Test bank accounting 25th chapter 9 receivables

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment, and an analysis of customers' accounts indicates uncollectible receivables of $19

9. The direct write-off method records Bad Debt Expense in the year the specific account receivable is

14. When using the estimate based on sales method, the entry to record uncollectible accounts expense includes

a credit to the Accounts Receivable account

True    False

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

17. At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of

$250.  The net credit sales for the period total $500,000.  If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is

20. 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

True    False

21. 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. True    False

22. The balance in the Allowance for Doubtful Accounts account at the end of the year includes  the total of all accounts written-off since the beginning year

True    False

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

34. When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

42. The receivable that is usually evidenced by a formal instrument of credit is a(n) 

45. The term "receivables" includes all

A. money claims against other entities

B. merchandise to be collected from individuals or companies

C. cash to be paid to creditors

D. cash to be paid to debtors

46. When does an account become uncollectible?

A. when accounts receivable is converted into notes receivable

B. when discount is availed on notes receivable

C. there is no general rule for when an account becomes uncollectible

D. at the end of the fiscal year

48. The direct write-off method of accounting for uncollectible accounts

A. emphasizes balance sheet relationships

B. is often used by small companies and companies with few receivables

C. emphasizes cash realizable value

D. emphasizes the matching of expenses with revenues

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

A. at the end of each accounting period

B. when a credit sale is past due

C. whenever a pre-determined amount of credit sales have been made

D. when an account is determined to be worthless

50. An alternative name for Bad Debt Expense is

A. Collection Expense

B. Credit Loss Expense

C. Uncollectible Accounts Expense

D. Deadbeat Expense

51. Two methods of accounting for uncollectible accounts are the

A. direct write-off method and the allowance method

B. allowance method and the accrual method

C. allowance method and the net realizable method

D. direct write-off method and the accrual method

54. The Lowery Co uses the direct write-off method of  accounting for uncollectible accounts receivable.  Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible The entry to write off this account  would be which of the following?:

A. debit Allowance for Doubtful Accounts; credit Accounts Receivable

B. debit Sales Returns and Allowance, credit Accounts Receivable

C. debit Bad Debt Expense; credit Allowance for Doubtful Accounts

D. debit Bad Debt Expense; credit Accounts Receivable

55. 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. Uncollectible Accounts Receivable

B. Accounts Receivable

C. Allowance for Doubtful Accounts

D. Bad Debts Expense

56. 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?

A. Uncollectible Accounts Expense

B. Allowance for Doubtful Accounts

C. Accounts Receivable

D. Interest Expense

57. After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance

of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000.  What is the net realizable value ofthe accounts receivable?

59. On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the

A. Uncollectible accounts expense for the year

B. total of the accounts receivables written-off during the year

C. total estimated uncollectible accounts as of the end of the year

D. sum of all accounts that are past due

60. What is the type of account and normal balance of Allowance for Doubtful Accounts? 

A. Contra asset, credit

A. a customer's account becomes past due

B. an account becomes bad and is written off

C. a sale is made

D. management estimates the amount of uncollectibles

62. A debit balance in the Allowance for Doubtful Accounts

A. is the normal balance for that account

B. indicates that actual bad debt write-offs have been less than what was estimated

C. cannot occur if the percentage of receivables method of estimating bad debts is used

D. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts

63. To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a 

A. debit to Bad Debs Expense and a credit to Allowance for Doubtful Accounts

B. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts

C. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable

D. debit to Loss on Credit Sales and a credit to Accounts Receivable

65. Tanning Company analyzes its receivables to estimate bad debt expense The accounts receivable balance is

$390,000 and credit sales are $1,300,000 An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible What adjusting entry will Tanning Company make if the

Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? 

A. Bad Debt Expense        17,000

       Allowance for Doubtful Accounts       17,000

B. Bad Debt Expense        19,500

        Allowance for Doubtful Accounts       19,500

C. Bad Debt Expense        22,000

        Allowance for Doubtful Accounts       22,000

D. Bad Debt Expense        65,000

       Allowance for Doubtful Accounts        65,000

66. You have just received notice that a customer of yours with an Account Receivable balance of $100 has

gone bankrupt and will not make any future payments.  Assuming you use the allowance method, the entry you

