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Exam 9: Accounting for Receivables

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Question 61

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Under the allowance method of accounting for uncollectible accounts,

A) the cash realizable value of accounts receivable is greater before an account is written off than after it is written off.
B) Bad Debts Expense is debited when a specific account is written off as uncollectible.
C) the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.
D) Allowance for Doubtful Accounts is closed each year to Income Summary.

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Question 62

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On January 15, 2010, Raymond Company received a two-month, 9%, $5,000 note from William Pentel for the settlement of his open account. The entry by Raymond Company on March 15, 2010 if Pentel dishonors the note and collection is expected is:

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Question 63

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Coffeldt Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2009, and December 31, 2010, appear below: Instructions (a) Record the following events in 2010. Aug. 10 Determined that the account of Sue Lang for $1,000 is uncollectible. Sept. 12 Determined that the account of Tom Woods for $4,000 is uncollectible. Oct. 10 Received a check for $550 as payment on account from Sue Lang, whose account had previously been written off as uncollectible. She indicated the remainder of her account would be paid in November. Nov. 15 Received a check for $450 from Sue Lang as payment on her account. (b) Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2010. (c) What is the balance of Allowance for Doubtful Accounts at December 31, 2010?

Wright sells softball equipment. On November 14, they shipped $1,000 worth of softball uniforms to Paola Middle School, terms 2/10, n/30. On November 21, they received an order from Douglas High School for $600 worth of custom printed bats to be produced in December. On November 30, Paola Middle School returned $100 of defective merchandise. Wright has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November 30?

The two methods of accounting for uncollectible accounts are the ____________ method and the ______________ method.

Short-term notes receivable are reported at

The following information is available for Sumner Company. Instructions Compute the receivables turnover ratio and the average collection period.

Short-term receivables are reported in the current assets section before temporary investments.

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore dishonors the note on May 9. Record the entry that Camp would make when the note is dishonored, assuming that no interest has been accrued.

An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Instructions Prepare the correcting entries.

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

The three primary accounting problems associated with accounts receivable are (1) ______________, (2) _______________, and (3) ______________ of accounts receivable.

Compute bad debts expense based on the following information: (a) Ramsey Company estimates that 1% of net credit sales will become uncollectible. Sales are $600,000, sales returns and allowances are $30,000, and the allowance for doubtful accounts has a $6,000 credit balance. (b) Ramsey Company estimates that 3% of accounts receivable will become uncollectible. Accounts receivable are $100,000 at the end of the year, and the allowance for doubtful accounts has a $500 debit balance.

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the

Under the allowance method, writing off an uncollectible account

Other receivables include nontrade receivables such as loans to company officers.

Compute the missing amount for each of the following notes:

When a note receivable is honored, Cash is debited for the note's

An analysis and aging of the accounts receivable of Downs Company at December 31 revealed the following data: The cash realizable value of the accounts receivable at December 31, after adjustment, is: