Exam 9: Receivables

Allowance for doubtful accounts has a debit balance of $980 at the end of the current year (prior to adjustment). Net credit sales for the current period amount to $950,000 and 2.5% is estimated to be uncollectible. The adjusting entry would require a debit to:

Under the direct write-off method, the entry to estimate the bad-debt expense includes a:

You are informed that Warren Hodges, one of your customers, has declared bankruptcy. Hodges has an account with your company with a current balance of $2,300. Using the allowance method, the entry to write off the uncollectible account involves:

A company has $60,000 in cash, $75,000 in short-term investments, $140,000 in net current receivables, and $145,000 in inventory. The total current liabilities of the firm are $395,000. The acid-test ratio of the company is:

The due date should be included when calculating the interest period on a promissory note receivable.

The percent-of-sales method for estimating uncollectibles is also known as the income statement approach.

The direct write-off method of recognizing bad debts is superior to the allowance methods for the purpose of matching revenues and expenses.

Table 9-10 Armadillo Camera Shop The following information is from the 2019 records of Armadillo Camera Shop: Accounts receivable, December 31,2019 \ 20,000 (debit) Allowance for doubtful accounts, December 31,2019, prior to adjustment 600( debit) Net credit sales for 2019 95,000 Accounts written off as uncollectible during 2019 7,000 Cash sales during 2019 27,000 -Refer to Table 9-10. Bad debts expense is estimated by the aging-of-accounts-receivable method. Management estimates that $2,850 of accounts receivable will be uncollectible. Which of the following will be the amount of bad debts expense?

Table 9-11 Mark's Sales At the beginning of 2019, Mark's sales had the following ledger balances: Date Accounts Receivable Debit Credit Balance 24,000 Dr. Date Allowance for Doubtful Accounts Debit Credit Balance 1,000 . Date Bad Debts Expense Debit Credit Balance During the year there were $450,000 of credit sales, $460,000 of collections, and $3,700 of write-offs. -Refer to Table 9-11. At the end of the year, Mark's adjusted for uncollectible account expense using the aging method, and calculated an amount of $1,600 as their estimate of uncollectible accounts. At the end of the year, what was the balance in the allowance account?

Allowance for doubtful accounts has a debit balance of $980 at the end of the current year (prior to adjustment). Net credit sales for the current period amount to $900,000 and 2.5% is estimated to be uncollectible. The adjusting entry would require a credit to:

Table 9-5 The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments: Net credit sales for the year \ 780,000 Accounts receivable, Dec. 31,2019 170,000 Allowance for doubtful accounts, December 31,2019 3,200 . Aging of accounts receivable at December 31, 2019: 1-30 days \ 95,000 31-60 days 38,000 61-90 days 23,000 Over 90 days 14,000 Total \ 170,000 -Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for estimating uncollectible accounts. Ritchie estimates that uncollectible accounts will be aged as follows: 2% for 1-30 days; 4% for 31-60 days; 10% for 61-90 days; and 25% for over 90 days. The balance in allowance for doubtful accounts after the adjusting entry for uncollectible accounts will be:

Record entries for the following transactions for Riviera Company. Riviera Company maintains an allowance account. a)Sold merchandise on account to Carver Company, $2,800. b)Sold merchandise on account to Gwinett Company, $1,670. c)Write off both the Carver Company and the Gwinett Company accounts. d)Carver Company unexpectedly paid off its account in full.

Daniels & Company accepted a nine-month, $24,000 note receivable, with 6% interest, from Renee Company on September 1, 2018. Daniels & Company's year end is December 31. The amount of interest on this note to be recognized by Daniels & Company in 2019 is:

Aging-of-accounts receivable and percent-of-accounts receivable are both considered income-statement approaches in estimating uncollectible accounts.

Table 9-10 Armadillo Camera Shop The following information is from the 2019 records of Armadillo Camera Shop: Accounts receivable, December 31,2019 \ 20,000 (debit) Allowance for doubtful accounts, December 31,2019, prior to adjustment 600( debit) Net credit sales for 2019 95,000 Accounts written off as uncollectible during 2019 7,000 Cash sales during 2019 27,000 -Refer to Table 9-10. Bad debts expense is estimated by the aging-of-accounts-receivable method. Management estimates that $2,850 of accounts receivable will be uncollectible. Which of the following will be the balance of the allowance for uncollectible accounts after adjustment?

Table 9-11 Mark's Sales At the beginning of 2019, Mark's sales had the following ledger balances: Date Accounts Receivable Debit Credit Balance 24,000 Dr. Date Allowance for Doubtful Accounts Debit Credit Balance 1,000 . Date Bad Debts Expense Debit Credit Balance During the year there were $450,000 of credit sales, $460,000 of collections, and $3,700 of write-offs. -Refer to Table 9-11. At the end of the year, Mark's adjusted for uncollectible account expense using the aging method, and calculated an amount of $1,600 as their estimate of uncollectible accounts. At the end of the year, what was the balance in the uncollectible account expense?

Under the allowance method of accounting for uncollectible accounts, the entry to write off an account that is determined to be uncollectible includes a debit to bad-debt expense.

Under the allowance method, if uncollectible account write-offs during the year exceed the allowance amount, the balance in allowance for doubtful accounts at year end prior to adjustment:

If the allowance method of accounting for doubtful receivables is used, what account is credited in the entry to write off a customer's account as uncollectible?

The current debit balance in allowance for doubtful accounts is $465. Management estimates that 3% of net credit sales of $205,000 will be uncollectible. Based on the foregoing data, what is the allowance for doubtful accounts balance on the balance sheet?