Accounting Smart Books, Assignments, etc.
Accounts Receivable Revenue Accounts
A Sale on account is recorded with a debit to ________ __________ and a credit to _____ _______.
Effectiveness in granting and collecting credit.
A high receivables turnover ratio is a sign of a company's ______.
removes the same amount from Allowance for Doubtful Accounts
A receivable write-off removes a non-paying customer's account receivable and....
amounts owed to a business by its customers
Accounts Receivable Represent...
permanent account so its balance carries forward to the next accounting period.
Allowance for Doubtful Accounts is a...
permanent account
Allowance for Doubtful Accounts is a....
Allowance for Doubtful Accounts of $1,000 Bad Debt Expense of $950
Delectable, Inc.'s unadjusted trial balance includes Accounts Receivable of $10,000; Allowance for Doubtful Accounts of $50 credit balance; and credit sales of $100,000. Based on an aging of its receivable, management estimates that $1,000 of receivables will be uncollectible. Delectable's financial statements will show ______.
Sales Revenue on the income statement Accounts Receivable on the Balance Sheet
In financial statements, Sales on account will cause an increase in...
Bad Debt Expense and credit to Allowance for Doubtful Accounts for $1,000
Murphy's Paw, Inc. has credit sales of $100,000 for the month ended May 31. The Accounts Receivable balance is $8,000. Management estimates that 1% of its credit sales will be uncollectible. This adjusting entry includes a debit to ______.
30 days
Net sales revenue is $730,000. Beginning and ending net accounts receivable are $62,000 and $58,000, respectively. Calculate the days to collect.
Generally charge the borrowers interest from the day they are signed to the day they are collected.
Notes Receivable differ from Accounts Receivable in that Notes Receivable...
Lending Money to Individuals or businesses Extended payment periods Selling large dollar-value items
Notes receivable are used for_______.
a write-off
Removing an uncollectible account and its corresponding allowance from the accounting records is called
Increase Assets and Stockholders' Equity Increase Accounts Receivable on the Balance Sheet and Sales Revenue on the income statement.
Sales on Accounts....
capitalized
Sunny Skys, Inc. bought a derelict hunting lodge, which it tore down at a cost of $45,000 and replaced with a new lodge. The demolition cost should be ______.
Assets to decrease Stockholders' equity to decrease
The adjusting entry to record the allowence to record the allowence for doubtful accounts causes total...
Allowance for Doubtful Accounts
The adjusting entry to record the estimated amount of bad credit sales is a debit to Bad Debt Expense and a credit to _________ ___ ________ ________.
bad debt expense
The adjusting entry to record the estimated amount of bad credit sales is a debit to ___ ____ _______ and a credit to Allowance for Doubtful Accounts.
debit to Bad Debt Expense, Credit to Allowance for Doubtful Accounts
The adjusting journal entry to record the allowance for doubtful accounts includes a...
Credit to Notes Receivable, Debit to Cash
The correct journal entry for the collection of a note receivable includes a ______. Assume the collection of interest is recorded separately.
365 divided by the Receivable Turnover Ratio
The days to collect ratio is computed as...
The average number of days from sale on account to collection, That a higher number of days means a longer (worse) time for collection
The days to collect ratio provides what kind of information?
debit Notes Receivable and Credit Cash
The entry to record the issuance of a note receivable is...
The same period as credit sales
The estimated amount of credit sales that customers will likely fail to pay is recorded as bad debt expense in which period?
Allowance for Doubtful Accounts will have a $90,000 credit balance
Using its aging of accounts receivable, Age Old, Inc. estimates that $90,000 of its $4,000,000 of accounts receivable will be uncollectible. Prior to making its adjusting entry, the unadjusted Allowance for Doubtful Accounts has a debit balance of $1,000. After the adjustment, the ______.
Credit to Allowance for Doubtful Accounts of $900. Debit to Bad Debt Expense of $900.
Using the aging approach, management estimates that $1,000 of Accounts Receivable will be uncollectible. The Allowance for Doubtful Accounts has a $100 unadjusted credit balance. The adjusting entry to record estimated bad debts includes a ______
a write off
When will a bankrupt customer's accounts receivable be eliminated? When the company records _______
contra asset account
an account that is offset against an asset account on the balance sheet
A productive Asset
used to produce goods or services that will be sold to customers
Credit card companies charge fees that reduce profits.
ABC Corp. wants to avoid lengthy cash collection periods and, therefore, allows customers to pay with a national credit card, rather than extend credit to its customers directly. What is the downside to such a strategy?
Allowance for Doubtful Accounts of $8,000 on the Balance Sheet. Bad Debt Expense of $7,250 on the income statement.
