Exam 8: Receivables

A company's acceptance of credit cards,like MasterCard,is an example of factoring with recourse.

Why should a dishonored note receivable be transferred to an individual account receivable for the debtor?

Under the allowance method,uncollectible accounts must be estimated if the matching rule is to be followed.

The higher the receivables turnover,the lower the days' sales uncollected.

Use this information to answer the following question. The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $1,000.Net sales for the year were $500,000.In the past,2 percent of sales have proved uncollectible,and an aging of accounts receivable accounts results in an estimate of $13,500 of uncollectible accounts. -Using the percentage of net sales method,the Allowance for Uncollectible Accounts balance (after adjustment)would be

If the receivables turnover is 3.1 times,what is the days' sales uncollected?

If the amount of uncollectible accounts expense is understated at year end,

Securitization delays the receipt of cash from sales made on credit.

A company has net sales of $50,000 during the year.At year end (before an adjustment is made),Allowance for Uncollectible Accounts has a credit balance of $2,500.If the company estimates that 3 percent of net sales are uncollectible,what is the balance in the allowance account after the year-end adjustment has been made using the percentage of net sales method?

Purchasing receivables with recourse is riskier than purchasing them without recourse.

A promissory note is executed in June.When the note is paid the following January,the payee's entry includes (assuming a calendar-year accounting period and no reversing entries)a