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Exam 9: Accounting for Receivables

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Question 21

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When an account is written off using the allowance method, the

A) cash realizable value of total accounts receivable will increase.
B) total accounts receivable will decrease.
C) allowance account will increase.
D) total accounts receivable will stay the same.

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Question 22

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The two key parties to a note are the maker and the payee.

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Question 23

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Remington Company had the following select transactions. Apr. 1, 2010 Accepted Carter Company's 1-year, 12% note in settlement of a $30,000 account receivable. July 1, 2010 Loaned $20,000 cash to David Pratt on a 9-month, 10% note. Dec. 31, 2010 Accrued interest on all notes receivable. Apr. 1, 2011 Received principal plus interest on the Carter note. Apr. 1, 2011 David Pratt dishonored its note: Remington expects it will eventually collect. Instructions Prepare journal entries to record the transactions. Remington prepares adjusting entries once a year on December 31.

The best managed companies will have

Newland Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Newland Retailers will include a credit to Sales of $75,000 and a debit(s) to

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

A 90-day note dated June 14 has a maturity date of

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

Putnam Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $105,000 (Cr.) , respectively. An aging of accounts receivable indicated that $192,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Using the following information: During 2010, sales on account were $145,000 and collections on account were $86,000. Also during 2010, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $54,000. Bad debts expense for 2010 is

The maturity value of a $90,000, 10%, 60-day note receivable dated July 3 is

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

Newman Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred. Jan. 15 Made Newman credit card sales totaling $22,000. (There were no balances prior to January 15.) 20 Made Visa credit card sales (service charge fee 2%) totaling $5,500. Feb. 10 Collected $12,000 on Newman credit card sales. 15 Added finance charges of 1% to Newman credit card balance. Instructions (a) Journalize the transactions for Newman Stores. (b) Indicate the statement presentation of the financing charges and the credit card service charge expense for Newman Stores.

Retailers generally consider sales from the use of national credit card sales as a

Horton Company has the following accounts receivable in its general ledger at July 31: Accounts Receivable $32,000. During August, the following transactions occurred. Aug. 1 Added 1% finance charges to $12,000 of credit card balances for not paying within the 30 day grace period. 15 Sold $20,000 of accounts receivable to Fast Factors Inc. who charge a 2% commission. 28 Collected $7,000 from Horton credit card customers including $350 of finance charges previously billed. Instructions (a) Journalize the transactions. (b) Indicate the statement presentation of finance and service charges.

Interest is usually associated with

Kosko Furniture Store has credit sales of $400,000 in 2010 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2010, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that $3,000 will prove to be uncollectible. On March 4, 2011, the credit manager authorizes a write-off of the $1,000 balance owed by A. Noonan. Instructions (a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2010. (b) Show the balance sheet presentation of accounts receivable on December 31, 2010. (c) On March 4, before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $2,000. Make the appropriate entry to record the write-off of the Noonan account. Also show the balance sheet presentation of accounts receivable before and after the write-off.

Allowance for Doubtful Accounts is a _____________ account which is ______________ from Accounts Receivable on the balance sheet.

Accounts receivable, which are also referred to as ______________ receivables, are amounts owed by customers on account.

Bad Debts Expense is considered