Exam 8: Accounting for Receivables

The retailer considers Visa and MasterCard sales as

When a note receivable is honored, Cash is debited for the note's

On February 28, Kerley Company had accounts receivable in the amount of $437,000 and Allowance for Doubtful Accounts had a credit balance of $2,140 before adjustment. Net credit sales for February amounted to $3,000,000. The credit manager estimated that uncollectible accounts expense would amount to 2% of accounts receivable made during February. On March 10, an accounts receivable from Kathy Black for $6,100 was determined to be uncollectible and written off. However, on March 31, Black received an inheritance and immediately paid her past due account in full. Instructions (a) Prepare the journal entries made by Kerley Company on the following dates: 1. February 28 2. March 10 3. March 31 (b) Assume no other transactions occurred that affected the allowance account during March. Determine the balance of Allowance for Doubtful Accounts at March 31.

An aging of a company's accounts receivable indicates that $3,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $800 debit balance, the adjustment to record bad debts for the period will require a

On October 1, 2018, Milago Company sells (factors) $700,000 of receivables to Beanfield Factors, Inc. Beanfield assesses a service charge of 3% of the amount of receivables sold. The journal entry to record the sale by Milago will include

The Allowance for Doubtful Accounts is a liability account.

The best managed companies will have

When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense

Major advantages of credit cards to the retailer include all of the following except the

Short-term notes receivables

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

Compute bad debt expense based on the following information: (a) RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000, at the end of the year, and the allowance for doubtful accounts has a $600 credit balance. (b) RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000 at the end of the year, and the allowance for doubtful accounts has a $500 debit balance.

When a note receivable is dishonored,

The accounts receivable turnover is computed by dividing total sales by the average net receivables during the year.

A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 9% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. The accounts affected by the journal entry made by Annie's Sport Shop to record the finance charge are

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Allowance for Doubtful Accounts is a _____________ account which is ______________ from Accounts Receivable on the balance sheet.