Exam 8: Receivables

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 amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts, respectively.

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.

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

On the basis of the following data related to assets due within one year for Simons Co., prepare a partial balance sheet in good form at December 31. Show total current assets. Cash 56,000 Accounts receivable 325,000 Allowance for doubtful accounts 25,000 Interest receivable 3,000 Supplies 4,000 Inventory 45,000 Other current assets 10,000

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

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

Financial statement data for the years ended December 31 for Parker Corporation are as follows: (a) Determine the accounts receivable turnover for each year. Round to one decimal place. (b) Determine the number of days' sales in receivables for each year. Round to whole days. (c) Does the change in accounts receivable turnover and number of days' sales in receivables from the first year to the second year indicate a favorable or unfavorable trend?

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables. ​ April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of goods sold 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.

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

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?

If a note receivable is dishonored, what is the effect on the accounting equation?

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

Under the allowance method of uncollectible accounts, how does the adjusting entry to estimate the amount that will become uncollectible affect the accounting equation?

Under the allowance method of uncollectible accounts, the entry to reinstate a customer's account that had been written off affects the accounting equation by

A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

No allowance account is used with the direct write-off method.

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a