Exam 9: Accounting for Receivables

Timmons Company had a January 1, balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year:

Sellers allow customers to use credit cards:

What is the maturity date of a 6-month note receivable dated February 5?

Under IFRS, the term provision:

A company reports the following results in its financial statements: Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare these two results and give a possible explanation for any significant change.

A company had net sales of $500,000 and an average accounts receivable of $80,000. Its accounts receivable turnover equals 6.25. $500,000/$80,000 = 6.25

The accounts receivable turnover indicates how often accounts receivable are received and collected during the period.

Explain the difference between honoring and dishonoring a note receivable.

The matching principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

The quality of receivables refers to the likelihood of collection without loss.

Failure by a promissory note's maker to pay the amount due at maturity is known as:

Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $4,800, 90-day, 10% note. If the note is dishonored, what entry should TechCom make on January 15 of the next year?

The accounts receivable method to estimate bad debts obtains the estimated balance in the Allowance for Doubtful Accounts in one of two ways: (1) computing the percent uncollectible from the total accounts receivable or (2) aging accounts receivable.

On May 31, a company had a balance in its accounts receivable of $103,895. Prepare journal entries to record the following transactions for June.

Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a:

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $800. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

The interest accrued on $6,500 at 6% for 60 days is:

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: Prepare the adjusting entry to estimate bad debts under each of the following separate situations. 1. Bad debts are estimated to be 2.5% of credit sales. 2. An aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

A credit sale of $3,275 to a customer would result in:

The following data are taken from the comparative balance sheets of Gayle Company. Compute and interpret its accounts receivable turnover for Year 2. Competitors average a turnover of 7.5. How is the company doing in relation to its competitors?