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Exam 8: Accounting for Receivables

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Question 61

Multiple Choice

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When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

A) a sale is made.
B) an account becomes bad and is written off.
C) management estimates the amount of uncollectibles.
D) a customer's account becomes past-due.

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Question 62

Multiple Choice

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When a note receivable is honored, Cash is debited for the note's

A) net realizable value.
B) maturity value.
C) gross realizable value.
D) face value.

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Question 63

Multiple Choice

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The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts

In 2015, Warehouse 13 had net credit sales of $750,000. On January 1, 2015, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2015, $29,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis) . If the accounts receivable balance at December 31 was $150,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2015?

Schwartzman Co., makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $640 at the end of the grace period, the interest charge is

Deborah Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $50,000 (Cr.) , respectively. An aging of accounts receivable indicated that $180,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Which of the following receivables would not be classified as an "other receivable"?

The maturity date of a 1-month note receivable dated June 30 is July 30.

Bad Debt Expense is considered

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

An analysis and aging of the accounts receivable of Hugh Company at December 31 revealed the following data: The cash realizable value of the accounts receivable at December 31, after adjustment, is:

Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances) : Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record?

The receivable that is usually evidenced by a formal instrument of credit is a(n)

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $32,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debt expense for that period?

If a company fails to record estimated bad debts expense,

A promissory note

A debit balance in the Allowance for Doubtful Accounts

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

The percentage of receivables basis of estimating expected uncollectible accounts emphasizes income statement relationships.