Question 1

Which of the following statements concerning receivables is incorrect?

Accepted Answer

Notes receivable are usually listed separately from accounts receivable and may be listed first or second depending on their significance in relation to other receivables. They are not typically listed last.

Question 2

Putnam Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $105,000 (Cr.), respectively. An aging of accounts receivable indicated that $192,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Accepted Answer

The adjusting entry for bad debts is the difference between the expected uncollectible amount ($192,000) and the existing credit balance in the Allowance for Doubtful Accounts ($105,000), which is $87,000.

Question 3

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore honors the note on May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.

Accepted Answer

The answer of On March 9, Fillmore gave Camp Company...

Question 4

The interest rate specified on any note is for a

Accepted Answer

The interest rate specified on any note is commonly for a year. It is expressed in terms of an annual percentage rate (APR).

Question 5

Flint Distributors has the following transactions related to notes receivable during the last two months of the year.
Dec. 1 Loaned $12,000 cash to G. Kingsley on a 1-year, 6% note.
16 Sold goods to D. Jones, receiving a $2,400, 60-day, 7% note.
31 Accrued interest revenue on all notes receivable.
Instructions
Journalize the transactions for Flint Distributors.

Accepted Answer

The answer of Flint Distributors has the following transactions related...

Question 6

Record the following transactions for Turnbull Company.
1. On August 4, Turnbull sold merchandise on account to Tabor Company for $450, terms 2/10, n/30.
2. On August 7, Turnbull granted Tabor a sales allowance and reduced the cost of the merchandise by $50 because some of the goods were slightly damaged.
3. On August 12, Tabor paid the account in full.

Accepted Answer

The answer of Record the following transactions for Turnbull Company.
1....

Question 7

Patel Co. sells Christmas angels. Patel determines that at the end of December, it has the following aging schedule of Accounts Receivable:  
Compute the net receivables based on the above information at the end of December. (There was no beginning balance in the Allowance for Doubtful Accounts).

Accepted Answer

The answer of Patel Co. sells Christmas angels. Patel determines...

Question 8

On February 7, Camp Company sold goods on account to Fillmore Enterprises for $3,200, terms 2/10, n/30. On March 9, Fillmore gave Camp 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 Camp Company.

Accepted Answer

The answer of On February 7, Camp Company sold goods...

Question 9

Longbine Company's ledger at the end of the current year shows Accounts Receivable of $150,000.
Instructions
a. If Allowance for Doubtful Accounts has a credit balance of $3,000 in the trial balance and bad debts are expected to be 10% of accounts receivable, journalize the adjusting entry for the end of the period.
b. If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial balance and bad debts are expected to be 10% of accounts receivable, journalize the adjusting entry for the end of the period.

Accepted Answer

The answer of Longbine Company's ledger at the end of...

Question 10

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore dishonors the note on May 9. Record the entry that Camp would make when the note is dishonored, assuming that no interest has been accrued.

Accepted Answer

The answer of On March 9, Fillmore gave Camp Company...

Question 11

On February 1, Platt Company received a $9,000, 10%, four-month note receivable. The cash to be received by Platt Company when the note becomes due is

Accepted Answer

The amount of cash that will be received by Platt Company when the note becomes due is the sum of the principal amount ($9,000) and the interest that has accrued over the four-month period.

To calculate the interest accrued, we need to use the formula:

Interest = Principal x Rate x Time

In this case, the principal is $9,000 and the rate is 10%. The time is four months, which is equivalent to 4/12 = 1/3 of a year.

Therefore, the interest accrued is:

Interest = $9,000 x 10% x 1/3 = $300

Adding the interest to the principal, we get:

Cash to be received = $9,000 + $300 = $9,300

Therefore, the best choice is C.

Question 12

Compute the maturity value for each of the following notes receivable.
1. A $5,000, 6%, 3-month note dated July 20.
Maturity value $____________.
2. A $12,000, 9%, 150-day note dated August 5.
Maturity value $____________.

Accepted Answer

The answer of Compute the maturity value for each of...

Question 13

Rainey Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500. During August, the following transactions occurred.
Oct. 15 Sold $20,000 of accounts receivable to Good Factors, Inc. who assesses a 3% finance charge.
25 Made sales of $900 on VISA credit cards. The credit card service charge is 2%.
Instructions
Journalize the transactions.

Accepted Answer

The answer of Rainey Company has the following accounts in...

Question 14

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

Accepted Answer

The commission charged by a factor is a service charge expense and should be recorded as such. Option A, bad debts expense, is not applicable as the sale of accounts receivable is done to transfer the risk of bad debts to the factor. Option B, commission expense, is too general and does not specify that it is related to the sale of accounts receivable. Option C, loss on sale of receivables, is incorrect as the sale of accounts receivable should result in a gain, not a loss. Therefore, the best choice is D, service charge expense.

