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Exam 7: Reporting and Analyzing Receivables

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Question 51

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A company has net sales of $1,200,000 and average accounts receivable of $400,000.What is its accounts receivable turnover for the period?

A) 0.33
B) 5.00
C) 20.0
D) 73.0
E) 3.0

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Question 52

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Federal laws prohibit the selling of accounts receivable to factors.

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Question 53

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For legal reasons,it is not advisable to accept a note receivable in exchange for an overdue account receivable.

The amount due on the maturity date of a $6,000,60-day 4%,note receivable is: (Use 360 days a year.)

The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts: All sales are made on credit.Based on past experience,the company estimates 3.5% of ending account receivable to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

A company borrowed $10,000 by signing a 180-day promissory note at 9%.The maturity value of the note is: (Use 360 days a year.)

On July 9,Mifflin Company receives an $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on July 9 to record receipt of the note?

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.Experience suggests that 4% of outstanding receivables are uncollectible.The current balance (before adjustments) in the allowance for doubtful accounts is an $800 debit.The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Credit sales are recorded by increasing (crediting)Accounts Receivable.

The person that borrows money and signs a promissory note is called the maker.

A Company had net sales of $23,000,and its average account receivables were $5,700.Its accounts receivable turnover is 0.24.

If a 90-day note receivable is dated July 12,what is the maturity date of the note?

A receivable is an amount due from another party.

________ refers to the expected proceeds from converting an asset into cash.

Companies can report credit card expense as a reduction in net sales or as a selling expense.

A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit.Based on past experience,the company estimates 0.6% of net credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

When using the allowance method of accounting for uncollectible accounts,the entry to record the estimated bad debts expense is a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts.

The________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).

The ________ methods of computing uncollectible accounts use balance sheet relations to estimate bad debts-mainly the relation between accounts receivable and the allowance amount.

The following data are taken from the comparative balance sheets of Grayling Company.Compute and interpret its accounts receivable turnover for Year 2.Competitors average a turnover of 7.5.How is the company doing in relation to its competitors? $\begin{array}{lrr} & \text { Year 2 } & \text { Year 1 } \\\text { Accounts receivable, net } & 180,230 & 220,450 \\\text { Net sales } & 1,500,750 & 1,495,600\end{array}$