ABC, Inc.'s unadjusted trial balance included Accounts Receivable $80,000 debit; Allowance for Doubtful Accounts $750 credit; and credit sales $400,000 credit. ABC uses the aging of accounts receivable method and estimates that $8,000 of its receivables will be uncollectible. After the adjusting entry is made, ABC's financial statements will report ______
Write off the uncollectible account and its corresponding allowance from the accounting records.
During the year, ABC Corp. realizes that a particular customer will never pay. What action should ABC take?
$1,000 debit
If the Allowance for Doubtful Accounts on January 1 equals $10,000 and during the year $11,000 of specific customers' accounts were written off, then its Allowance for Doubtful Accounts will have an unadjusted balance of ______.
a write off is recorded by debiting Allowance for Doubtful Account and Crediting Accounts Receivable
Ima Broke is a customer that owes the company for credit sales and has declared bankruptcy. As a result, Ima Broke's subsidiary account receivable will be eliminated when.
The company lends money to employees or businesses. The company converts an existing account receivable to grant the customer an extended payment period for the amount owed plus interest
In which situations does a company issue a note receivable?
$100 greater than
Management estimates that 1% of the $100,000 of credit sales will be uncollectible. The Allowance for Doubtful Accounts has a $100 unadjusted debit balance. After the adjusting entry is recorded, Bad Debt Expense on the income statement will be ______ the Allowance for Doubtful Accounts on the balance sheet.
debit to Bad Debt Expense of $1,000 Credit to Allowance for Doubtful Accounts of $1,000
Management estimates that 1% of the $100,000 of credit sales will be uncollectible. The Allowance for Doubtful Accounts has a $100 unadjusted debit balance. The adjusting entry to record estimated bad debts includes a ______.
Bad Debt Expense
The advantage of extending credit to customers is that it helps customers to buy products and services, thereby increasing the seller's revenue. The disadvantages of extending credit are costs related to...
Allowance for Doubtful Accounts be netted against Accounts Receivable. Bad Debt Expense be recorded in the same period as the related credit sales.
The allowance requires that ______.
The same period as credit sales.
The estimated amount of credit sales that customers will likely fail to pay is recorded as bed debt expense in which period?
many times the company sells and collects amounts on account per year
The receivables turnover ratio gives information on how...
net sales revenue divided by average net accounts receivables.
The receivables turnover ratio is computed as
an adjusting entry on December 31 with a debit to Interest Receivable and credit to Interest Revenue for the interest generated in December.
Tresses, Inc., which has a December 31 year end, lent $1,000 on December 1 to an employee at 6% due in 6 months. When will Tresses record Interest Revenue? It will record ______.
$100 less than
Using the aging approach, management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible. The Allowance for Doubtful Accounts has a $100 unadjusted credit balance. After the bad debt adjusting entry is recorded, Bad Debt Expense on the income statement will be ______ the Allowance for Doubtful Accounts on the balance sheet.
Greater than
Using the aging of receivables method, an unadjusted Allowance for Doubtful Accounts will have a debit balance when the amount of write offs recorded during the period is ______ the amount estimated to uncollectible in the prior accounting period.
Total Assets remain the same.
What effect does the collection of a note receivable, excluding interest, have on the accounting equation?
Debit Notes Receivable Credit Cash
What is the entry a company records at the time it issues a $1,000, 6% note to one of its employees that the employee needs to repay in 6 months?
Assets and Stockholders' Equity would be overstated.
What would be the effect of forgetting to record the adjusting entry for estimated bad debts?
Match the cost of bad debts to the accounting period in which the related credit sales are made. Report accounts receivable at the net realizable value which equals accounts receivable less the amount the company.
When accounting for accounts receivable and bad debt, the objectives are to______.
The amounts are estimates and no one knows which particular customers will not pay. The company would lose track of which customers still owe money.
When recording the adjusting entry for uncollectible accounts using the allowance method, customers' subsidiary accounts are not directly reduced. The reason is ______.
The contra-asset account called Allowance for Doubtful Accounts
Which account is used to reduce assets for the amount of estimated bad debts?
Percentage of credit sales method
Which method requires estimating the amount of the Bad Debt Expense and then determining the balance in the Allowance for Doubtful Accounts which will differ from the expense if there is an unadjusted balance?
(1) Avoid lengthy cash collection periods and (2) reduction of bad debts expense
Which of the following are advantages of using national credit cards?
Allowance for Doubtful Accounts
Which of the following is a permanent account whereby the ending balance of the prior accounting period equals its beginning balance of the next.
The receipt of an interest payment for interest previously recording.
Which of the following is recorded with a debit to Cash and a credit to Interest Receivable?
The receipt of the principal payment
Which of the following is recorded with a debit to Cash and a credit to Notes Receivable?
The adjusting entry to record interest earned but not yet received
Which of the following is recorded with a debit to Interest Receivable and a credit to Interest Revenue?
It generated interest on its notes receivable which will be collected in a later accounting period.
Why would a company debit Interest Receivable?
