Exam 9: Receivables

The two major types of receivables are interest receivable and taxes receivable.

Under both the allowance method and the direct-write off method of accounting for uncollectible accounts,the amount of bad debts expense is to be estimated at the end of each accounting period.

Bad debt expense is not debited when a company writes off an account receivable when using the allowance method because the company has already recorded the Bad Debt Expense as an adjusting entry.

The accounts receivable turnover ratio indicates whether a company could pay all its current liabilities if they were to become due immediately.

On December 1,2017,Falcon,Inc.sold machinery to a customer for $22,000.The customer could not pay at the time of sale but agreed to pay 6 months later and signed a 6-month note at 11% interest.How much interest revenue was earned for the entire term of the note? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

The two methods of accounting for uncollectible receivables are ________.

At the beginning of 2017,Elixir,Inc.has the following account balances: Bad Debts Expense $0 During the year,credit sales amounted to $800,000.Cash collected on credit sales amounted to $770,000,and $18,000 has been written off.At the end of the year,the 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 is ________.

Calculate the interest on a 90-day,12% note for $45,000.(Use a 360-day year to compute interest.Round your answer to the nearest dollar. )

On January 1,2017,Everlight Corp.has the following account balances: Allowance for Bad Debts During the year,Everlight has $150,000 of credit sales,collections of credit sales of $144,000,and write-offs of $3,400.It records bad debts expense at the end of the year using the aging-of-receivables method.At the end of the year,the aging analysis shows that $2,100 is the estimate of uncollectible accounts.Before the year-end entry to adjust the bad debts expense is made,the balance in the Allowance for Bad Debts expense is ________.

Which of the following is true of the balance sheet presentation of the Allowance for Bad Debts?

On December 1,2017,Sheehan,Inc.sold machinery to a customer for $2,000.Sheehan regularly sells machinery.The customer could not pay at the time of sale but agreed to pay 9 months later and signed a 9-month note at 12% interest.Prepare the journal entry to record the revenue at the time of sale.Ignore the entry for cost of goods sold.

Which of the following is the result of the maker of a promissory note failing to pay the note on the due date?

Notes receivable represents a written promise that a party will pay a fixed amount of principal plus interest on a stated maturity date.

The Allowance for Bad Debts account has a debit balance of $9,000 before the adjusting entry for bad debts expense.After analyzing the accounts in the accounts receivable subsidiary ledger,the company's management estimates that uncollectible accounts will be $10,000.What will be the amount of the adjustment in the Allowance for Bad Debts account?

On January 1,Ajax Corp.accepted a one-year note for $70,000 at 6% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company recorded the dishonor.The amount of the debit recorded on December 31 is ________.

What is the maturity value of a 3-month,13% note for $50,000? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Which of the following statements,regarding notes receivable,is incorrect?

Which of the following statements is true?

Average Art is a new business.During its first year of operations,credit sales were $40,000 and collections of credit sales were $36,000.One account,$650,was written off.Management uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be uncollectible.Prepare the entry to record bad debts expense.

What is measured by days' sales in receivables? Both Smith Enterprises and Jones Enterprises have credit terms of 2/10,net 30.The days' sales in receivables are 40 for Smith Enterprises and 35 for Jones Enterprise.Analyze this information.