make is to

A. debit Bad Debt Expense and credit Allowance for Doubtful Accounts

B. debit Bad Debt Expense and credit Accounts Receivable

C. debit Allowance for Doubtful Accounts and credit Accounts Receivable

D. debit Allowance for Doubtful Accounts and credit Bad Debt Expense

68. An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals

$7,900.  If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the  bad debt

69. An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals

$6,400.  If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

A. debit to Bad Debt Expense for $7,700

B. debit to Bad Debt Expense for $6,400

C. debit to Bad Debt expense for $5,100

D. credit to Allowance for Doubtful Accounts for $1,300

70. An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals

$4,000.  If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

A. debit to Allowance for Doubtful Accounts for $3,200

B. debit to Bad Debt Expense for $3,200

C. debit to Allowance for Doubtful Accounts for $4,000

D. credit to Allowance for Doubtful Accounts for $4,000

71. The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

A. will increase net income in the period it is collected

B. will decrease net income in the period it is collected

C. does not affect net income in the period it is collected

D. requires a correcting entry for the period in which the account was written off

72. Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700.  Which of the following entries records the proper adjustment for Bad Debt Expense?

A. debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600

B. debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800

C. debit Bad Debt Expense $21,800; credit Allowance for Doubtful Accounts, $21,800

D. debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600

73. Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment),

74. 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?

A. debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600

B. debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400

C. debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600

D. debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600

75. At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $760.  During the year, $120 of previously written-off accounts were reinstated and accounts totaling $740 are written-off as uncollectible.  The end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be

A. credit to Bad Debt Expense

B. credit to Accounts Receivable

C. debit to Allowance for Doubtful Accounts

D. debit to Accounts Receivable

77. 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 

A. Bad Debt Expense and credit Accounts Receivable

B. Bad Debt Expense and credit Allowance for Doubtful Accounts

C. Allowance for Doubtful Accounts and credit Accounts Receivable

D. Accounts receivable and credit Allowance for Doubtful Accounts

79. Abbott Company uses the allowance method of accounting for uncollectible accounts.  Abbott estimates that3% 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. total current assets are reduced

B. total expenses for the period are increased

C. net realizable value of accounts receivable increases

D. there is no effect on total current assets or total expenses

A. debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600

B. debit Allowance for Doubtful Accounts $43,200; credit Bad Debt Expense, $43,200

C. debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200

D. debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600

82. Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment) The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to

be $31,900.  Which of the following adjusting entries is needed to record the Bad Debt Expense for the year? 

A. debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200

B. debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200

C. debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600

D. debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600

83. Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment),

84. 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? 

A. debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800

B. debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200

C. debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800

D. debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800

85. When using the allowance method to estimate uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible.  The Allowance for Doubtful Accounts has a debit balance of $110.  The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

87. Allowance for Doubtful Accounts is classified as a(n) and has a normal balance

A. owners’ equity, credit

B. contra-asset, debit

C. owners’ equity, debit

D. contra-asset, credit

89. When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method

A. uses a percentage of sales method to estimate uncollectible accounts

B. is used primarily by large companies with many receivables

C. is used primarily by small companies with few receivables

D. uses an allowance account

90. When a company uses the allowance method of accounting for uncollectible receivables, which entry wouldnot be found in the general journal?

A. Bad Debt Expense        500

  Allowance for Doubtful Accounts          500

B. Bad Debt Expense       500

   Accounts Receivable - Bob Smith         500

C. Cash       300

Allowance for Doubtful Accounts     200

       Accounts Receivable - Bob Smith      500

A. A credit to Bad Debt Expense

B. A debit to Bad Debt Expense

C. A debit to Allowance for Doubtful Accounts

D. A credit to Allowance for Doubtful Accounts

94. A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account.  The face value of the note is

96. Interest on a note can be calculated without knowledge of the

A. fair value of the note

100. A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity.  The journal entry to recognize this event is

A. debit Cash, $6,120; credit Notes Receivable, $6,120

B. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Receivable, $120

C. debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060

D. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120

101. When referring to a note receivable or promissory note

A. the maker is the party to whom the money is due

B. the note is not considered a formal credit instrument

C. the note cannot be factored to another party

D. the note may be used to settle an accounts receivable

102. When a company receives an interest-bearing note receivable, it will

A. debit Notes Receivable for the maturity value of the note

B. debit Notes Receivable for the face value of the note

C. credit Notes Receivable for the maturity value of the note

D. credit Notes Receivable for the face value of the note

105. Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note Harper Company prepares financial statements on March 31.  What adjusting entry should be made before the financial statements can be prepared?

