Exam 9: Receivables

One method of establishing control over collections of accounts receivable is to:

It is normal to have a debit balance in the allowance for doubtful accounts account after adjusting journal entries at the end of the year.

The maturity value of a note is equal to the principal amount less the interest due at the maturity date.

It is possible to have a debit balance in the allowance for doubtful accounts account before adjusting journal entries at the end of the year.

Bad-debt expense is a contra asset account.

Allowance for doubtful accounts has a debit balance of $980 at the end of the current year (prior to adjustment). An analysis of the accounts in the customers' ledger indicates uncollectible accounts of $16,000. The adjusting entry would require a credit to:

Under the allowance method, the recovery of an account previously written off results in an increase in income.

The allowance method and the direct write-off method are both methods of aging accounts receivable.

The interest on a $32,000 note at 9% for three months is:

When accruing interest on notes receivable that are outstanding at the end of the year, it is not necessary to do any proration.

On December 1, 2018, Parsons Sales sold machinery to a Janet's Vegetables for $2,000. Janet could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 12% interest. Parsons accrues interest only at year-end. On September 1, 2019 Parsons collected the whole amount due. Parsons Sales uses the periodic method for recording inventory transactions. Janet's Vegetables will be using the equipment in the business. Provide all of the required journal entries for Parson Sales for 2018 and 2019; and, for Janet's Vegetables the 2018 required journal entries, assuming a one-year useful life and $200 estimated residual value for the equipment. General Journal-Parsons Sales Date Accounts Debit Credit General Journal-Janet's Vegetables Date Accounts Debit Credit

Which of the following is included in the category Other receivables?

The acid-test ratio would include in the denominator:

Under the income-statement approach (percent-of-sales approach), the entry to accrue bad-debt expense involves:

Days' sales in receivables is computed as average net accounts receivables divided by 365 days.

The balance sheet of Rogers Company reports: accounts receivable (less allowance for doubtful accounts of $25,700), $695,500. Therefore Rogers Company's gross accounts receivable must be $721,200.

Dishonoured notes receivable must always be written off.

Santagos Industries gathered the following information from its accounting records for the year ended December 31, 2019, prior to adjustment: Net credit sales for the year $\quad \$ 730,000$ Accounts receivable balance, Dec. 31, 2019142,000 Allowance for doubtful accounts balance, Dec. $31,2019 \quad 1,850 \quad$ Dr. Santagos uses the allowance method of accounting for uncollectible accounts and estimates bad-debt expense at 1.5% of net credit sales. Required: a)Prepare the adjusting entry to record bad-debt expense on December 31, 2019. b)Determine the balance in allowance for doubtful accounts after the adjusting entry is prepared. c)Show how the receivables would be reported on the December 31, 2019, balance sheet for Santagos Industries.

The ________, a more stringent measure than the current ratio, measures a company's ability to pay its current liabilities.

Eyewear Unlimited has accounts receivable of $16,000 and an allowance for doubtful accounts with a credit balance of $1,700 before a specific account of $60 is written off. What were net accounts receivable before and after the write-off?