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Exam 8: Receivables

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Question 71

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

A) True
B) False

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Question 72

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

A) True
B) False

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Question 73

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

When a company receives an interest-bearing note receivable, it will

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

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 net 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 of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Net credit sales for the period totaled $800,000. If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value.

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, 2011. Show total current assets. $\begin{array}{ll}\$ 128,000 & \text { Cash } \\50,000 & \text { Notes receivable } \\275,000 & \text { Accounts receivable } \\25,000 & \text { Allowance for doubtfil accounts } \\1,000 & \text { Interest rec eivable }\end{array}$

Notes or accounts receivables that result from sales transactions are often called

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.

When a note is written to settle an open account, no entry is necessary.

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3rd to Valley Co. on account. (Assume a 360-day year when calculating interest.) a. Determine the due date of the note. b. Determine the interest. c. Determine the maturity value of the note. d. Journalize the entry to record the issuance of the note by Potts on Feb. 3. e. Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.

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) The aging of Torme Designs shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible. b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year.

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

A note receivable due in 18 months is listed on the balance sheet under the caption

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. (Assume a 360-day year when calculating interest.)

Discuss the two methods for recording bad-debt expense. What type of company uses each method?

Allowance for Doubtful Accounts has a debit balance of $800 at the end of the year (before adjustment) , and an analysis of accounts in the customers ledger indicates uncollectible receivables of $15,000. Which of the following entries records the proper adjusting entry for bad debt expense?