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Exam 8: Receivables

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Question 51

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Allowance for Doubtful Accounts is classified as an ________and has a normal ________balance.

A) owners' equity,credit
B) contra asset,debit
C) owners' equity,debit
D) contra asset,credit

E) A) and D)
F) None of the above

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Question 52

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At the end of the current year,Accounts Receivable has a balance of $90,000; Allowance for Doubtful Accounts has a credit balance of $850; and sales for the year total $300,000.Bad debt expense is estimated at 2.5% of sales. Determine a the amount of the adjusting entry for uncollectible accounts; b the adjusted balances of Accounts Receivable,Allowance for Doubtful Accounts,and Bad Debt Expense; and c the net realizable value of accounts receivable.

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Question 53

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Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Required: $\begin{array}{|l|r|}\hline \text { Customer } & \text { Amount } \\\hline \text { J. Jackson } & \$ 10,000 \\\hline \text { L. Stanton } & 9,500 \\\hline \text { C. Barton } & 13,100 \\\hline \text { S. Fenton } & 2,400 \\\hline \text { Total } & \$ 35,000 \\\hline\end{array}$ 1 Journalize the write-offs for the current year under the direct write-off method. 2 Journalize the write-offs for the current year under the allowance method.Also,journalize the adjusting entry for uncollectible receivables assuming the company made $2,400,000 of credit sales during the year and the industry average for uncollectible receivables is 1.50% of credit sales. 3 How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Dalton Company uses the allowance method to account for uncollectible receivables.Dalton has determined that the Irish Company account is uncollectible.To write off this account,Dalton should debit

On the basis of the following data related to assets due within one year for Simons Co.,prepare a partial balance sheet in good form at December 31.Show total current assets.

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

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 for year 2 to 2 decimal places.The industry average turnover is 20 times during the year,and the number of days' sales in receivables averages 25.c Comment on this situation.

One of the weaknesses of the direct write-off method is that it

Small companies can use either the direct write-off method or the allowance method.

The direct write-off method of accounting for uncollectible accounts

The journal entry to record a note received from a customer to replace an account is

Using the allowance method of accounting for uncollectible receivables,the entry to reinstate a specific receivable previously written off would include a

In accounting for uncollectible receivables,the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year before adjustment,and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000.Which of the following entries records the proper adjusting entry for bad debt expense?

At the end of a period before adjustment,Allowance for Doubtful Accounts has a credit balance of $5,000.The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000.The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000.

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

Given the following information,compute accounts receivable turnover:

When using the analysis of receivables method for estimating uncollectible receivables,the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.

For the fiscal years 1 and 2,Grange Co.reported the following: Year Ended December 31, $\begin{array}{l}\begin{array}{lll}\\\text { Sales }\\\text { Accounts receivable }\\\end{array}\begin{array}{lll}\underline { \text { Year 1} } \\\$ 44,123,486 \\749,321\end{array}\begin{array}{lll}\underline { \text { Year 2 } } \\\$ 34,1 2 4 , 9 6 1\\719,365\\\end{array}\end{array}$ a.Compute the accounts receivable turnover for Year 2.Round to two decimals. b.Compute the number of days' sales in receivable at the end of Year 2.Round to two decimals.

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.