Exam 9: Receivables

The direct write-off method is only acceptable for companies that have very few uncollectible receivables.

Which of the following statements is true?

Which of the following exists if the maker of a promissory note fails to pay the note on the due date?

Under the direct write-off method, which of the following is included in the entry to write off an uncollectible account?

At the beginning of 2015, Peter Dots has the following ledger balances: During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance in the Allowance for Bad Debts would be:

Tom's Fit Inc. a readymade garment seller accepts payment through credit cards. During the month of August, the card sales amounted to $12,000. The processor charges a 3% fee. Assume that the processor nets the deposits. Provide the journal entry for card sales revenue.

The percent-of-sales method to compute uncollectible accounts is also known as the balance sheet approach.

Smart Art is a new establishment. During the first year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the percent-of-sales method to account for bad debts expense, and decided to use a factor of 2% for their year-end adjustment of bad debts expense. At the end of the year, what is the ending balance in Accounts Receivable?

Give journal entry to record the dishonor of a note receivable at the maturity date.

On January 1, Davidson Services has the following balances: Davidson has the following transactions during January: Credit sales of $100,000, collections of credit sales of $85,000, and write-offs of $15,000. Davidson uses the direct write-off method. At the end of January, the balance in Bad Debts Expense is:

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

The percent-of-receivables method computes bad debts expense as a percentage of accounts receivable.

The aging-of-receivables method is a balance sheet approach of estimating uncollectible accounts.

Which of the following is true of the proper balance sheet treatment of the Allowance for Bad Debts with a credit balance?

The terms of payment for a note receivable are longer than that of an account receivable.

Charles and Charms, a merchandiser, has an account receivable for $125 which they now decided to be uncollectible. The merchandiser uses the direct write-off method. Which of the following entries is required to record the write-off?

A company will have receivables whenever it sells goods or services on credit.

On July 1, 2015, Ealys Jewellers accepted a 3-month, 15% note for $6,000 in settlement of an overdue account receivable. Provide the journal entry to record the acceptance of the note.

The following information is from the 2015 records of Armand Camera Shop: Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. The balance of the Allowance for Bad Debts after adjustment will be:

The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the balance of the Allowance for Bad Debts reported on the balance sheet at December 31, 2015?