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Exam 8: Accounting for Receivables

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Question 21

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Compute the maturity value for each of the following notes receivable. 1. An $8,000, 6%, 3-month note dated July 20. Maturity value $____________. 2. A $12,000, 9%, 150-day note dated August 5. Maturity value $____________.

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1. Maturity value: $8120
$8000...

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Question 22

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When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

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Question 23

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The net amount expected to be received in cash from receivables is termed the

Three accounting issues associated with accounts receivable are

In 2014, Freeze Company had credit sales of $1,200,000 and granted sales discounts of $24,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $30,000. During 2014, $50,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2014?

When the allowance method is used to account for uncollectible accounts, ______________ is credited when an account is determined to be uncollectible.

U.S. GAAP accounts for short-term receivables at amortized cost, adjusted for allowances for doubtful accounts, whereas IFRS requires fair values for receivables.

When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense

Miles to Go is a travel agency specializing in tours to Africa and Australia. Miles to Go has $3,200,000 in accounts receivable. During 2014, miles to Go enters into a factoring arrangement with Fox Factors to factor 75% of their receivables. The agreement with Fox calls for a services charge of 2% of the amount of receivables sold. The effects on the statement of financial position for Miles to Go of factoring its receivables includes a(n)

Trade accounts receivable are valued and reported on the statement of financial position

A company that receives an interest bearing note receivable will

A company has net credit sales of $900,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of

ABC Company accepted a national credit card for a €7,500 purchase. The cost of the goods sold is €6,000. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

Management can choose between two bases in calculating the estimated uncollectible accounts under the allowance method. One basis emphasizes an income statement viewpoint whereas the other emphasizes a statement of financial position viewpoint. Identify the two bases and contrast the two approaches. How do the different points of view affect the amount recognized as Bad Debts Expense during the accounting period?

Black Company provides for bad debts expense at the rate of 2% of credit sales. The following data are available for 2014: The Allowance for Doubtful Accounts balance at December 31, 2014, should be

Remington Company had the following select transactions. Instructions Prepare journal entries to record the transactions. Remington prepares adjusting entries once a year on December 31.

The two methods of accounting for uncollectible accounts are (a) percentage of sales and (b) percentage of receivables.

The direct write-off method

Short-term receivables appear in the current assets section of the statement of financial position above short-term investments.

Prepare the necessary journal entry for the following transaction. Francis Company sold €300,000 of its accounts receivables to a factor. The factor charges a 3% fee.