Exam 9: Receivables

The entry to write off an account under the allowance method affects net income at the time of entry.

Industrial Equipment Supply is a new business.During its first year of operations,credit sales were $41,000 and collections of credit sales were $33,000.One account,$675,was written off.Management uses the aging-of-receivables method to account for bad debts expense and estimated $525 as uncollectible at year end.The ending balance of the Allowance for Bad Debts is ________.

The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debts expense.The company's management estimates that 2% of net credit sales will be uncollectible for the year 2019.Net credit sales for the year were $250,000.Prepare the journal entry to record the bad debts expense on December 31,2019.Omit explanation.

On August 14,Park Avenue Bank lent $210,000 to City Coffee Shop on a 75 day,4% note.What is the maturity value of the note? (Use a 360-day year and round answers to the nearest dollar.)

Moonlight Company wrote off the account of one of its customers,X,in 2018 for $500.On January 21,2019,X unexpectedly repaid his account in full.The company uses the direct write-off method to account for uncollectible receivables.Journalize the entries required for Moonlight Company on January 21,2019.Omit explanations.

Interest is generally stated as a monthly rate on notes receivable.

Two methods of estimating uncollectible receivables are ________.

Historical Art is a new business.During its first year of operations,credit sales were $55,000 and collections on credit sales were $33,000.One account of $500 was written off.Management uses the percent-of-sales method to account for bad debts expense and estimates 3% of credit sales to be uncollectible.The ending balance of Allowance for Bad Debts account is ________.

A company's liquidity can be evaluated by analyzing the company's current assets.

Edgewood Home Improvement Store reported the following selected items at June 30,2019 (previous year - 2018 - amounts are also given as needed): Cash \ 80,000 Accounts Receivable, net: June 30,2019 125,000 June 30,2018 153,000 Accounts Payable 45,000 Cost of Goods Sold 475,000 Merchandise Inventory June 30,2019 320,000 June 30,2018 280,000 Net Credit Sales Revenue 1,200,000 Long-Term Assets 520,000 Long-Term Liabilities 140,000 Other Current Assets 150,000 Other Current Liabilities 130,000 Short-term Investments 200,000 Compute Edgewood's days' sales in receivables for the year ending June 30,2019.Show your computations.

If a credit customer fails to pay an accounts receivable,the company may ask the customer to sign a promissory note.

Businesses must estimate the amount of bad debts expense at the end of the accounting period only when using the balance sheet approaches.

On October 1,2018,Equipment Suppliers Company made a loan to one of its customers.The customer signed a 4-month note for $110,000 at 13%.How much interest revenue did the company record in the year 2018? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

On June 16,2018,Evergreen Company wrote off the $200 receivable from customer M.Simmons.On October 14,2018,Evergreen unexpectedly receives $200 cash from M.Simmons.How should Evergreen record the $200 payment from M.Simmons? Evergreen uses the allowance method.

On April 1,2019,Barnes Services received a 6-month note for $15,000 at 9%.Calculate the amount of interest due at maturity.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

On July 7,A-1 Credit Union loaned $500,000 to Bridal Retail Shop on a 90 day,4% note.What is the maturity date of the note?

In counting the number of days in a note term,________.

The following information is from the records of Chicago Photography: Accounts Receivable, December 31,2019 \ 24,000 (debit) Allowance for Bad Debts, December 31,2019 prior to adjustment 700 (debit) Net credit sales for 2019 91,000 Accounts written off as uncollectible during 2019 400 Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $2950 of accounts receivable will be uncollectible.Calculate the amount of net accounts receivable after the adjustment for bad debts.

When using the direct method to account for uncollectibles,an allowance account is used.

When using the allowance method,Allowance for Bad Debts is debited when an account receivable is written off.