Exam 9: Receivables

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. $31,2019\quad145,000$ Allowance for doubtful accounts balance, Dec. $31,2019 \quad 1,850 \mathrm {~~~ Cr. }$ 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.

Which of the following entries would be used to account for uncollectible receivables using the allowance method?

A 90-day note dated August 26 matures on:

Under the direct write-off method, the entry to write off an uncollectible account would include a:

The allowance for doubtful accounts is a contra account to cash.

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.

The acid-test ratio includes in the numerator all:

The direct write-off method of recognizing bad debts usually results in assets being overstated on the balance sheet.

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 percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of net accounts receivable after adjustment?

The maturity value of a 15%, 90-day note for $10,000 is $9,625.

Using the balance-sheet approach to estimate uncollectibles, accounts that are 90 days old are:

Perry Materials Supply uses the aging method to account for uncollectible accounts. At the end of the year, the balance in Accounts receivable was $146,000 and Perry prepared the following aging schedule. Customer 1-30 days 31-60 days 61-90 days Over 90 days Total Balance Tohnson \ 4,600 \ 3,200 \ 7,800 Hot Pots, Inc. \ 800 \ 1,000 1,800 Potter 40,000 550 40,550 Harrison 3,600 900 4,500 Marx 2,000 50 2,050 Younger 65,000 65,000 Merry Maids 5,900 5,900 Archer 12,000 6,400 18,400 Total \ 127,500 \ 13,750 \ 3,700 \ 1,050 \ 146,000 Uncollectible percentage Estimated uncollectible amount Based on past history, Perry uses 2% for current receivables (1-30 days), 10% for 31-60 days, 20% for 61-90 days, and 40% for over 90 days. Please complete the schedule and calculate the estimated amount of uncollectible accounts.