Exam 9: Accounting for Receivables

Record the following transactions for Cyrus Company. 1. On August 4 Cyrus sold merchandise on account to Swift Company for $700 terms 2/10 n/30. 2. On August 7 Cyrus granted Swift a sales allowance and reduced the cost of the merchandise by $50 because some of the goods were slightly damaged. 3. On August 12 Swift paid the account in full.

When the allowance method of accounting for uncollectible accounts is used Bad Debt Expense is recorded

Underwood Company's ledger at the end of the current year shows Accounts Receivable of $150000. Instructions a. If Allowance for Doubtful Accounts has a credit balance of $4500 in the trial balance and bad debts are expected to be 8% of accounts receivable journalize the adjusting entry for the end of the period. b. If Allowance for Doubtful Accounts has a debit balance of $4500 in the trial balance and bad debts are expected to be 8% of accounts receivable journalize the adjusting entry for the end of the period.

Jasmine's Supply Co. has the following transactions related to notes receivable during the last 2 months of 2016. Nov. 1 Loaned $24000 cash to Simone Buil on a 1-year 7% note. Dec. 11 Sold goods to Dac Jo Inc. receiving a $12000 90-day 3% note. 16 Received an $18000 6-month 8% note in exchange for Jason Tanner's outstanding accounts receivable. 31 Accrued interest revenue on all notes receivable. Instructions (a) Journalize the transactions for Jasmine's Supply Co. (b) Record the collection of the Buil note at its maturity in 2017.

A customer charges a treadmill at Sports Equipment Shop. The price is $5000 and the financing charge is 6% 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. What is the amount of the finance charge?

A debit balance in the Allowance for Doubtful Accounts

Receivables may be sold because they may be the only reasonable source of cash.

Bozemen Co. makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.8% per month is added to the balance. If the unpaid balance on the above sale is $650 at the end of the grace period the interest charge is

The financial statements of Georgi Manufacturing Company report net sales of $595000 and accounts receivable of $80000 and $60000 at the beginning and end of the year respectively. What is the average collection period for accounts receivable in days?

Which of the following statements concerning receivables is incorrect?

Under the direct write-off method of accounting for uncollectible accounts

Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6000 terms 2/10 n/30. On July 20 Cajon Co. returns merchandise worth $1000 to Cosmos Company. On July 24 payment is received from Cajon Co. for the balance due. What is the amount of cash received?

The interest on a $9000 6% 1-year note receivable is

Shelton Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions: January 5 Sold merchandise to Luke Ryan for $1700 terms n/15. April 15 Received $500 from Luke Ryan on account. August 21 Wrote off as uncollectible the balance of the Luke Ryan account when he declared bankruptcy. October 5 Unexpectedly received a check for $600 from Luke Ryan. It is not felt any more will be received from Ryan

When credit sales are made _________________ Expense is considered a normal and necessary risk of doing business on a credit basis.

Determine the interest on the following notes: (a) $2000 at 6% for 90 days. (b) $900 at 9% for 5 months. (c) $3000 at 8% for 60 days (d) $1600 at 7% for 6 months

The financial statements of Daye Manufacturing Company report net sales of $720000 and accounts receivable of $70000 and $90000 at the beginning and end of the year respectively. What is the average collection period for accounts receivable in days?

Customer purchases using credit cards are a significant source of revenue for many retailers. From the standpoint of a retailer briefly discuss some advantages and disadvantages of a retail store having its own credit card as opposed to accepting one of the national credit cards (e.g. Visa MasterCard).

Able Company accepted a national credit card for a $5000 purchase. The cost of the goods sold is $3000. The credit card company charges a 2% fee. What is the impact of this transaction on net operating income?