Question 15

At December 31, 2010, Grayson Company reported Accounts Receivable of $34,000 and Allowance for Doubtful Accounts of $3,500. On January 7, 2011, Duffy Enterprises declares bankruptcy and it is determined that the receivable of $1,200 from Duffy is not collectible.
1. What is the cash realizable value of Accounts Receivable at December 31, 2010?
2. What entry would Grayson make to write off the Duffy account?
3. What is the cash realizable value of Accounts Receivable after the Duffy account is written off?

Accepted Answer

The answer of At December 31, 2010, Grayson Company reported...

Question 16

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

Accepted Answer

The answer of Determine the interest on the following notes:
(a)...

Question 17

The accounts receivable turnover ratio is computed by dividing

Accepted Answer

The accounts receivable turnover ratio measures how many times a company's accounts receivable are collected and paid off over a period of time. The formula for calculating the ratio is net credit sales divided by average net accounts receivable. This means that answer choice B is the correct formula for calculating the ratio. Answer choices A, C, and D are incorrect because they either use total sales instead of net credit sales or use ending net accounts receivable instead of average net accounts receivable.

Question 18

The following data exists for Gilkey Company.  
Calculate the receivables turnover ratio and the average collection period for accounts receivable in days for 2010.

Accepted Answer

The answer of The following data exists for Gilkey Company....

Question 19

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Accepted Answer

When a note receivable is dishonored and the payee expects eventual collection, the entry includes debiting Accounts Receivable to record the amount expected to be collected in the future. This moves the balance from Notes Receivable, indicating the shift from a formal note back to a regular receivable.

Question 20

Kessler Co., makes a credit card sale to a customer for $600. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $360 at the end of the grace period, the interest charge is

Accepted Answer

First, we need to calculate how many months the balance is past the grace period:

$360 / $600 = 0.6

This means the balance has been unpaid for 0.6 months (or 18 days).

Next, we need to calculate the interest charge using the formula:

Interest = Balance x Rate x Time

where Rate is the monthly interest rate (1.5%) and Time is the number of months the balance has been unpaid (0.6).

Interest = $360 x 0.015 x 0.6 = $5.40

Therefore, the interest charge on the unpaid balance is $5.40. The answer is D.

Quiz 9: Accounting for Receivables

Which of the following statements concerning receivables is incorrect?

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore honors the note on May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.

The interest rate specified on any note is for a

Patel Co. sells Christmas angels. Patel determines that at the end of December, it has the following aging schedule of Accounts Receivable: Compute the net receivables based on the above information at the end of December. (There was no beginning balance in the Allowance for Doubtful Accounts).

On February 7, Camp Company sold goods on account to Fillmore Enterprises for $3,200, terms 2/10, n/30. On March 9, Fillmore gave Camp 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 Camp Company.

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore dishonors the note on May 9. Record the entry that Camp would make when the note is dishonored, assuming that no interest has been accrued.

On February 1, Platt Company received a $9,000, 10%, four-month note receivable. The cash to be received by Platt Company when the note becomes due is

Compute the maturity value for each of the following notes receivable. 1. A $5,000, 6%, 3-month note dated July 20. Maturity value $. 2. A $12,000, 9%, 150-day note dated August 5. Maturity value $.

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

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

The accounts receivable turnover ratio is computed by dividing

The following data exists for Gilkey Company. Calculate the receivables turnover ratio and the average collection period for accounts receivable in days for 2010.

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Kessler Co., makes a credit card sale to a customer for $600. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $360 at the end of the grace period, the interest charge is

Quiz 9: Accounting for Receivables

Which of the following statements concerning receivables is incorrect?

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore honors the note on May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.

The interest rate specified on any note is for a

Patel Co. sells Christmas angels. Patel determines that at the end of December, it has the following aging schedule of Accounts Receivable: Compute the net receivables based on the above information at the end of December. (There was no beginning balance in the Allowance for Doubtful Accounts).

On February 7, Camp Company sold goods on account to Fillmore Enterprises for $3,200, terms 2/10, n/30. On March 9, Fillmore gave Camp 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 Camp Company.

On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore dishonors the note on May 9. Record the entry that Camp would make when the note is dishonored, assuming that no interest has been accrued.

On February 1, Platt Company received a $9,000, 10%, four-month note receivable. The cash to be received by Platt Company when the note becomes due is

Compute the maturity value for each of the following notes receivable. 1. A $5,000, 6%, 3-month note dated July 20. Maturity value $____________. 2. A $12,000, 9%, 150-day note dated August 5. Maturity value $____________.

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

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

The accounts receivable turnover ratio is computed by dividing

The following data exists for Gilkey Company. Calculate the receivables turnover ratio and the average collection period for accounts receivable in days for 2010.

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Kessler Co., makes a credit card sale to a customer for $600. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $360 at the end of the grace period, the interest charge is

Compute the maturity value for each of the following notes receivable. 1. A $5,000, 6%, 3-month note dated July 20. Maturity value $. 2. A $12,000, 9%, 150-day note dated August 5. Maturity value $.