Gleim 2014 Accounts receivable

Orr Co. prepared an aging of its accounts receivable at December 31 and determined that the net realizable value of the receivables was $250,000. Additional information is available as follows: Allowance for uncollectible accounts at 1/1 -- credit balance $ 28,000 Accounts written off as uncollectible during the year 23,000 Accounts receivable at 12/31 270,000 Uncollectible accounts recovered during the year 5,000 For the year ended December 31, Orr's uncollectible accounts expense is

$10,000

Foster Co. adjusted its allowance for uncollectible accounts at year end. The general ledger balances for the accounts receivable and the related allowance account were $1,000,000 and $40,000, respectively. Foster uses the percentage-of-receivables method to estimate its allowance for uncollectible accounts. Accounts receivable were estimated to be 5% uncollectible. What amount should Foster record as an adjustment to its allowance for uncollectible accounts at year end?

$10,000 Increase

The following information applies to Nichola Manufacturing Company, which has a 6-month operating cycle: Cash sales $100,000 Credit sales during the sixth month with net 30 days terms 150,000 Credit sale during the fifth month with special terms of net 9 months 10,000 Interest earned and accrued on an investment that matures during month 3 of the next cycle 2,000 The total of Nichola's trade accounts receivable at the end of the current cycle is

$160,000

The following accounts were abstracted from Roxy Co.'s unadjusted trial balance at December 31 Accounts receivable D $1,000,000 Allowance for uncollectible accounts D 8,000 Net credit sales C $3,000,000 Roxy estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, the allowance for uncollectible accounts should have a credit balance of

$30,000

Based on the industry average, Davis Corporation estimates that its bad debts should average 3% of credit sales. The balance in the allowance for uncollectible accounts at the beginning of Year 3 was $140,000. During Year 3, credit sales totaled $10,000,000, accounts of $100,000 were deemed to be uncollectible, and payment was received on a $20,000 account that had previously been written off as uncollectible. The entry to record bad debt expense at the end of Year 3 would include a credit to the allowance for uncollectible accounts of

$300,000

On January 1, Ott Company sold goods to Fox Company. Fox signed a noninterest-bearing note requiring payment of $60,000 annually for 7 years. The first payment was made on January 1. The prevailing rate of interest for this type of note at date of issuance was 10%. Information on present value factors is as follows:

$321,600

On March 31, Vale Co. had an unadjusted credit balance of $1,000 in its allowance for uncollectible accounts. An analysis of Vale's trade accounts receivable at that date revealed the following: Estimated Age Amount Uncollectible 0-30 days $60,000 5% 31-60 days 4,000 10% Over 60 days 2,000 70% What amount should Vale report as allowance for uncollectible accounts in its March 31 balance sheet?

$4,800

Marr Co. had the following sales and accounts receivable balances, prior to any adjustments at year end: Credit sales $10,000,000 Accounts receivable 3,000,000 Allowance for uncollectible accounts 50,000 Marr uses 3% of accounts receivable to determine its allowance for uncollectible accounts at year end. By what amount should Marr adjust its allowance for uncollectible accounts at year end?

$40,000

On January 1, the Fulmar Company sold personal property to the Austin Company. The personal property had cost Fulmar $40,000. Fulmar frequently sells similar items of property for $44,000. Austin gave Fulmar a noninterest-bearing note payable in six equal annual installments of $10,000 with the first payment due this December 31. Collection of the note is reasonably assured. A reasonable rate of interest for a note of this type is 10%. The present value of an annuity of $1 in arrears at 10% for six periods is 4.355. What amount of sales revenue from this transaction should be reported in Fulmar's income statement for the year ended December 31?

$44,000

On January 2, Year 3, Emme Co. sold equipment with a carrying amount of $480,000 in exchange for a $600,000 noninterest-bearing note due January 2, Year 6. There was no established exchange price for the equipment, and the market value of the note cannot be reasonably approximated. The prevailing rate of interest for a note of this type at January 2, Year 3, was 10%. The present value of 1 at 10% for three periods is 0.75. In Emme's Year 3 income statement, what amount should be reported as interest income?

$45,000

The following information pertains to Oro Corp.: Credit sales for the year ended December 31 $450,000 Credit balance in allowance for uncollectible accounts at January 1 10,800 Bad debts written off during the year 18,000 According to past experience, 3% of Oro's credit sales have been uncollectible. After provision is made for bad debt expense for the year ended December 31, the allowance for uncollectible accounts balance would be

$6,300

Frame Co. has an 8% note receivable dated June 30, Year 1, in the original amount of $150,000. Payments of $50,000 in principal plus accrued interest are due annually on July 1 for Year 2, Year 3, and Year 4. In its June 30, Year 3, balance sheet, what amount should Frame report as a current asset for interest on the note receivable?

$8,000

The following information pertains to Tara Co.'s accounts receivable at December 31, Year 2: During Year 2, Tara wrote off $7,000 in receivables and recovered $4,000 that was written off in prior years. Tara's December 31, Year 1, allowance for uncollectible accounts was $22,000. Under the aging method, what amount of allowance for uncollectible accounts should Tara report at December 31, Year 2?

$9,000

On the December 31 balance sheet of Mann Co., the current receivables consisted of the following: Trade accounts receivable $ 93,000 Allowance for uncollectible accounts (2,000) Claim against shipper for goods lost in transit (November) 3,000 Selling price of unsold goods sent by Mann on consignment at 130% of cost (not included in Mann's ending inventory) 26,000 Security deposit on lease of warehouse used for storing some inventories 30,000 Total $150,000 At December 31, the correct total of Mann's current net receivables was

$94,000

When the allowance method of recognizing uncollectible accounts is used, how would the collection of an account previously written off affect accounts receivable and the allowance for uncollectible accounts?

Accounts Receivable: No effect Allowance for Doubtful Accounts: Increase

Gibbs Co. uses the allowance method for recognizing uncollectible accounts. Ignoring deferred taxes, the entry to record the write-off of a specific uncollectible account

Affects neither net income nor working capital.

A method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement is the allowance method based on

Aging the receivables.

Which method of recording uncollectible accounts expense is consistent with accrual accounting?

Allowance: YES Direct write-off: NO

On a balance sheet, what is the preferable presentation of notes receivable or accounts receivable from officers, employees, or affiliated companies?

As assets but separately from other receivables.

When the allowance method of recognizing uncollectible accounts is used, the entry to record the write-off of a specific account

Decreases both accounts receivable and the allowance for uncollectible accounts.

Jole Co. lent $10,000 to a major supplier in exchange for a noninterest-bearing note due in three years and a contract to purchase a fixed amount of merchandise from the supplier at a 10% discount from prevailing market prices over the next 3 years. The market rate for a note of this type is 10%. On issuing the note, Jole should record

Discount on notes Recievable: Yes Deferred Charge: Yes

On December 31, Jet Co. received two $10,000 notes receivable from customers in exchange for services rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of 3% and payable at maturity. The note from Hart Corp., made under customary trade terms is due in 9 months and the note from Maxx, Inc., is due in 5 years. The market interest rate for similar notes on December 31 was 8%. The compound interest factors to convert future values into present values at 8% follow: Present value of $1 due in 9 months .944 Present value of $1 due in 5 years .680 At what amounts should these two notes receivable be reported in Jet's December 31 balance sheet?

Hart: $10,000 Maxx:$7,820

Under the allowance method of recognizing uncollectible accounts, the entry to write-off an uncollectible account

Has no effect on net income.

When the allowance method of recognizing uncollectible accounts is used, the entries at the time of collection of a small account previously written off

Increase the allowance for uncollectible accounts.

During the year, Hauser Co. wrote off a customer's account receivable. Hauser used the allowance method for uncollectible accounts. What impact would the write-off have on net income and total assets?

Net Income: no Effect Total Assets: No Effect