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Exam 7: Accounts and Notes Receivable

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Question 31

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The ____________________ of a note is the day the principle plus interest of a note must be repaid.

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Question 32

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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:

A) Coke has the better turnover for both years.
B) Pepsi has the better turnover for both years.
C) Coke's turnover is improving.
D) Coke's credit policies are too loose.
E) Coke is collecting its receivables more quickly than Pepsi in both years.

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

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Question 33

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Chiller Company has credit sales of $5.60 million for year 2013.Chiller estimates that 1.32% of the credit sales will not be collected.Historically,4% of outstanding accounts receivable is uncollectible.On December 31,2013,the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561.Chiller 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: $\begin{array}{ccc}\text { December } 31,2013 & \text { Age of Accounts } & \text { Expected Percent } \\\text { Accounts Receivable } & \text { Receivable } & \text { Uncollectible } \\ 1,095,000 & \text { Not yet due } & 0.85 \% \\322,550 & 1 \text { to } 30 \text { days past due } & 1.42 \\84,700 & 31 \text { to } 60 \text { days past due } & 7.60 \\ 50,420 & 61 \text { to } 90 \text { days past due } & 42.50 \\ 12,500 & \text { Over } 90 \text { days past due } & 81.00\end{array}$ Assuming the company uses the aging of accounts receivable method,what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

Corona Company has credit sales of $4.60 million for year 2014.The company estimates that 2% of sales 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: $\begin{array}{ccc}\text { December 31,2014}&\text { Age of Accounts}&\text { Expected Percent}\\\text { Accounts Receivable}&\text { Receivable}&\text { Uncollectible}\\\$ 720,000 & \text { Not yet due } & 1.05 \% \\252,000 & 1 \text { to } 30 \text { days past due } & 1.80 \\ 49,600 & 31 \text { to } 60 \text { days past clue } & 6.30 \\ 14,100 & 61 \text { to } 90 \text { days past due } & 31.75 \\2,850 & \text { Over } 90 \text { days past due } & 66.00\end{array}$ Assuming the company used the percent of sales method determine the amount that should be recorded for bad debt expense on December 31,2014.

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

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.

Writing off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit _______________________ and credit accounts receivable.

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

The accounts receivable turnover is calculated by:

When using the allowance method of accounting for uncollectible accounts,the entry to write off Harold's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable- Harold.

The quality of receivables refers to the likelihood of collection without loss.

Paoli Pizza bought $5,000 worth of merchandise from TechCom and signed a 90-day,10% promissory note for the $5,000.TechCom's journal entry to record the sales portion of the transaction is:

The maturity date of a note receivable:

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

The following information is from the annual financial statements of Nancy Company. $\begin{array} { l c c r } & 2013 & 2012 & 2011 \\\text { Net sales } & \$ 3 0 7 , 0 0 0 & \$ 2 3 8 , 0 0 0& \$ 2 8 5 , 0 0 0 \\\text { Accounts receivable, net (year-end) } & 47,900 & 45,700 & 42,400\end{array}$ What is the accounts receivable turnover ratio for 2012?

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.

On December 31 of the current year,a company's unadjusted trial balance included the following: Accounts Receivable,debit balance of $88,790; Allowance for Doubtful Accounts,credit balance of $1,245.What amount should be debited to Bad Debts Expense,assuming 4% of outstanding accounts receivable at the end of the current year are considered uncollectible?

If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off,the entry to record the write-off against the allowance account results in:

Temper 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 debit balance of $2,575.Temper 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: $\begin{array}{ccc}\text { December } 31,2013 & \text { Age of Accounts } & \text { Expected Percent } \\\text { Accounts Receivable } & \text { Receivable } & \text { Uncollectible }\\ \$620,000 & \text { Not yet due } & 1.05 \% \\248,000 & 1 \text { to } 30 \text { days past due } & 1.80 \\ 49,600 & 31 \text { to } 60 \text { dlays past due } & 6.30 \\ 24,800 & 61 \text { to } 90 \text { days past due } & 31.75 \\4,960 & \text { Over } 90 \text { days past due } & 66.00\end{array}$ Assuming the company uses the percent of accounts receivable method,what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry?

A company that uses the allowance method to account for its bad debts had credit sales of $740,000 in 2013,including a $720 sale to Linda Paul.On December 31,2013,the company estimated its bad debts at 1.5% of its credit sales.On June 1,2014,the company wrote off as uncollectible the $720 account of Linda Paul; and on December 21,2014,Linda Paul unexpectedly paid her account in full.Prepare the necessary journal entries (a)on December 31,2013,to reflect the estimate of bad debts expense; (b)on June 1,2014,to write off the bad debt; and (c)on December 21,2014,to record the unexpected collection.