A. Cash       200

       Interest Revenue       200

B.       Interest Receivable        800

       Interest Revenue       800

C. Interest Receivable        200

       Interest Revenue       200

D. Note Receivable       40,000

       Cash        40,000

106. On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company.  The terms of the note were $20,000 face value and 6% interest.  On October 30, the journal entry to record the collection of the note should include a

A. credit to Notes Receivable for $20,300

B. debit to Interest Receivable for $300

C. credit to Interest Revenue for $300

D. debit to Notes Receivable for $20,000

107. Current assets are usually listed in order

A. of the due date

B. of the size

C. alphabetically

D. of liquidity

108. Accounts Receivable Turnover measures

A. how frequently during the year the accounts receivable are converted to cash

B. the number of days of accounts receivable outstanding

C. the fair market value of accounts receivable

D. the efficiency of the accounts payable function

110. Given the following information, compute Accounts Receivable Turnover:

Gross Sales:     $150,000 Accounts Receivable, Beginning of Year:   $18,000

Net Sales:        $135,000 Accounts Receivable, End of Year:       $22,000

Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively

Determine the net realizable value of accounts receivable after adjustment (Hint: Determine the amount of the

adjusting entry for bad debt expense and the adjusted balance Allowance of Doubtful Accounts.)

A. $550,000

B. $544,500

C. $525,000

113. Match each of the following terms associated with the best description of that term. 

1. The difference between Accounts Receivable

and Allowance for Doubtful Accounts. 

     AccountsReceivable  

2. A list of customer accounts sorted by age

3. Operating expense recorded as a result of

receivables becoming uncollectible

     Allowance forDoubtful Accounts  

4. A contra asset that represents the amount of

estimated uncollectible receivables at a specific

date

     Direct Write-off

Method  

5. A receivable created from selling merchandise

or services on account      Bad Debt Expense   

6. All money claims against other entities. 

     Net Realizable

Value  

7. Another term for selling receivables.       Factoring  

8. Records bad debt expense only when a specific

customer’s account is deemed worthless.       Receivables  

9. Measures how frequently during the year

accounts receivables are being turned into cash.       Accounts ReceivableTurnover  

114. Match each of the following terms associated with notes receivable with the best description of that term. 

1. The amount due when the note is paid off. 

     NotesReceivable  

2. The amount charged for using the money of another

party

     MaturityValue  

3. The time between the date a note is issued and the

4. The stated rate charged for using the money of

5. A formal written instrument that represents amounts

6. The party promising to pay a note      Face Amount  

7. The dollar amount listed on the promissory note.       Maker  

8. A note that is not paid when it is due       Term  

115. Other than accounts receivable and notes receivable, name other receivables that might be included in the general ledger

116. Discuss the similarities and differences between accounts receivables, notes receivables and other receivables.

119. Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.

April 1  Sold merchandise on account to Jim Dobbs, $7,200.  The cost of the merchandise is $5,400

June 10  Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.Oct 11  Reinstated the account of Jim Dobbs for and received cash in full payment. 

120. Stephanie Roe utilizes the direct write-off method of accounting for uncollectible receivables On

September 15th she is notified by the attorneys for Jacob Marley that Jacob Marley is bankrupt and no cash is expected in the liquidation of Jacob Marley Write off the $675 of accounts receivable due Jacob Marley. 

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

(b) Credit balance of $500 in Allowance for Doubtful Accounts  just prior to adjustment.  Uncollectible receivables are estimated at 2% of

credit sales, which totaled $1,000,000 for the year.

124. Journalize the following transactions using the allowance method of accounting for uncollectible

receivables

April 1  Sold merchandise on account to Jim Dobbs, $7,200.  The cost of the merchandise is $5,400

June 10  Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.Oct 11  Reinstated the account of Jim Dobbs and received cash in full payment

Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable

Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable

127. 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 net sales for the year total $300,000.  Bad debt expense is estimated

at 2.5% of net sales

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of

Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value

Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable

Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable

130. Discount Mart utilizes the allowance method of accounting for uncollectible receivables On December 12th the company receives a $550 check from Chad Thomas in settlement of Thomas’ $1,100 outstanding accounts receivable Due to Thomas’ failing health he is closing his company and is expecting to make no further payments to Discount Mart Journalize this declaration.

133. Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible.  Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

a Determine the due date of the note.

b Determine the maturity value of the note.

c Journalize the entry to record the receipt of the payment of the note at maturity.

Fill in the blanks related to the characteristics of a promissory note:

1 The party promising to pay the note is called the .

2 The amount for which the note is written is called the _ amount.

3 The date the note is to be paid is the _ date.

4 The time between the date when a note is written and the time it must be paid is called the _ of the note.

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

(2) Journalize the write-offs for 2011 under the allowance method.  Also, journalize the adjusting entry for uncollectible receivables

assuming the company made $2,400,000 of credit sales during 2011 and the industry average for uncollectible receivables is 1.50% of credit sales.

