Exam 8: Receivables

List at least three indicators that a receivable may be uncollectible.

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

The direct write-off method records bad debt expense when an account is determined to be uncollectible.

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and, the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.

Under the allowance method of uncollectible accounts, the adjusting entry to estimate the amount that will become uncollectible affects the accounting equation by

Other than Accounts Receivable and Notes Receivable, name other receivables that might be included in the general ledger.

Journalize the following transactions using the allowance method of accounting for uncollectible receivables.​ April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.​ June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.​ Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.

The due date of a 60-day note dated July 10 is September 10.

What is the type of account and normal balance of Allowance for Doubtful Accounts?

When a company accepts a note in settlement of a past due account, what is the effect on the accounting equation?

The direct write-off method

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. Journalize the entry to write off the account. You may omit posting references.​

Match each description to the appropriate term (a-i). -Measures how frequently during the year accounts receivable are being turned into cash A)Accounts receivable turnover B)Net realizable value C)Accounts receivable D)Aging report E)Receivables F)Direct write-off method G)Allowance for doubtful accounts H)Bad debt expense I)Factoring

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

Match each description to the appropriate term (a-h). -The stated rate 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

Discuss the two methods for recording bad debt expense. What type of company uses each method?

Receivables not currently collectible are reported in the investments section of the balance sheet.

The operating expense recorded from uncollectible receivables can be called all of the following except

The following information was taken from the financial records of Sodigaz, Inc. The number of days' sales in receivable for Year 2 is

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include a