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Exam 9: Receivables

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Question 1

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Trade receivables occur when two companies trade or exchange notes receivables.

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Question 2

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Match each of the following descriptions with its term associated with notes receivable.

Premises

Responses

The amount due when the note is paid off.

Notes Receivable

The amount charged for using the money of another party.

Maturity Value

The time between the date a note is issued and the due date of the note.

Interest

The stated rate charged for using the money of another party

Interest Rate

A formal written instrument that represents amounts due from customers.

Dishonored Note

The party promising to pay a note

Face Amount

The dollar amount listed on the promissory note.

Maker

A note that is not paid when it is due

Term

Premises

The amount due when the note is paid off.

The amount charged for using the money of another party.

The time between the date a note is issued and the due date of the note.

The stated rate charged for using the money of another party

A formal written instrument that represents amounts due from customers.

The party promising to pay a note

The dollar amount listed on the promissory note.

A note that is not paid when it is due

Responses

Notes Receivable

Maturity Value

Interest

Interest Rate

Dishonored Note

Face Amount

Maker

Term

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Correct Answer

Premises

Responses

The amount due when the note is paid off.

The amount charged for using the money of another party.

The time between the date a note is issued and the due date of the note.

The stated rate charged for using the money of another party

A formal written instrument that represents amounts due from customers.

The party promising to pay a note

The dollar amount listed on the promissory note.

A note that is not paid when it is due

Premises

The amount due when the note is paid off.

The amount charged for using the money of another party.

The time between the date a note is issued and the due date of the note.

The stated rate charged for using the money of another party

A formal written instrument that represents amounts due from customers.

The party promising to pay a note

The dollar amount listed on the promissory note.

A note that is not paid when it is due

Responses

Question 3

Multiple Choice

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When does an account become uncollectible?

Generally accepted accounting principles do normally allow the use of the direct write-off method of accounting for uncollectible accounts.

The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible.

Receivables currently collectible are reported in the investments section of the balance sheet.

Which of the following receivables would not be classified as an "other receivable"?

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 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 for and received cash in full payment.

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Other receivables include non trade receivables such as loans to company officers.

On the basis of the following data related to assets due within one year for Webb Co., prepare a partial balance sheet in good form at December 31, 2014. Show total current assets.

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

Accounts Receivable Turnover measures

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

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

A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account. The face value of the note is

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

Match each of the following terms associated with notes receivable with the best description of that term.

Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables.