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Exam 7: Reporting and Analyzing Receivables

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Question 1

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Teller,a calendar year company,purchased merchandise from TechCom on October 17 of the current year.TechCom accepted Teller's $4,800,90-day,10% note as payment.What entry should TechCom make on January 15 of the next year when the note is paid,assuming an adjusting entry for interest was made for interest on December 31?

A)
B)
C)
D)
E)

F) B) and D)
G) All of the above

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Question 2

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Acme Company has credit sales of $3.10 million for year 2013.Accounts Receivable total $947,360 and the company estimates that 2% of accounts receivable will remain uncollectible.Historically,.9% of sales have been uncollectible.On December 31,2013,the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $2,575.Acme prepared a schedule of its December 31,2013,accounts receivable by age.Based on past experience,it estimates the percent of receivables in each age category that will become uncollectible.This information is summarized here: Assuming the company uses the percent of accounts receivable method,what is the amount that Acme will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

A) $18,947.20
B) $16,372.20
C) $23,024.40
D) $27,900.00
E) $21,522.20

F) A) and D)
G) A) and E)

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Question 3

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Prepare general journal entries for the following transactions of Viking Company,assuming they use the allowance method to account for uncollectible accounts.

On August 1,2013,Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965.The note is due in 90 days and has an interest rate of 8%.What would be the total amount collected at the maturity date?

A company used the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit.Based on past experience,the company estimates 0.5% of credit sales to be uncollectible.What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

A 90-day note issued on April 20 has a maturity date of:

A company has sales of $350,000 and estimates that 0.5% of its sales are uncollectible.The company's reported amount of bad debts expense is $1,750.

Calculate the total amount of interest that would be owed on a $9,000,60-day,9% note receivable.

Pepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year.Coca-Cola's turnover was 9.3 for this year and 9.3 for last year.These results imply that:

On November 15,2013,Betty Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $138,460.The note is due in 90 days and has an interest rate of 7.5%.What would be the amount required for the December 31,2013,adjusting journal entry?

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

Temper Company has credit sales of $3.10 million for year 2013.Temper estimates that .9% of the credit sales will not be collected.On December 31,2013,the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $2,222.Temper prepares a schedule of its December 31,2013,accounts receivable by age.Based on past experience,it estimates the percent of receivables in each age category that will become uncollectible.This information is summarized here: Assuming the company uses the aging of Accounts Receivable method,what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

Twin Cities Consulting uses the allowance method.Prepare journal entries to record the following transactions that took place during 2014 and 2015.

Prepare general journal entries for the following transactions of this company for the current year:

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

Crystal Products allows customers to use bank credit cards to charge purchases.The bank used by Crystal Products processes all bank credit cards in exchange for a 3% processing fee.All credit card receipts deposited are credited to the company account on the day of deposit.Assume that on January 18,Crystal Products sold and deposited $19,000 worth of bank credit card receipts.Prepare the general journal entry to record this transaction.

Timmons Company had a January 1 credit balance in its Allowance for Doubtful Accounts of $7,000 for the current year.The following transactions and events affected the Allowance for Doubtful Accounts during the current year: What amount should appear in the allowance for doubtful accounts in the December 31 balance sheet for the current year?

As long as a company accurately records total credit sales information,it is not necessary to have separate accounts for specific customers.

The following information is from the annual financial statements of Nancy Company. -What is the accounts receivable turnover ratio for 2013?

A ____________________ is a signed promise to pay a specified amount of money either on demand or at a definite future date.