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Exam 8: Receivables

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Question 101

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Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.

A) True
B) False

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Question 102

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What is the effect on the accounting equation when a company receives payment on a note receivable, including interest?

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Assets both increase and decre...

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Question 103

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A partially completed aging of receivables schedule for Torme Designs is shown below.​ (a) Determine the amount estimated to be uncollectible by completing the aging of receivables schedule. Round calculations to the nearest dollar.​ (b) If the Allowance for Doubtful Accounts has a credit balance of $1,135, record the adjusting entry for the bad debt expense for the year.​

Match each description to the appropriate term (a-i). -Operating expense recorded as a result of receivables becoming uncollectible A)Accounts receivable turnover B)Net realizable value C)Accounts receivable D)Aging report E)Receivables F)Direct write-off method G)Allowance for doubtful accounts H)Bad debt expense I)Factoring

Discuss the (a) focus and (b) financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.

When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

At the end of the current year, Accounts Receivable has a balance of $675,000; Allowance for Doubtful Accounts has a debit balance of $5,400; and sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000.​ Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method focuses on the income statement. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

When using the direct write-off method of accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

If collection of an other receivable is expected beyond one year, it is classified as a

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case.(a)Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $8,500.(b)Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment. Bad debt expense is estimated at 2% of credit sales, which totaled $1,000,000 for the year.

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

Allowance for Doubtful Accounts is a liability account.

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

An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

On the balance sheet after adjusting entries are made, the amount shown for the Allowance for Doubtful Accounts is equal to the

Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment) . The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?

Under the allowance method of uncollectible accounts, the entry to reinstate a customer's account that had been written off affects the accounting equation by