Exam 8: Receivables

Assume that on October 1,a note which has a face value of $2,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his past-due account is honored on its due date.The entry that would be made to record the receipt on due date is:

Under the allowance method,Uncollectible Accounts Expense is not recorded when an individual customer defaults.

When using the direct charge-off method,year-end adjustments for uncollectible accounts expense are not made.

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. Using the percentage of net sales method. -The entry to record the Uncollectible Accounts Expense would be:

A promissory note may be issued for an amount to be determined at a future date.

Which of the following statements is false regarding promissory notes?

Using the accounts receivable aging method,estimated uncollectible accounts are $40,000.If the balance of the Allowance for Uncollectible Accounts is an $8,000 debit before adjustment,what is the balance after adjustment?

Loans to company employees should be included with accounts receivable on the balance sheet.

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

The matching rule relates to credit losses by stating that Uncollectible Accounts Expense should be recorded

A note receivable dated May 23 and due in 90 days would be due on

When Company A discounts without recourse a note to Company B,Company A has a contingent liability until the note is paid.

Days' sales uncollected equals 365 days divided by

What purpose is served by a factoring arrangement? What does it mean to factor accounts receivable with recourse?

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. Using the accounts receivable aging method. -The entry to record Uncollectible Accounts Expense would be:

Assume that the $2,000,90-day,8 percent note was received on August 31 and that the fiscal year ended on September 30.The adjusting entry that would be made to record the interest receivable is (amounts rounded to nearest dollar):

One might infer from a debit balance in Allowance for Uncollectible Accounts that

Under the allowance method,Uncollectible Accounts Expense is recorded

Interest on a six-month,7 percent,$2,000 note is calculated by multiplying $2,000 × 7/100 × 6/12.

On December 31,Ferndale Enterprises has an $800 debit balance in Allowance for Uncollectible Accounts.If an accounts receivable aging method analysis indicated that an estimated $6,400 of December 31 receivables are uncollectible,for what amount would the adjusting entry for uncollectible accounts be recorded? (Show your work. )