Exam 8: Receivables

Match each description to the appropriate term (a-h). -The amount charged for using the money of another party A)Face amount B)Term C)Interest D)Maturity value E)Dishonored note F)Maker G)Notes receivable H)Interest rate

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method is based on the theory that older accounts are less likely to be collected. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Small companies can use either the direct write-off method or the allowance method.

The number of days' sales in receivables

Under the direct write-off method of uncollectible accounts, what is the effect on the accounting equation of writing off a customer's account?

A partially completed aging of receivables schedule for Lindy Designs is shown below.​ (a) Determine the amount estimated to be uncollectible by completing the aging of receivables schedule. Round calculations to the nearest dollar. (b) If the Allowance for Doubtful Accounts has a credit balance of $9,700, record the adjusting entry for the bad debt expense for the year.(c) If the Allowance for Doubtful Accounts has a debit balance of $9,700, record the adjusting entry for the bad debt expense for the year.

When referring to a note receivable or promissory note

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000.​ Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.)

A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

A note receivable due in 18 months is listed on the balance sheet under the caption

Theta Company determines that a $6,300 account receivable from CorpCo is uncollectible and writes off the account using the direct write-off method on June 16. On August 21, CorpCo pays the $6,300 to Theta Company.​ Journalize the entry for the reinstatement of the account receivable and receipt of cash on August 21. You may omit posting references.

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivable are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables.

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write off this account, Dalton should debit

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

When a note is written to settle an open account, no entry is necessary.

Match each description to the appropriate term (a-d). Each term may be used more than once. -With this method, there is no allowance account. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method