Exam 9: Receivables

Rotel purchased merchandise from TechCom on October 17,2014.TechCom accepted Rotel's $4,800,90-day,10% note as payment.TechCom has a December 31^st year end.What entry should TechCom make on January 15,2015 when the note is honoured?

The Liccorish Pizza bought $5,000 worth of merchandise from TechCom and signed a 90-day,10% promissory note for the $5,000.TechCom's journal entry to record the transaction is:

How can a company convert its receivables to cash?

Annie's Attic sold $80,000 in accounts receivable to First Bank and incurred a 2% factor fee.Prepare the journal entry to record the sale.

The days' sales uncollected ratio is calculated by:

Z-Mart had $12,000 in accounts receivable and $320,000 in net sales for the period.To one decimal,Z-Mart's days' sales uncollected was 13.7 days.

The percentage of sales approach for estimating bad debts is based on the idea that a percent of a company's credit sales for the period are uncollectible.

A promissory note:

Kader Company had the following balances on January 1,2015: Prepare general journal entries for the following transactions of Kader Company:

If a customer owes interest on a bill,Accounts Receivable is debited and Interest Expense is credited.

The practice of placing dishonoured notes receivable into Accounts Receivable keeps only current notes receivable in the Notes Receivable account.

Which accounting principle requires reporting expenses in the same period as the sales they helped to produce?

A contingent liability:

Notes receivable do not require a subsidiary ledger.

Assume bad debts are estimated and recorded as 2% of credit sales. (1)Show how Accounts Receivable and Allowance for Doubtful Accounts would appear on the balance sheet. (2)Present the entry to write off a $1,500 account. (3)Show how Accounts Receivable and Allowance for Doubtful Accounts would appear on a balance sheet immediately after writing off the account in (2)above.

Outdoors Unlimited had net sales for YR 1 of $285,000 and $575,000 for YR 2.The year-end balances of accounts receivable were $49,000 for YR 1 and $85,000 for YR 2.Calculate the days' sales uncollected at the end of each year (to the nearest day)and describe any changes in the apparent liquidity of the company's receivables.

TechCom has $40,000 in outstanding accounts receivable.Past experience suggests that 5% of outstanding receivables are uncollectible.The current balance in the allowance for doubtful accounts is $2,500 debit.The required adjusting journal entry includes a debit to bad debt expense for $4,500.

Explain the difference between honouring and dishonouring a note receivable.

In April,Hasbro had $3,875 million in sales and $990 million in accounts receivable.For the same period,Mattel had $4,595 million in sales and $834 million in accounts receivable.Calculate the days' sales uncollected for both companies.Which company appears to be doing a better job in managing collection of its receivables (all other things assumed to be equal)?

The following information is from the financial statements of Exquisite Ensembles: Calculate Exquisite Ensembles' accounts receivable turnover ratio for YR 2 and YR 3.Compare the two results and give a possible explanation for any significant change.