Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31 balance in Bad Debt Expense will be
$3,000
Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is
$32,000
The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is
$40,400
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 sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.)
$525,000
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $700,765 and Allowance for Doubtful Accounts has a balance of $24,659. What is the net realizable value of the accounts receivable?
$676,106
A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account. The face value of the note is
$7,000
The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivable are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:
$750
Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivable is
$9,000
Given the following information, compute accounts receivable turnover: Gross sales$150,000Accounts receivable, beginning of year$18,000Sales135,000Accounts receivable, end of year22,000
6.75
Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct regarding the entry to record estimated uncollectible receivables?
Allowance for Doubtful Accounts will be credited
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
Allowance for doubtful accounts
When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?
Bad Debt Expense 500 Accounts Receivable, Bob Smith 500
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?
Bad Debt Expense17,000 Allowance for Doubtful Accounts 17,000
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $296,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 7% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,800 before adjustment?
Bad Debt Expense17,920 Allowance for Doubtful Accounts 17,920
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
Bad debt expense
On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $9,000 face value and 8% interest. On October 30, the journal entry to record the collection of the note should include a
Credit to Interest Revenue for $180.
Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?
Interest Receivable 200 Interest Revenue 200
Harper Company lends Hewell Company $32,400 on March 1, accepting a four-month, 8% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?
Interest Receivable 216 Interest Revenue 216
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?
Notes Receivable—Dame Company 6,000 Accounts Receivable—Dame Company 6,000
Paper Company receives a $3,930, 3-month, 9% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?
Notes Receivable—Dame Company$3,930 Accounts Receivable—Dame Company $3,930
The operating expense recorded from uncollectible receivables can be called all of the following except
accounts receivable
Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account
affects only balance sheet accounts
In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?
analysis of receivables method
When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because
assets and equity both decrease by the same amount.
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
debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120.
You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to
debit Allowance for Doubtful Accounts and credit Accounts Receivable
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?
debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600
Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?
debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on this estimate, which of the following adjusting entries should be made?
debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200
Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?
debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600
Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?
debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?
debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600
The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?
debit Bad Debt Expense; credit Accounts Receivable
When a company receives an interest-bearing note receivable, it will
debit Notes Receivable for the face value of the note
The journal entry to record a note received from a customer to replace an account is
debit Notes Receivable; credit Accounts Receivable
Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James. The journal entry to record the initial write-off includes a
debit to Allowance for Doubtful Accounts
To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a
debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts
An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a
debit to Bad Debt Expense for $3,200
An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $5,157. If Allowance for Doubtful Accounts has a $1,229 credit balance, the adjustment to record the bad debt expense for the period will require a
debit to Bad Debt Expense for $3,928.
An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $4,592. If Allowance for Doubtful Accounts has a $1,019 debit balance, the adjustment to record the bad debt expense for the period will require a
debit to Bad Debt Expense for $5,611.
An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a
debit to Bad Debt Expense for $7,200
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
debit to Bad Debt Expense for $7,700.
Two methods of accounting for uncollectible accounts are the
direct write-off method and the allowance method
If the maker of a promissory note fails to pay the note on the due date, the note is said to be
dishonored
The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
does not affect net income in the period it is collected
A note receivable due in 18 months is listed on the balance sheet under the caption
investments
The number of days' sales in receivables
is an estimate of the length of time the receivables have been outstanding
The direct write-off method of accounting for uncollectible accounts
is often used by small companies and companies with few receivables
The direct write-off method
is used by businesses whose receivables are a small part of their current assets.
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
is used primarily by small companies with few receivables
The amount of the promissory note plus the interest earned on the due date is called the
maturity value
The term "receivables" includes all
money claims against other entities
If collection of an other receivable is expected beyond one year, it is classified as a
noncurrent asset and reported under Investments
The receivable that is usually evidenced by a formal, written instrument of credit is a(n)
note receivable
Which of the following receivables would not be classified as an "other receivable"?
notes receivable
Current assets are usually listed in order
of liquidity
Indications that an account may be uncollectible include all of the following except
the customer is making small but regular payments
When referring to a note receivable or promissory note
the note may be used to settle an account receivable
A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable
there is no effect on total current assets or total expenses
When does an account become uncollectible?
there is no general rule for when an account becomes uncollectible
Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts
total assets decrease
On the balance sheet after adjusting entries are made, the amount shown for the Allowance for Doubtful Accounts is equal to the
total estimated uncollectible accounts as of the end of the year
Notes or accounts receivable that result from sales transactions are often called
trade receivables
An alternative name for Bad Debt Expense is
uncollectible accounts expense
Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
when an account is determined to be worthless