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Exam 9: Receivables

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Question 61

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Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, 2010, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2010, Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no Sales Returns or Sales Discounts during the year. After the adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be

A) $1,200
B) $3,000
C) $3,600
D) $7,200

E) A) and B)
F) A) and C)

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Question 62

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The maturity value of a 12%, 60-day note for $5,000 is $5,600.

A) True
B) False

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Question 63

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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.

The equation for computing interest on an interest-bearing note is as follows: interest equals maturity value times interest rate times time.

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each. (a) (b)

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

When companies sell their receivables to other companies, the transaction is called factoring.

An alternative name for Bad Debt Expense is

Determine the due date and the amount of interest due at maturity on the following notes:

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value.

The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible.

a) The aging of Torme Designs shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible. b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year.

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment) , and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment) , and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Based on the following data and using a 365-day year, compute (a) the accounts receivable turnover and (b) the number of days' sales in receivables. The industry average is a collection period of once every 20 days, and the number of days' sales in receivables averages 25. (c) Comment on this situation.

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

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?