Exam 9: Accounting for Receivables

In 2010, Garrison Company had net credit sales of $1,125,000. On January 1, 2010, Allowance for Doubtful Accounts had a credit balance of $27,000. During 2010, $45,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $300,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2010?

The two key parties to a promissory note are the

Pine Boat Company often requires customers to sign promissory notes for major credit purchases. Journalize the following transactions for Pine Boat Company. Feb. 12 Accepted a $25,000, 6%, 60-day note from Bob Weiss for a 24-foot motorboat built to his specifications. April 14 Received notification from Bob Weiss that he was unable to honor his promissory note but that he expects to pay the amount owed in May. May 26 Received a check from Bob Weiss for the total amount owed. June 10 Received notification by the bank that Bob Weiss check was being returned "NSF" and that Mr. Weiss had declared personal bankruptcy.

Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $25,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debts expense for that period?

Trade accounts receivable are valued and reported on the balance sheet

In 2010, the Dugan Co. had net credit sales of $750,000. On January 1, 2010, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2010, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2010?

Notes receivable represent claims for which formal instruments of credit are issued as evidence of debt.

When a note receivable is dishonored,

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

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

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

On February 1, 2010, Janssen Company sells merchandise on account to Nicholson Company for $5,000. The entry to record this transaction by Janssen Company is

On February 7, Camp Company sold goods on account to Fillmore Enterprises for $3,200, terms 2/10, n/30. On March 9, Fillmore gave Camp a 60-day, 12% promissory note in settlement of the account. Record the sale and the acceptance of the promissory note on the books of Camp Company.

The two methods of accounting for uncollectible accounts are (a) percentage of sales and (b) percentage of receivables.

The allowance method of accounting for uncollectible accounts is required if

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

The interest on a $2,000, 6%, 90-day note receivable is

The maturity value of a $4,000, 9%, 60-day note receivable dated February 10th is

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

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