Exam 8: Receivables

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

The interest on a 6%, 60-day note for $5,000 is $300.

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include:

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

The balance in the Allowance for Doubtful Accounts account at the end of the year includes the total of all accounts written-off since the beginning year.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

The journal entry to record a note received from a customer to apply on account is

On June 30th (the end of the period) Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.

When does an account become uncollectible?

For a business that uses the allowance method of accounting for uncollectible receivables:

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared?

A 60-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Journalize the following transactions for Solley Company that occurred during 2011 and 2012. November 14, 2011 Received a $4,800.00, 90-day, 9% note from Alan Hibbetts in payment of his account. December 31, 2011 Accrued interest on the Hibbetts note. February 12, 2012 Received the amount due from Hibbetts on his note.