141. Journalize the following transactions in the accounts of Simmons Company:

Mar  1            Received a $60,000, 60-day, 6% note dated March 1 from Bynum Company                         on account

Mar 18            Received a $25,000, 60-day, 9% note dated March 18 from Solo Company on                         account

Apr 30            The note dated March 1 from Bynum Company is dishonored, and the                              

customer’s account is charged for the note, including interest

May 17       The note dated March 18 from Solo Company is dishonored, and the                               customer’s account is charged for the note, including interest

July 29            Cash is received for the amount due on the dishonored note dated March 1                         plus interest for 90 days at 8% on the total amount debited to Bynum                               Company on April 30.Aug 23            Wrote off against the allowance account the amount charged to Solo                              

Company on May 17 for the dishonored note dated March 18

142. Financial Statement data for the years ended December 31 for Parker Corporation is as follows:

      2012      2011

Net Sales        $2,595,600      $2,409,500

Accounts Receivable

Beginning of the year      $  390,000            $400,000

End of the year      434,000            390,000

a)  Determine the accounts receivable turnover for 2012 and 2011

b)  Determine the number of days’ sales in receivables for 2012 and 2011

c)  Does the change in accounts receivable turnover and number of days’ sales in receivables from 2011 to 2012indicate a favorable or unfavorable trend.?

143. Journalize the following transactions for Solley Company that occurred during 2011 and 2012

November 14, 2011  Received a $4,800.00, 90-day, 9%  note from Alan Hibbetts in payment of his account.December 31, 2011  Accrued interest on the Hibbetts note

February 12, 2012  Received the amount due from Hibbetts on his note

144. For each of the following notes receivables held by Rogers Company determine the interest revenue to be reported on the income statements for 2011 and 2012.  Round answers to nearest whole dollar.

Date Face Rate Time 2011 Interest Revenue 2012 Interest Revenue

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.   

146. For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded in 2014, the balance in Allowance for Doubtful Accounts after adjustment at December

31, 2014, and the net realizable value of Accounts Receivable at December 31, 2014:

a)  Based on an analysis of Simmon’s Company’s $380,000 balance in Accounts Receivable at December 31,

2014,  is was estimated that $15,500 will be uncollectible There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment

b) Blake Company had net credit sales of $900,000 during 2014, and has an Accounts Receivable balance of

$425,000 at December 31, 2014, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment.  Blake estimates Bad Debt Expense as 3/4 of 1% of net credit sales

c)  Hidgon Inc has a balance of $812,000 in Accounts Receivable at December 31, 2014.  An analysis of those receivables shows $24,000 will probably not be collected.  Before adjusting entries are prepared, the Allowancefor Doubtful Accounts has a debit balance of $750

a.  Determine the due date of the note

b.  Determine the interest

c.  Determine the maturity value of the note

d.  Journalize the entry to record the issuance of the note by Potts on Feb 3

e.  Journalize the entry to record the receipt of payment of the note at maturity by Valley Co. 

  (1) receipt of the note by the payee, and

  (2) receipt by the payee of the amount due on the note at maturity Round answers to the nearest $1.

151. Journalize the following transactions (Assume a 360-day year when calculating interest.):

Mar 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co on account.

May 30 The note of March 1 was dishonored.

153. For a business that uses the allowance method of accounting for uncollectible receivables:

  (1) Record the adjusting entry at December 31, 2010,  the end of the fiscal year, to record the bad debt expense.    The accounts

receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of $600.  Analysis of the receivables indicates uncollectible receivables of $18,000.

  (2) In March, 2011, the $350 owed by Fronk Co on account is written off as uncollectible.

  (3) In November, 2011, $200 of the Fronk Co account is reinstated and payment of that amount is received.

  (4) In December, 2011, $400 is received on the $600 owed by Dodger Co and the remainder is written off as uncollectible.

a.  Compute the accounts receivable turnover for 2010.

b.  Compute the number of days’ sales in receivable at the end of 2010.

155. Journalize the following transactions of Upton Drugs:

July 8 Received a $180,000, 90-day 8% note dated July 8 from Miracle Chemical on account.

Chapter 9 Receivables Key

9. The direct write-off method records Bad Debt Expense in the year the specific account receivable is

14. When using the estimate based on sales method, the entry to record uncollectible accounts expense includes

a credit to the Accounts Receivable account

17. At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of

$250.  The net credit sales for the period total $500,000.  If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is

20. 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

TRUE

21. 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. 

FALSE

22. The balance in the Allowance for Doubtful Accounts account at the end of the year includes  the total of all accounts written-off since the beginning year