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Exam 7: Accounting for Receivables

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Question 91

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The person to whom a note is payable to is known as the ______________.

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Question 92

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A company has the following unadjusted account balances at December 31, of the current year: Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance). This company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year-end: a. Calculate the amount of the allowance for doubtful accounts that should appear on the December 31 of the current year balance sheet. b Prepare the adjusting journal entry to record bad debts expense for the current year.

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Question 93

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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.

When a company holds a large number of notes receivable, it sometimes sets up a controlling account and a subsidiary ledger for notes.

Companies can report a credit card expense as a discount deducted from sales or as a selling expense.

The person who signs a note receivable and promises to pay the principal and interest is the:

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: $\begin{array}{|l|l|r|}\hline &{\text { Debit }} &{\text { Credit }} \\\hline \text { Cash sales } & & \$ 88,000 \\\hline \text { Credit sales } & & 275,000 \\\hline \text { Accounts receivable } & \$ 96,000 & \\\hline \text { Allowance for doubtful accounts } & & 1,000 \\\hline\end{array}$ Prepare the adjusting entry to estimate bad debts under each of the following separate situations. a. Bad debts are estimated to be 2.5% of credit sales. b. An aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

Corona Company has credit sales of $4.60 million for year 2014. The company estimates that 1.42% of accounts receivable will be uncollectible. On December 31, 2014, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $13,164. Corona prepares a schedule of its December 31, 2014, 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: $\begin{array}{ccc}\text { December } 31,2014 & \text { Age of Accounts } & \text { Expected Percent } \\\text { Accounts Receivable } & \text { Receivable } & \text { Uncollectible }\\\hline\$ 720,000 & \text { Not yet due } & 1.05 \% \\252,000 & 1 \text { to } 30 \text { days past due } & 1.80 \\49,600 & 31 \text { to } 60 \text { days past due } & 6.30 \\14,100 & 61 \text { to } 90 \text { days past due } & 31.75 \\2,850 & \text { Over } 90 \text { days past due } & 66.00\end{array}$ Assuming the company uses the percent of accounts receivable method, determine the amount that should be recorded for bad debt expense on December 31, 2014.

During a given year, a company had net sales of $500,000 and average accounts receivable of $80,000. Its accounts receivable turnover is equal to 6.25.

The amount due on the date of maturity for a $6,000, 60-day, 8%, note receivable is: