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Exam 8: Receivables

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Question 31

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Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. a. Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment.Analysis of Accounts Receivable indicates uncollectible receivables of $8,500. b. Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment.Uncollectible receivables are estimated at 2% of credit sales,which totaled $1,000,000 for the year.

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a. Amount added: $8,...

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Question 32

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A company uses the allowance method to account for uncollectible accounts receivables.When the firm writes off a specific customer's account receivable

A) total current assets are reduced
B) total expenses for the period are increased
C) net realizable value of accounts receivable increases
D) there is no effect on total current assets or total expenses

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Question 33

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Although Allowance for Doubtful Accounts normally has a credit balance,it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

The Lowery Co.uses the direct write-off method of accounting for uncollectible accounts receivable.Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible.The entry to write off this account would be which of the following?

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

The party promising to pay a note at maturity is the maker.

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 net realizable value of accounts receivable after adjustment.Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts.

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables,a major difference is that the direct write-off method

On August 1,Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company.The terms of the note were $20,000 face value and 6% interest.On October 30,the journal entry to record the collection of the note should include a

The receivable that is usually evidenced by a formal,written instrument of credit is an

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 a the amount of the adjusting entry for bad debt expense; b the adjusted balances of Accounts Receivable,Allowance for Doubtful Accounts,and Bad Debt Expense; and c the net realizable value of accounts receivable.

A partially competed aging of receivables schedule for Lindy Designs' is shown below.Calculate the amount that is estimated to be uncollectible. a Determine the amount estimated to be uncollectible by completing the aging of receivables schedule.Round calculations to the nearest dollar. a $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\text { Est Uncollectible Accts }$$\quad$ $\begin{array}{|l|r|r|r|}\hline \text { Age Interval } & \text { Balance } & \text { \quad Percentage } & \text { \quad Amount: } \\\hline \text { Not past due } & 550,000 & 2.50 \% \\\hline 1 \sim 30 \text { days past due } & 96,500 & 4.00 \% \\\hline 31 \sim 60 \text { days past due } & 43,750 & 9.50 \% \\\hline 61 \sim 90 \text { days past due } & 22,250 & 16.00 \% \\\hline 91 \sim 180 \text { days past due } & 5,600 & 31.00 \% \\\hline 181 \sim 365 \text { days past due } & 3,100 & 60.00 \% \\\hline \text { Over } 365 \text { days past due } & 1,250 & 95.00 \% \\\hline \text { Total } & \underline{722.450} & \\\hline\end{array}$ b If the Allowance for Doubtful Accounts has a credit balance of $9,700,record the adjusting entry for the bad debt expense for the year. c If the Allowance for Doubtful Accounts has a debit balance of $9,700,record the adjusting entry for the bad debt expense for the year.

The maturity value of a $40,000,9%,40-day note receivable dated July 3 is

A debit balance in the Allowance for Doubtful Accounts

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

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible.The Allowance for Doubtful Accounts has a debit balance of $110.The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

Under the allowance method,when a year-end adjustment is made for estimated uncollectible accounts

When does an account become uncollectible?

Journalize the following transactions for the Scott Company: November 4 Received a $6,500,90-day,6% note from Michael Tim's in payment of his account. December 31 Accrued interest on the Tim's note. February 2 Received the amount due from Tim's on his note. $\begin{array}{|l|l|l|l|l|}\hline \text { Date } &{\text { Description }} & \begin{array}{c}\text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline \\\hline \\\hline & & & & \\\hline \\\hline \\\hline & & & & \\\hline \\\hline \\\hline \\\hline \\\hline\end{array}$

The balance of Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.