FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Accounting for Receivables

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

The following information is available for Blankenship Company for the most recent year. What was Blankenship's operating cycle for the most recent year? (rounded)

A) 30 days
B) 50 days
C) 80 days
D) 120 days

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

Chico Company began 2016 with balances in accounts receivable and allowance for doubtful accounts of $44,300 and $1,675,respectively.The company reported credit sales of $490,250 during the year,and wrote off $1,400 of uncollectible accounts.Chico Company prepared the following aging schedule on December 31,2016: Required: a)Prepare general journal entries to record the 2016 credit sales,collection of accounts receivable,write-off of uncollectible accounts,and estimate of uncollectible accounts. b)What is Chico Company's net realizable value of receivables after all of the above entries have been made?

Correct Answer

verified

a)
b)Net realizable ...

View Answer

Show Answer

Question 63

Short Answer

Review LaterAdd Note

One of the methods of accounting for uncollectible accounts is the direct write-off method.Indicate whether each of the following statements is true or false. _____ a)The direct write-off method does not comply with GAAP if uncollectible accounts expense is immaterial. _____ b)The direct write-off method is allowed for some companies because of the going concern concept. _____ c)The direct write-off method requires an advance estimate of anticipated uncollectible accounts. _____ d)The direct write-off method is easier to use than the allowance method. _____ e)The direct write-off method does not require the use of an allowance account.

What is the effect on the accounting equation of writing off an uncollectible account receivable when the direct write-off method is used?

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Enter only one letter for each element.You do not need to enter amounts. -Furst Co.uses the allowance method to account for uncollectible accounts expense.On June 20,2016,Furst wrote-off an uncollectible account in the amount of $2,000.On September 1,2016,the account was collected.How would the appropriate entries on September 1 affect the financial statements?

During 2016,Oklahoma Trucking Co.had service revenue on account of $350,000.Oklahoma had a balance in the Accounts Receivable account of $35,000 at the beginning of the year and a year-end balance of $42,500.During the year Oklahoma wrote-off $8,750 of worthless receivables.Oklahoma uses the direct write-off method for uncollectible accounts. a)Prepare the journal entry for Oklahoma's revenue for 2016. b)Prepare the journal entry to record the write-off of the receivables. c)What amount of cash did Oklahoma collect from customers during 2016?

Which of the following is not a significant difference between the allowance method and the direct write-off method of accounting for uncollectible accounts?

The longer it takes to collect accounts receivable,the greater the opportunity cost incurred.

The direct write-off method does a better job of matching revenues and expenses than does the allowance method.

How do the percent of revenue method and the percent of receivables method to estimate uncollectible accounts expense differ?

What is meant by the net realizable value for accounts receivable?

Li Company has the following account balances: Compute the net realizable value of Li's accounts receivable.

The percent of receivables method to estimate uncollectible accounts expense is also known as:

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Enter only one letter for each element.You do not need to enter amounts. -On November 1,2016,Gable Company accepted a credit card as payment for $1,500 of services rendered to one of its customers.Assume the credit card fee of 3% is recorded on the date of the sale.Show the effect of this transaction on Gable's financial statements.

Accepting credit cards is usually more costly to a business than offering credit directly to customers.

Lucas Company has the following account balances at the end of 2016: Required: Compute the net realizable value of the above accounts receivable.

Other things being equal,the longer a company's operating cycle,the higher the company's operating costs are likely to be.

Hancock Medical Supply Co. ,which had no beginning balance in its Accounts Receivable and Allowance for Doubtful Accounts,earned $160,000 of revenue on account during 2016.During 2016,Hancock collected $128,000 of cash from its receivables accounts.The company estimates that it will be unable to collect 1% of revenue on account.The amount of net realizable value of receivables on the December 31,2016 balance sheet would be:

On December 31,2016,the West Corporation estimated that $6,000 of its receivables might not be collected.Before adjusting entries,the balance of Accounts Receivable and the Allowance for Doubtful Accounts respectively was $150,000 and zero on 12/31/16.On February 1,2017,West wrote-off of a delinquent account from one of its customers.West Corp.uses the allowance method of accounting for uncollectible accounts.Indicate whether each of the following statements is true or false. _____a)The net realizable value of accounts receivable (after the appropriate adjusting entry on 12/31/16)was $144,000. _____b)The write-off of the account on 2/1/2017 did not affect the net realizable value of West's accounts receivable. _____c)The adjusting entry on 12/31/16 had no effect on West's total assets. _____d)The write-off entry on 2/1/16 had no effect on West's total assets. _____e)The write-off entry on 2/1/16 decreased net income for 2017.

Most companies report receivables on their balance sheets at the net realizable value.