fin Acct- ch 5
Tudor Corp. has an ending balance in the accounts receivable account of $20,000. Tudor recorded bad debt expense of $1,000. Tudor has an ending balance in the allowance for uncollectible accounts of $2,000. What is the net accounts receivable balance?
$ 18,000
On November 1, year 1, ABC, Inc., received a 3-month, 8%, $1,500 note receivable with interest and principal to be collected on February 1 of year 2. What is the amount of interest revenue that should be recorded for year 1?
$ 20
On Sept 1, year 1, Parnell Inc. received a 6-month, 6%, $2,000 note receivable with interest and principal to be collected on March 1 of year 2. What is the amount of interest revenue that should be recorded for year 1?
$ 40
Crimson Inc. recorded credit sales of $809,000, of which $540,000 is not yet due, $170,000 is past due for up to 180 days, and $99,000 is past due for more than 180 days. Under the aging of receivables method, Crimson Inc. expects it will not collect 2% of the amount not yet due, 12% of the amount past due for up to 180 days, and 26% of the amount past due for more than 180 days. The allowance account had a debit balance of $1,700 before adjustment. After adjusting for bad debt expense, what is the ending balance of the allowance account?
$ 56,940.
Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance?
$ 93,000
On September 1, Year 1, Dallas Corporation accepts a $30,000 six-month, 12 percent promissory note from one of its clients. The year-end adjustment to accrue interest revenue on December 31, Year 1 will include a _____.
$1,200 credit to Interest Revenue
Sampson Company creates the following accounts receivable aging report at the end of the year: AgeAccounts Receivable($ in millions) Estimated Uncollectible 0-60 days $20 15%, 61-20 days 10 25% 121-180 days 5 50% More than 180 days 10 80% Total $45 The balance of the Allowance for Uncollectible Accounts before adjustment is $5 million (credit). Use the information above to calculate the estimated ending balance in the Allowance for Uncollectible Accounts.
$16 million
On February 1, 2021, Miter Corp. lends cash and accepts a $3,200 note receivable that offers 14% interest and is due in six months. How much interest revenue will Miter Corp. report during 2021?
$224.
At December 31, Gill Co. reported accounts receivable of $236,000 and an allowance for uncollectible accounts of $1,400 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:
$5,680.
On December 31, the Accounts Receivable ending balance is $80,000. Assume that the unadjusted balance of Allowance for Uncollectible Accounts is a debit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expense recorded on December 31 will be:
$6,100.
Nija Incorporated reports the following aging schedule of its accounts receivable with the estimated percent uncollectible. What is the total estimate of uncollectible accounts using the aging method? Age Group AmountReceivable Estimated Percent Uncollectible 0-60 days $40,000 1% 61-90 days 15,000 20% More than 90 days past due 5,000 60% Total$60,000
$6,400.
During its first year of operations, Ellison, Inc. bills customers $18,000 for the services it provided. At the end of the year, $6,000 remains due from customers. The company's credit manager estimates that 10% of the total year-end accounts receivable will not be collected. The company's estimate of uncollectible accounts is:
$600
Schmidt Company's Accounts Receivable balance is $100,000, its adjusted balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt expense is $3,800. The net amount of accounts receivable is:
$96,000.
Claire provides $100 of services to customers on account with terms 2/10, n/30. The Service Revenue account is credited for $100. If the customer pays within 10 days, Claire will record which of the following?
-Debit cash $98 -Debit Sales Discount $2 -Credit Account Receivable $100
Net credit sales for Turner Company are $200,000 for the year and the average accounts receivable balance is $20,000. What is the company's average collection period? (Use 365 days in a year.)
36.5 days
Net credit sales for Winner Company are $100,000 for the year. The Accounts Receivable account had a balance of $15,000 at the beginning of the year and $25,000 at the end of the year. What is the company's receivables turnover ratio?
5.0
The effect of writing off a specific account receivable is:
A reduction in the Allowance for Uncollectible Accounts.
A company will debit ___________ when recording a credit sale.
Accounts Receivable
Account(s) with a normal credit balance include:
Allowance for Uncollectible Accounts; Cash; Sales Revenue
Beta Corporation wrote off $100,000 due from a specific client in March. However, this client was able to make a partial payment of $15,000 in June. Recording this cash collection will involve all of the following accounts except:
Bad Debt Expense
When a business provides services to a customer, and the customer promises to pay later, this is referred to as
Credit sales
Adrian Corp. sells goods on account for $100,000 on May 1. On May 15, the customer returns $40,000 of the merchandise. The customer has not yet paid for any of the goods. What will Adrian record on May 15?
Credit to Accounts Receivable. Debit to Sales Returns.
Bell provides $500 of services to customers on account with terms 3/10, n/30. The Service Revenue account is credited for $500. If the customer pays within 10 days, Bell will record which of the following?
Debit Sales Discount $15
On January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25?
Debit Sales Discount for $10.
Warner Corp. sells goods on account for $10,000 on April 2. On April 20, the customer returns $3,000 of the merchandise. The customer has not yet paid for any of the goods. What is the entry Warner will make on April 20 when the goods are returned?
Debit Sales Returns; credit Accounts Receivable.
Joyce Corp. uses the percentage-of-receivables method to account for bad debt expense. Joyce determines that a customer account of $20,000 should be written off as uncollectible. The write off of the account will include which of the following entries?
Debit to Allowance for Uncollectible AccountsCredit to Accounts Receivable
Under the allowance method for uncollectible accounts, the balance of Allowance for Uncollectible Accounts increases when:
Future bad debts are estimated.
