Exam 7: Accounting for Receivables

Galveston Co. uses the allowance method to account for uncollectible accounts. Show how the adjusting entry to recognize uncollectible accounts expense would affect the elements of Galveston's financial statements.

Raymond Company reports the following information for the 2014 fiscal year: Determine the average number of days it takes Raymond to collect its accounts receivable. (Round intermediate calculations to 2 decimal places.)

What is the effect on the accounting equation of writing off an uncollectible account receivable when the direct write-off method is used?

The net realizable value of receivables appearing on Karma's 2013 balance sheet will amount to:

The net effect of the entries to recognize the receipt of a previously written-off account under the allowance method is to:

One of the methods of accounting for uncollectible accounts is the direct write-off method. Indicate whether each of the following statements is true or false. _____ a) The direct write-off method does not comply with GAAP if uncollectible accounts expense is material. _____ b) The direct write-off method is allowed for some companies because of the going concern concept. _____ c) The direct write-off method requires an advance estimate of anticipated uncollectible accounts. _____ d) The direct write-off method is easier to use than the allowance method. _____ e) The direct write-off method does not require the use of an allowance account.

If a company uses the percent of receivables method to estimate uncollectible accounts, the company will first determine the required ending balance in Allowance for Doubtful Accounts, and Uncollectible Accounts Expense will be the difference between that amount and the current balance in the allowance.

When a company accepts a credit card payment for a sale, the amount of sales revenue to be recorded is reduced by the amount of the credit card company's fee.

On December 31, 2013, the Juniper Corporation estimated that $3,000 of its receivables might not be collected. The balance of Accounts Receivable and the Allowance for Doubtful Accounts respectively was $75,000 and zero on 12/31/13. On February 1, 2014, Juniper wrote-off of a delinquent account from one of its customers. Juniper Corp. uses the allowance method of accounting for uncollectible accounts. Indicate whether each of the following statements is true or false. _____a) The net realizable value of accounts receivable (after the appropriate adjusting entry on 12/31/13) was $75,000. _____b) The write-off of the account on 2/1/2014 did not affect the net realizable value of Juniper's accounts receivable. _____c) The adjusting entry on 12/31/13 had no effect on Juniper's total assets. _____d) The write-off entry on 2/1/13 had no effect on Juniper's total assets. _____e) The write-off entry on 2/1/13 decreased net income for 2014.

The collection of an account receivable is an asset source transaction.

Warner Company had $400,000 in credit sales for 2013, and it estimated that 2% of the credit sales would not be collected. The balance in Accounts Receivable at the end of the year was $76,000. Warnock had never used the allowance method to account for its receivables till 2013. The net realizable value of its accounts receivable at the end of the year was $68,000.

The party that issues a promissory note is known as the

Based on this information, the amount of cash flow from operating activities that would appear on the 2013 statement of cash flows is:

Accounts receivable turnover is computed by dividing:

Fleur de Lis Florist uses the allowance method to account for uncollectible accounts. Unable to collect a $200 account from a customer, Fleur de Lis determined it was uncollectible. How would the write-off of this account affect the company's financial statement?

How is the number of days to collect accounts receivable computed? What information does this ratio provide?

The adjusting entry to recognize uncollectible accounts expense is an asset use transaction.

The amount of uncollectible accounts expense recognized on the 2011 income statement was

Feingold Corporation uses the direct write-off method of accounting for uncollectible accounts. On February 2, 2013, after making numerous efforts to collect $2,400 from a customer, the company wrote off the account. On April 1, 2013, the customer paid the $2,000 to Feingold. Make the appropriate entries to 1) write off the account; 2) reestablish the account receivable; and 3) to record the collection.

Which of the following general journal entries would be used to recognize $7,500 of uncollectible accounts expense under the direct write-off method?