Exam 9: Receivables

The following information is from the 2017 records of Lane Bicycle Shop: Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $6,000 of accounts receivable will be uncollectible.Calculate the ending balance of Allowance for Bad Debts,after the adjustment for bad debts expense,at December 31,2017.

A six-month note receivable for $6,000 at 13%,dated October 1,2017,has accrued interest revenue of ________ as of December 31,2017.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Use the following to calculate the acid-test ratio.(Round your answer to two decimal places. )

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 2017.Net credit sales for the year amounted to $270,000.What will be the balance of Allowance for Bad Debts on the December 31,2017 balance sheet?

Sales through credit cards or debit cards transfer the risk of collection of receivables from the seller to the card issuer.

The entry to write off an account receivable under the allowance method will ________.

For a company with significant uncollectible receivables,the direct write-off method is unsuitable because ________.

When using the allowance method,the write-off of a receivable ________.

When using the allowance method,after a company has previously written off an account,________.

At the beginning of 2017,Smoothie Town,Inc.has the following account balances: Accounts receivable $40,000 (Debit) Allowance for Bad Debts $6,000 (Credit) During the year,credit sales were $820,000.Cash collected on credit sales was $750,000,and $15,000 was written off.Smoothie Town uses the aging-of-receivables method to record bad debts expense.The amount estimated as uncollectible was $28,000.The amount of Bad Debts Expense for 2017 is ________.

On August 14,First Avenue Bank lent $250,000 to City Cafe on a 75 day,4% note.What is the maturity date of the note? (Use a 360-day year and round answers to the nearest dollar. )

On January 16,Whole Circle,Inc.sold $5,000 merchandise to Smith,on account.Whole Circle could not collect cash from Smith and wrote off the account.Prepare a journal entry to record the write-off,assuming Whole Circle uses the allowance method.

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

Clothesall,Inc. ,a retailer,accepts payment through credit cards.During August,credit card sales amounted to $12,000.The processor charges a 3% fee.Assume that the processor deposits the net amount.Prepare the journal entry for card sales.(Ignore cost of goods sold. )

Businesses must maintain a single Accounts Receivable account regardless of the number of customers.

Interest is generally stated as a monthly rate.

Smart Art is a new business.During its first year of operations,credit sales were $45,000 and collections from credit sales were $31,000.One account for $600 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.What is the balance of Accounts Receivable at the end of the first year?

Sales through credit cards and debit cards are journalized in the same way as sales on account.

Prairie Outfitters,Inc. ,a retailer,accepts payment through credit cards.During August,credit card sales amounted to $12,000.The processor charges a 3% fee.Assuming that the credit card processor uses the gross method,prepare the journal entries,on the books of Prairie Outfitters,for the credit card sales and the payment of fees.(Ignore cost of goods sold. )

The accounts receivable turnover ratio for a merchandiser is 9.6 times.Calculate the days' sales in receivables for the merchandiser.(Round your answer to the nearest day. )