Exam 9: Receivables

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 bad-debt expense will be aged as follows: 2.5% for 1-30 days; 4.5% for 31-60 days; 7.5% for 61-90 days; and 22.5% for over 90 days. After the adjustment for uncollectible accounts is made, the net realizable value of the accounts receivable will be:

The current credit balance in allowance for doubtful accounts before adjustment is $658. An aging schedule reveals $3,500 of uncollectible accounts. The ending balance in allowance for doubtful accounts should be:

On December 31, 2019, the unadjusted trial balance of Tarzwell Services showed the following balances: Accounts receivable $\$ 200,000$ Allowance for doubtful accounts $1,000 \mathrm { ~Cr }$ . Sales $700,000$ The business has given up trying to collect $5,000 of its accounts receivable but has not yet recorded the write-off entry. The firm uses the allowance method to estimate bad-debt expense. a)Provide the entry for the write-off. b)If the firm uses the percent-of-sales allowance method for recording bad-debt expense, and has experienced an average 6% rate of non-collection based on sales, provide the entry to record bad-debt expense for 2019. c)Assume that after the firm recorded the $5,000 of write-offs, it determined that 18% of its remaining accounts receivable will be uncollectible under the aging method. Provide the entry to record bad-debt expense.

A business with days' sales in receivables of 39 days is more liquid than one with a collection period of 31 days.

At January 1, Everbright Sales has the following balances: Date Accounts Receivable Debit Credit Balance 18,000 Dr. Date Allowance for Doubtful Accounts Debit Credit Balance 1,200 . Date Bad Debts Expense Debit Credit Balance During the year, Everbright has $150,000 of credit sales, collections of $140,000, and write-offs of $3,000. Everbright records bad debt expense at the end of the year using the aging method. At the end of the year, the aging analysis produces a figure of $1,900, being the estimate of uncollectible accounts at end of year. Required: 1. What is the December 31 journal entry to record the bad debts expense? 2. Present the Everbright accounts receivable in a partial balance sheet at December 31st.

A company has the following account balances. What is the acid-test ratio? (Please round to two decimal places.) Cash \ 50,000 Short-term investments 85,000 Net current receivables 120,000 Inventory 145,000 Total current liabilities 275,000

The accounts receivable account in the general ledger serves as a control account because it summarizes the total of the receivables from all customers.

A bookkeeper should not be allowed to handle cash.

The amount of a note receivable plus the total interest due is referred to as the:

The accountant for Withers Company is trying to decide which method to use for estimating uncollectible accounts. An aging of accounts receivable revealed $14,325 in uncollectible accounts. Under the percent-of-sales method, bad-debt expense was estimated at $14,780. The balance in allowance for doubtful accounts prior to adjustment was $1,760 (Dr.)and the balance in accounts receivable was $284,500. a)Determine the amount of the adjusting entry under each method. b)What will be the amount reported on the balance sheet as uncollectible under each method? c)Calculate the net realizable value for accounts receivable reported on the balance sheet under each method.

Compare and contrast the three methods of estimating uncollectible accounts that make use of the allowance for doubtful accounts. Be specific. What are the advantages and disadvantages of each?

A written promise to pay a specified amount of money at a particular future date is called a(n):

Martin Manufacturing held three interest-bearing notes during 2018 and 2019: Note 1 issued September 25, 2018, $6,000, 10%, 60 days Note 2 issued November 20, 2018, $12,000, 12%, 90 days Note 3 issued December 30, 2018, $4,000, 9%, 30 days Compute for each note: a)the maturity date b)the maturity value c)interest revenue to be reported on the 2016 income statement (round to the nearest cent)

A 10% six month note receivable for the principal amount of $1,000 will earn interest revenue of $100.

A record that contains the details by customer or vendor of the individual account balances would be called a:

One method of establishing internal control over receivables is to establish a bank lock box.

The balance sheet reports accounts receivable at:

The current debit balance in allowance for doubtful accounts is $150. Management estimates that 2% of net credit sales of $100,000 will be uncollectible. Based on the foregoing data, what is the bad-debt expense balance on the income statement?

Accounts receivable may be presented on the balance sheet without the contra account: allowance for doubtful accounts.

Compute net accounts receivable for the following independent situations. a)Accounts receivable has a balance of $16,000. The allowance for doubtful accounts has a credit balance prior to adjustment of $350. An aging schedule prepared on December 31 reveals $1,250 of uncollectible accounts. b)Accounts receivable has a balance of $17,500. The allowance for doubtful accounts has a debit balance prior to adjustment of $560. An aging schedule prepared on December 31 reveals $1,500 of uncollectible accounts. c)Accounts receivable has a balance of $15,500. The allowance for doubtful accounts has a debit balance prior to adjustment of $760. Net credit sales for the year are $35,000 and 3.5% of net credit sales are deemed uncollectible. d)Accounts receivable has a balance of $20,200. The allowance for doubtful accounts has a credit balance prior to adjustment of $460. Net credit sales for the year are $35,000 and 4.5% of net credit sales are deemed uncollectible.