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Exam 8: Reporting and Analyzing Receivables

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Question 101

Multiple Choice

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Receivables might be sold to

A) lengthen the cash-to-cash operating cycle.
B) take advantage of deep discounts on the cash realizable value of receivables.
C) generate cash quickly.
D) finance companies at an amount greater than cash realizable value.

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Question 102

Multiple Choice

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An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $2,400 debit balance, the adjustment to record bad debts for the period will require a

A) debit to Bad Debt Expense for $9,000.
B) debit to Allowance for Doubtful Accounts for $11,400.
C) debit to Bad Debt Expense for $11,400.
D) credit to Allowance for Doubtful Accounts for $9,000.

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Question 103

Multiple Choice

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A company sells $800,000 of accounts receivable to a factor for cash, incurring a 2% service charge.The entry to record the sale should not include a

The interest rate on a note is always expressed as an annual rate.

The percentage of receivables basis for estimating uncollectible accounts emphasizes

The maturity value of a $10,000, 6%, 60-day note receivable dated February 10th is

Nichols Company uses the percentage of receivables method for recording bad debts expense.The accounts receivable balance is $250,000 and credit sales are $1,000,000.Management estimates that 4% of accounts receivable will be uncollectible.What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

During 2022, Wheeler Inc.had sales on account of $792,000, cash sales of $324,000, and collections on account of $504,000.In addition, they collected $8,700 which had been written off as uncollectible in 2021.As a result of these transactions, the change in the accounts receivable indicates a

Which one of the following is not an accounting problem (issue) associated with accounts receivable?

The average collection period is frequently used to assess the effectiveness of a company's credit and collection policies.

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $3,200 credit balance, the adjustment to record bad debts for the period will require a

Bad debt expense and interest revenue are reported in the income statement under other revenues and expenses.

Net credit sales for the month are $900,000.The accounts receivable balance is $192,000.The allowance is calculated as 5% of the receivables balance using the percentage-of-receivables basis.If the Allowance for Doubtful Accounts has a credit balance of $6,000 before adjustment, what is the balance after adjustment?

Bad Debt Expense is reported on the income statement as

The accounts receivable turnover is computed by dividing

Young Company lends Dobson industries $40,000 on January 1, 2022, accepting a 9-month, 9% interest note.If Dobson dishonors the note and does not pay it in full at maturity but Young expects that it will eventually be able to collect the debt, which of the following entries should most likely be made by Young Company?

If a retailer accepts a national credit card such as Visa, the retailer must maintain detailed records of customer accounts.

The accounts receivable turnover is used to analyze

An alternative name for Bad Debt Expense is

Non-trade receivables should be reported separately from trade receivables.Why is this statement either true or false?