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 aging method to account for uncollectible account expense,and has calculated an amount of $200 as their estimate of uncollectible amounts at year-end. -At the end of the year,what is the ending balance in Uncollectible account expense?

On October 1,2012,Allen Jewelry Company accepted a 4-month,10% note for $2,400 in settlement of an overdue account receivable.Please provide the journal entry needed to record the conversion of an Accounts receivable into a Note receivable.

The creditor is the entity that signs a note.

The Allowance for uncollectible accounts currently has a credit balance of $200.The company's management estimates that 2.5% of net credit sales will be uncollectible.Net credit sales are $115,000.What will be the balance of the Allowance for uncollectible accounts reported on the balance sheet?

On January 1,Wolfie's Supply sold $222 worth of goods to customer Abe Smith on account.Please record the journal entry for the sales revenue.

Which of the following duties should NOT be performed by a credit department?

An acid-test ratio of at least 1.0 is considered safe.

A company has significant uncollectible receivables.Why is the direct write-off method unacceptable?

On March 1,2014,Bayonne Services made a loan to one of its officers.The officer signed a 6-month note for $4,000 at 8%.Bayonne generally accrues interest at year-end only,so at the time the note matured,Bayonne had not accrued any interest revenue.On August 1 when the note matured,the officer settled in full with the company.How much interest revenue did Bayonne record?

A note is dishonored when the maker of the note fails to pay the note at maturity.

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. - Before the year-end entry to adjust the Uncollectible accounts expense is made,what is the balance in the Allowance for uncollectible accounts?

At the beginning of 2014,Mark's sales had the following ledger balances: During the year there were $450,000 of credit sales,$460,000 of collections,and $3,700 of write-offs.At the end of the year,Mark's adjusted for uncollectible account expense using the percent-of-sales method,and applied a rate,based on past history,of 1.2% -At the end of the year,what was the balance in the Allowance account?

The direct write-off method is used primarily by large,publicly owned companies.

Which of the following would be included in the entry to record a dishonored note receivable by the payee?

The Allowance for uncollectible accounts currently has a credit balance of $900.After analyzing the accounts in the accounts receivable subsidiary ledger using the aging method,the company's management estimates that uncollectible accounts will be $15,000. -What will be the amount of Uncollectible accounts expense reported on the income statement?

Which of the following is included in the denominator of the acid-test ratio?

A company issues a 60-day,12% note for $11,000.What is the principal amount?

Charlton Sales has a receivable for $92 that they now deem to be uncollectible.Charlton uses the direct write-off method.Which of the following entries correctly records the write-off?

At January 1,Davidson Services has the following balances: Davidson has the following transactions during January: Credit sales of $80,000,collections of $76,000,and write-offs of $12,000. - Davidson uses the direct write-off method.At the end of January,the balance in Accounts receivable is:

Companies that use GAAP accounting will prefer the use of the direct write-off method.