A company sells goods to a customer on account for $800, terms 3/10, n/30. The customer pays within the discount period. On the date of payment, the company will debit:
Sales Discounts for $24
Net revenues is calculated as total revenues minus which of the following items?
Sales returns, Sales discounts, Sales allowances
The percentage increase in receivables for Petro Corporation is greater than the percentage increase in sales. Which of the following conclusions can be drawn from this information?
The average collection period will increase
The percentage-of-receivables approach to measuring bad debt expense is referred to as _____ method.
a balance sheet
The account "Allowance for Uncollectible Accounts" is classified as
a contra asset to accounts receivable.
A trade discount is
a percentage reduction from list price.
The percentage-of-receivables method of estimating bad debt applies ____ to _____.
a single percentage; accounts receivable
A(n) is the legal right to receive cash from a credit sale and represents an asset of the company.
account receivable
An informal credit arrangement with a customer for payment to be received after the sale is classified as a(n)
accounts receivable
The allowance for uncollectible accounts is a contra account to
accounts receivable
The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the method of accounts receivable.
aging
A partial adjustment to the amount owed by the customer for goods that were not returned, but did not fully meet the customer's expectations is referred to as a sales
allowance
To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to
allowance for uncollectible accounts.
Accounts receivable should be classified as a(n)
asset
A customer account that is not expected to be collected is referred to as a(n) debt.
bad debit
The cost of estimated accounts receivable that will not be collected is referred to as expense.
bad debt expense
The estimated expense for accounts that may not be collected is referred to as
bad debt expense
Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to
be more accurate.
Sales Returns and Sales Allowances are ___ ___ accounts and require a debit entry to increase the account.
contra revenue
Sales Returns is an example of a(n) ____________ account, which is used to keep a record of reductions from revenue due to sales returns separate from total revenue itself.
contra revenue
Allowance for Uncollectible Accounts has a credit balance because it is a(n) _____ account.
contra-asset
The Sales Returns and Sales Allowances accounts are classified as
contra‐revenue account
The account "Allowance for Uncollectible Accounts" normally has a balance.
credit
When a business provides services to a customer, and the customer promises to pay later, this is referred to as
credit sales
According to the allowance method, writing off an account receivable will include a:
credit to Accounts Receivable
Adrian Corp. sells goods on account for $100,000 on May 1. The customer paid for the goods on May 10. On May 15, the customer returns $40,000 of the merchandise. The entry Adrian makes on May 15 will include the following:
credit to Cash debit to Sales Returns
On September 1, Year 1, a company collects a $5,000 six-month, five percent promissory note. The entry to record the collection at maturity date will include a:
credit to Interest Revenue for $125
A disadvantage to selling on account is
customers do not always pay.
Shannon Corp. uses the aging method to account for bad debt expense. Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include
debit Allowance for Uncollectible Accounts.
On January 1, Year 1, Boyd Corporation accepts a $10,000 three-month, nine percent promissory note from one of its customers. To record acceptance of the note, the company will record a:
debit to Notes Receivable for $10,000
The journal entry to record bad debt expense includes:
debit to bad debt expense credit to allowance for uncollectible accounts
Ophelia Inc. just learned that Patton Inc., one of its customers with an outstanding accounts receivable balance, filed for bankruptcy. Assuming that the company utilizes the allowance method, Ophelia should record a(n):
decrease in Accounts Receivable
Under the allowance method, companies are required to estimate future uncollectible accounts and record those estimates in the current year. Estimated uncollectible accounts:
decrease total assets and decrease net income.
A sales allowance ____ the amount owed by the customer for merchandise that is _____ by the customer.
decreases; retained
The Accounts Receivable account is reduced when the seller:
determines that a specific customer account will not be collectible
A trade discount is a reduction from the list price, which is used to:
disguise real prices from competitors, give quantity discounts to customers, and change prices without publishing a new catalog
The formula for calculating interest on a note is
face value x annual rate x fraction of the annual period.
Under the allowance method, companies estimate _____ uncollectible amounts and report those estimates in the _____ year.
future, current
(Face value x annual interest rate x fraction of the annual period) is the formula for
interest on a note.
Companies extend credit to customers and sell goods on account because
it increase sales
An aging schedule classifies accounts receivable based on
length of time outstanding.
Total revenues less discounts, returns, and allowances are referred to as __________ revenues.
net
A formal credit arrangement between a creditor and debtor is called a(n)
note receivable.
A formal, signed credit agreement between a lender and a borrower is called a(n) _____ by the lender.
note receivable.
Trade discounts represent:
reduction in the listed price of a good or service
A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as a(n)
sales discount
Which of the following is a discount in the amount to be paid if the customer pays within a specified time period?
sales discount
Sales to customers in which the customers pay within 30 to 60 days are referred to as
sales on account. credit sales.
When a customer returns a product for a refund, in which account is the entry recorded?
sales return
When merchandise is returned for a refund or for credit to be applied to other purchases, the situation is called a(n) .
sales return
For accounts receivable, the longer an account is outstanding,
the more likely it will prove uncollectible.
Assume Company X is in its fifth year of operation. Analyze the following schedule. What conclusion can be drawn from the following schedule?
the target amount in allowance for uncollectible accounts is $25,500.
Accounts receivable are typically classified as current assets because
they will be converted to cash within 1 year.
At the end of Year 1, Fulton Corporation estimates uncollectible accounts to be $10,000. Actual bad debts during Year 2 totaled $12,000. This indicates that management's estimate of uncollectible accounts in Year 1 was:
too low
The allowance method estimates
uncollectible accounts.
A customer account that is not expected to be collected is referred to as a bad debt or account.
uncollectible or allowance
