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Exam 8: Accounting for Receivables

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Question 41

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Determine the interest on the following notes: (a) $2,000 at 6% for 90 days. (b) $900 at 9% for 5 months. (c) $3,000 at 8% for 60 days (d) $1,600 at 7% for 6 months

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(a) $30.00 ($2,000 × .06 × 90/...

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Question 42

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The following data exists for Carley Company. Calculate the accounts receivable turnover and the average collection period for accounts receivable in days for 2018.

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Question 43

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When counting the exact number of days to determine the maturity date of a note, the date of issue is included but the due date is omitted.

On February 7, Jackson Company sold goods on account to Phillips Enterprises for $5,200, terms 2/10, n/30. On March 9, Phillips gave Jackson a 60-day, 12% promissory note in settlement of the account. Record the sale and the acceptance of the promissory note on the books of Jackson Company.

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Accounts receivable are the result of cash and credit sales.

Compute the maturity date and the maturity value associated with each of the following notes receivables. 1. A $15,000, 6%, 3-month note dated April 20. Maturity date ___________, Maturity value $____________. 2. A $25,000, 8%, 72-day note dated June 10. Maturity date ___________, Maturity value $____________. 3. An $8,000, 9%, 30-day note dated September 20. Maturity date ___________, Maturity value $____________.

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Wainwright Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred. Jan. 15 Made Wainwright credit card sales totaling $24,000. (There were no balances prior to January 15.) 20 Made Visa credit card sales (service charge fee 2%) totaling $7,000. Feb. 10 Collected $14,000 on Wainwright credit card sales. 15 Added finance charges of 1% to Wainwright credit card balance. Instructions (a) Journalize the transactions for Wainwright Stores. (b) Indicate the statement presentation of the financing charges and the credit card service charge expense for Wainwright Stores.

Which permits partial derecognition of receivables? IFRS:

When a note receivable is dishonored,

If a company fails to record estimated bad debts expense,

Bad Debt Expense is reported on the income statement as

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

When a note receivable is honored, Cash is debited for the note's

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

Morton Company had the following select transactions. Apr. 1, 2018 Accepted Remington Company's 1-year, 12% note in settlement of a $25,000 account receivable. July 1, 2018 Loaned $15,000 cash to Jenny Green on a 9-month, 10% note. Dec. 31, 2018 Accrued interest on all notes receivable. Apr. 1, 2019 Received principal plus interest on the Remington note. Apr. 1, 2019 Jenny Green dishonored its note: Morton expects it will eventually collect. Instructions Prepare journal entries to record the transactions. Morton prepares adjusting entries once a year on December 31.

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