Exam 9: Receivables

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?

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

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

The allowance method of handling bad debts violates the matching principle.

Assume that on February 25,a customer who owes Berry Sales Company $2,000 is declared bankrupt by a federal court.The entry that would be made to write off this account is:

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

Which of the following accounts is classified as a short-term financial asset?

Which of the following statements is false regarding promissory notes?

It is considered unethical to use the estimate for bad debts to purposely manipulate the amount of net income.

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. )

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

A company performs the aging of accounts receivable calculation and arrives at an estimate for uncollectible accounts of $900.If Allowance for Uncollectible Accounts has a debit balance of $200 prior to the year-end adjustment,for how much should the adjustment be journalized?

Under the direct charge-off method of dealing with uncollectible accounts,

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.

The percentage of net sales method of estimating uncollectible accounts is in violation of the matching principle.

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

The maturity value of a 60-day,9 percent,$4,000 note receivable is

Each of the following is a characteristic of a promissory note except a(n)

At year end,MWE Graphics has a $700 debit balance in Allowance for Uncollectible Accounts.It estimates that 5 percent of the $40,000 in sales are uncollectible.Give the amount that should be used in the adjusting entry to record uncollectible accounts using the percentage of net sales method.(Show your calculations. )