Exam 9: Accounting for Receivables

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 credit 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 $7,000.

Hankco accepts all major bank credit cards, including Omni Bank's, which assesses a 4% charge on sales for using its card. On June 28, Hankco had $3,500 in Omni Card credit sales. What entry should Hankco make on June 28 to record the deposit?

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:

Prepare general journal entries for the following transactions of Viking Company, assuming they use the allowance method to account for uncollectible accounts.

A company allows its customers to use bank credit cards to charge purchases. When customers use the credit cards, the net amount is deposited in the company's checking account. The company also is charged a 2.5% service charge for these credit card sales. Assume that on April 13, the company sold $25,000 worth of merchandise to customers who used credit cards. Prepare the company's journal entry to record the credit card sales for April 13 assuming the company deposited the receipts that same day.

Match each of the following terms with the appropriate definitions.

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

The matching principle requires use of the direct write-off method of accounting for bad debts.

MixRecording Studios purchased $7,800 in electronic components from TechCom. MixRecording Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note?

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.

On August 9, Pierce Company receives a $8,500, 90-day, 8% note from customer Eric Simms as payment on his account. Compute the maturity date for the note.

When using the allowance method of accounting for uncollectible accounts, the recovery of a bad debt would be recorded as a debit to Cash and a credit to Bad Debts Expense.

On August 9, Pierce Company receives a $8,500, 90-day, 8% note from customer Eric Simms as payment on his account. Compute the amount due at maturity for the note.

A 90-day note issued on April 10 matures on:

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

If a 90-day note receivable is dated June 12, what is the maturity date of the note?

The ________________________ methods use balance sheet relations to estimate bad debts - mainly the relation between accounts receivable and the allowance amount.

A promissory note:

A company borrowed $10,000 by signing a 180-day promissory note at 11%. The total interest due on the maturity date is.

____________________ is the charge for using (not paying) money until a later date.