Exam 9: Accounting for Receivables

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. All sales are made on credit.Based on past experience,the company estimates 1% of credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Bonita Company estimates uncollectible accounts using the allowance method at December 31.It prepared the following aging of receivables analysis. a.Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. b.Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a.Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $550 credit. c.Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a.Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300 debit.

Sellers allow customers to use credit cards for all of the following reasons except:

Each December 31,Kimura Company ages its accounts receivable to determine the amount of its adjustment for bad debts.At the end of the current year,management estimated that $16,900 of the accounts receivable balances would be uncollectible.The Allowance for Doubtful Accounts account had a debit balance of $1,200 before any year-end adjustment for bad debts.Prepare the adjusting journal entry that Kimura Company should make on December 31,of the current year,to estimate bad debts expense.

Pepperdine reported net sales of $8,600 million,net income of $126 million and average accounts receivable of $890 million.Its accounts receivable turnover is:

A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1,including a $720 sale to Marshall Fresh.On December 31,Year 1,the company estimated its bad debts at 1.5% of its credit sales.On June 1,Year 2,the company wrote off,as uncollectible,the $720 account of Marshall Fresh.On December 21,Year 2,Marshall Fresh unexpectedly paid his account in full.Prepare the necessary journal entries: (a)On December 31,Year 1,to reflect the estimate of bad debts expense. (b)On June 1,Year 2,to write off the bad debt. (c)On December 21,Year 2,to record the unexpected collection.

Winkler Company borrows $85,000 and pledges its receivables as security.The journal entry to record this transaction would be:

Mullis Company sold merchandise on account to a customer for $625,terms n/30.The journal entry to record the collection on account would be:

On October 17 of the current year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Assuming the allowance method is used to account for bad debts,what effect will this write-off have on the company's net income and total assets?

Separate accounts receivable information for each customer is important because it reveals all of the following except:

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

_______________ refers to the expected proceeds from converting an asset into cash.

Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash.Northern Bank charges a 5% factoring fee.What entry should Jervis make on to record the transaction?

Factoring receivables is beneficial to a seller for all of the following reasons except:

On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on the maturity date assuming the maker pays in full?

Under IFRS,the term provision:

Prepare general journal entries for the following transactions of Norman Company,assuming they use the allowance method to account for uncollectible accounts.

All of the following statements regarding valuation of receivables under U.S.GAAP and IFRS are true except:

Gemstone Products allows customers to use bank credit cards to charge purchases.The bank used by Gemstone Products processes all bank credit cards in exchange for a 3% processing fee and all credit card receipts deposited are credited to the company account on the day of deposit.Assume that on January 18,Gemstone Products sold and deposited $18,000 worth of bank credit card receipts.Prepare the general journal entry to record this transaction.

A company had total sales of $600,000,net sales of $550,000,and an average accounts receivable of $95,000.Its accounts receivable turnover equals: