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Exam 8: Reporting and Analyzing Receivables

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Question 121

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Record the following transactions in general journal form for the Newell Company. July 1 Received a $9,000, 8%, 3-month note, dated July 1, from Lois Patton in payment of her open account. Oct. 1 Received notification from Lois Patton that she was unable to honor her note at this time. It is expected that Patton will pay at a later date. Nov. 15 Received full payment from Lois Patton for note receivable previously dishonored.

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Question 122

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Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

A) when a credit sale is past due.
B) at the end of each accounting period.
C) whenever a pre-determined amount of credit sales have been made.
D) when an account is determined to be uncollectible.

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Question 123

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

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $34,000. If the balance of the Allowance for Doubtful Accounts is $9,000 debit before adjustment what is the amount of bad debt expense for that period?

If an account is collected after having been previously written off

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the balance sheet.

Which permits partial derecognition of receivables?

The term "receivables" refers to

Under the direct write-off method, no attempt is made to match bad debt expense to sales revenues in the same accounting period.

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

Net credit sales for the month are $750,000. The accounts receivable balance is $160,000. The allowance is calculated as 5% of the receivables balance using the percentage-of-receivables basis. If the Allowance for Doubtful Accounts has a credit balance of $5,000 before adjustment, what is the balance after adjustment?

The interest on a $9,000, 10%, 1-year note receivable is

At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit). During the period, it had net credit sales of $650,000 and collections of $590,000. It wrote off as uncollectible accounts receivable of $5,000. However, a $3,000 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $20,000 at the end of the period. Instructions (a) Prepare the entries to record sales and collections during the period. (b) Prepare the entry to record the write-off of uncollectible accounts during the period. (c) Prepare the entries to record the recovery of the uncollectible account during the period. (d) Prepare the entry to record bad debts expense for the period. (e) Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts. (f) Calculate the net realizable value of the receivables at the end of the period.

The interest on a $5,000, 10%, 1-year note receivable is

All of the following statements regarding the financial statement presentation of receivables are true except:

The two key parties to a promissory note are the

Two methods of accounting for uncollectible accounts are the

The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

The Allowance for Doubtful Accounts is a liability account.

Bad Debt Expense is reported on the income statement as