Exam 8: Receivables

A newly created design business called Smart Art is just finishing up its first year of operations.During the year,there were credit sales of $40,000 and collections of $36,000.One account for $650 was written off.Smart Art uses the percent-of-sales method to account for uncollectible account expense,and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense.Show the journal entry required to record Uncollectible account expense at the end of the year.

Under the direct write-off method,a customer who doesn't pay their bills is written off with what journal entry?

At January 1,Davidson Services has the following balances: During the year,Davidson has $104,000 of credit sales,collections of $100,000,and write-offs of $1,400. Davidson records Uncollectible account expense at the end of the year using the percent-of-sales method,and applies a rate of 1.1%,based on past history. - After the year-end entry to adjust the Uncollectible accounts expense,what is the ending balance in the Allowance for uncollectible accounts?

Interest rates are generally stated on a monthly basis.

A company uses the direct write-off method to account for uncollectible receivables.Which of the following is included in the entry to write off an uncollectible account?

On March 1,2012,Bayonne Services made a loan to one of its officers.The officer signed a 6-month note for $4,000 at 8%.Please provide the journal entry needed by Bayonne to record the note.

On January 1,Ajax Company accepted a one-year note for $5,000 at 4% from one of its customers.When the note matured on December 31,the customer was unable to pay,and Ajax treated it as a dishonored note.Please provide the journal entry needed by Ajax.

A six-month note receivable for $4,000 at 12% dated September 1,2011,has accrued interest revenue of ________ on December 31,2011.

As Perry Materials Supply was preparing for the year-end close,their balances were as follows: Perry Materials uses the aging method and has completed the following analysis of the accounts receivable: Customer 1-30 Days 31-60 Days 61-90 Days Over 90 Days Total Balance Johnson \ 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 Marz 2,000 50 2,050 Younger 65,000 65,000 Merry Maids 5,900 5,900 Acher 12,000 6,400 18,400 Totals \ 127,500 \ 13,750 \ 3,700 \ 1,050 \ 146,000 Uncollectible percentage 2\% 10\% 20\% 40\% Estimated uncollectible amount \ 2,550 \ 1,375 \ 740 \ 420 \ 5,085 -How much will the Uncollectible account expense for the year be?

The maturity value of a note is the sum of the principal plus interest due at maturity.

GAAP prefers companies to use the:

Accounts receivable has a balance of $16,000 and the Allowance for uncollectible accounts has a credit balance of $1,700.What is Net accounts receivable before and after a $60 account receivable is written off?

The following information is from the 2013 records of Armadillo Camera Shop: Accounts receivable, December 31,2013 \ 20,000 (debit) Allowance for uncollectible accounts, December 31,2013 prior to adjustment 600 (debit) Net credit sales for 2013 95,000 Accounts written off as uncollectible during 2013 7,000 Cash sales during 2013 27,000 - Uncollectible accounts 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?

Which of the following describes the key significance of the acid ratio?

At January 1,Everbright Sales has the following balances: During the year,Everbright has $150,000 of credit sales,collections of $140,000,and write-offs of $3,000.Everbright records Uncollectible accounts 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. - After the year-end entry to adjust the Uncollectible accounts expense is made,what is the final balance in the Uncollectible accounts expense?

Notes receivable are usually longer in term than accounts receivable.

Archer Company has significant amounts of accounts receivable,and experiences uncollectible accounts from time to time.Archer uses the percent-of-sales method to account for uncollectible accounts.When Archer Company writes off an uncollectible receivable,what is the effect of that single transaction?

On October 1,2012,Allen Jewelry Company accepted a 4-month,10% note for $2,400 in settlement of an overdue account receivable.If the company accrues interest at year-end only,please provide the journal entry needed at year-end.

The accounts receivable turnover ratio measures:

Charlton Sales has a receivable for $92 that they now deem to be uncollectible.Charlton uses the direct write-off method.Please provide the journal entry for the write-off.