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Exam 8: Receivables

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Question 41

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If a note receivable is dishonored, what is the effect on the accounting equation?

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Assets both increase and decre...

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Question 42

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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.

A) $19,500 and $25,000
B) $30,500 and $525,000
C) $19,500 and $525,000
D) $30,500 and $25,000

E) None of the above
F) A) and B)

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Question 43

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Journalize the following transactions using the allowance method of accounting for uncollectible receivables. ​ April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400. ​ June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder. ​ Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

On the basis of the following data related to assets due within one year for Simons Co., prepare a partial balance sheet in good form at December 31. Show total current assets. $\begin{array} { l r } \text { Cash } & 56,000 \\\text { Accounts receivable } & 325,000 \\\text { Allowance for doubtful accounts } & 25,000 \\\text { Interest receivable } & 3,000 \\\text { Supplies } & 4,000 \\\text { Inventory } & 45,000 \\\text { Other current assets } & 10,000\end{array}$

Financial statement data for the years ended December 31 for Parker Corporation are as follows: (a) Determine the accounts receivable turnover for each year. Round to one decimal place. (b) Determine the number of days' sales in receivables for each year. Round to whole days. (c) Does the change in accounts receivable turnover and number of days' sales in receivables from the first year to the second year indicate a favorable or unfavorable trend?

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?

Match each description to the appropriate term.

Under the allowance method of uncollectible accounts, how does the adjusting entry to estimate the amount that will become uncollectible affect the accounting equation?

No allowance account is used with the direct write-off method.

Under the allowance method of uncollectible accounts, the entry to reinstate a customer's account that had been written off affects the accounting equation by

What is the type of account and normal balance of Allowance for Doubtful Accounts?

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

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?

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables. ​ April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of goods sold is $5,400. ​ June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder. ​ Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

A note receivable due in 18 months is listed on the balance sheet under the caption

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

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

When a note is written to settle an open account, no entry is necessary.