Question 1

Finney had the following transactions during March 2012. 1. Finney sold and delivered $14,000 of merchandise to LJ Enterprises, terms 2/10, n30. 2. LJ Enterprises also ordered an additional $5,000 worth of goods on the last day of the month. 3. Finney lent $1,000 to its company president who promised to repay the loan on the 15^th day of the next month. 4. Finney sold old storage sheds to Alt Traders on 3/31. Alt Traders gave a $2,500 promissory note to Finney agreeing to pay for the sheds in 3 months. 5. Other current assets totaled $50,000. Finney received no cash arising from the above transactions during March. