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Exam 5: Receivables and Sales

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Question 1

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On February 23,a company provides services on account to a customer for $4,500.The customer pays in full for those services on March 4.Record the transactions for the company when the services are provided on February 23 and when the cash is collected on March 4.

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Accounts receivable represent the amount of cash owed to the company by its customers from the sale of products or services on account.

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A sale on account for $1,000 offered with terms 2/10,n/30 means that the customers will get a $2 discount if payment is made within 10 days;otherwise,full payment is due within 30 days.

A company has the following balances on December 31,2015,before any year-end adjustments: Accounts Receivable = $80,000;Allowance for Uncollectible Accounts = $1,100 (credit).The company estimates uncollectible accounts based on an aging of accounts receivable as shown below: Record the adjustment for uncollectible accounts on December 31,2015.

A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales Allowances.

At the end of the year,a company reports a balance in its Allowance for Uncollectible Accounts of $1,400 (credit)before any year-end adjustment.The company estimates future uncollectible accounts to be 3% of credit sales for the year.Credit sales for the year total $280,000.Record the adjustment for the allowance for uncollectible accounts using the percentage-of-credit-sales method.

Which of the following statements is true with respect to the percentage-of-credit-sales method for estimating uncollectible accounts?

Beverage International reports net credit sales for the year of $240,000.The company's accounts receivable balance at the beginning of the year equaled $20,000 and the balance at the end of the year equaled $30,000.What is Beverage International's receivables turnover ratio?

At December 31,Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and $970 (debit) in Allowance for Uncollectible Accounts.An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable.Bad debt expense for the year should be:

At the beginning of the year,a company had an Allowance for Uncollectible Accounts of $22,000.By the end of the year,actual bad debts total $24,000.What is the balance of the Allowance for Uncollectible Accounts after the write-offs (before any year-end adjustment)?

A company reports the following amounts at the end of the year: Total sales = $500,000;sales discounts = $10,000;sales returns = $30,000;sales allowances = $20,000.Compute net revenues.

When using an aging method for estimating uncollectible accounts:

Under the direct write-off method,what adjustment is made at the end of the year to account for possible future bad debts?

Notes receivable are similar to accounts receivable but are more formal credit arrangements evidenced by a written debt instrument,or note.

When $2,500 of accounts receivable are determined to be uncollectible,which of the following should the company record to write off the accounts using the allowance method?

A sale on account is recorded as a debit to Service Revenue and a credit to Accounts Receivable.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Recognizes bad debts when accounts become uncollectible.

The average collection period shows the approximate number of days the average accounts receivable balance is outstanding.

Under the allowance method,when a company writes off an account receivable as an actual bad debt,it reduces total assets.

Accounts receivable are normally reported at the: