FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Reporting and Analyzing Receivables

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

True/False

Review LaterAdd Note

Review Later

The notes receivable account of a business should include both the notes that haven't matured and the dishonored notes.

A) True
B) False

Correct Answer

verified

Show Answer

Question 42

Essay

Review LaterAdd Note

Review Later

Orman Co. sold $80,000 of accounts receivable to First Savings and incurred a 3% factoring fee. Prepare the journal entry for Orman Co. to record the sale.

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

The matching principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $90,000. Its accounts receivable turnover equals:

A promissory note:

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid, assuming interest was properly accrued at the previous December 31 year end?

The accounts receivable turnover is calculated by dividing average accounts receivable by net sales.

Each December 31, Kimura Company ages its accounts receivable to determine the amount of its adjustment for bad debts. At the end of the current year, management estimated that $16,900 of the accounts receivable balances would be uncollectible. The Allowance for Doubtful Accounts account had a debit balance of $1,200 before any year-end adjustment for bad debts. Prepare the adjusting journal entry that Kimura Company should make on December 31, of the current year, to estimate bad debts expense.

A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible. The estimated amount of bad debts expense is $3,500. $350,000 * 0.01 = $3,500

White Company allows customers to make purchases on credit. The terms of all credit sales are 2/10, n/30, and all sales are recorded at the gross price. Other customers can use a bank credit card where the bank deducts a 4% service charge for credit card sales and credits the bank account of White immediately when credit card receipts are deposited. White uses the perpetual inventory method and accounts for sales discounts using the net method. Prepare journal entries to record the following selected transactions and events.

When the maker of a note is unable or refuses to pay at maturity, the note is said to be ___________________.

Factoring receivables is beneficial to a seller for all of the following reasons except:

If Taylor Corp. receives a $10,000, 120-day, 6% note on October 1, 2016, the amount of interest that should be accrued on December 31, 2016, the end of Taylor's accounting period, is $200. $10,000 × .06 × 90/360 = $150; the remaining 30 days of interest will be recorded in the following year

A company has the following unadjusted account balances at December 31, of the current year; Accounts Receivable of $183,400 and Allowance for Doubtful Accounts of $1,600 (credit balance). The company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year-end: Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet.

The matching principle requires use of the allowance method of accounting for bad debts.

A company allows its customers to use bank credit cards to charge purchases. When customers use the credit cards, the net amount is deposited in the company's checking account, less a 2.5% service charge. Assume that on April 13, the company sold $20,000 worth of merchandise to customers who used credit cards. Prepare the company's journal entry to record the credit card sales for April 13 assuming the company deposited the receipts that same day.

On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from overdue customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full?

The Barron Company uses the percent of sales method of accounting for uncollectible accounts. Barron Company estimates that 1% of its $2,900,000 of credit sales will be uncollectible. If the balance of the allowance for doubtful accounts was a $4,000 credit before adjustment at the end of the year, prepare the adjusting entry Barron must record.

The process of using accounts receivable as security for a loan is known as pledging accounts receivable.

A company borrowed $10,000 by signing a 180-day promissory note at 9%. The maturity value of the note is: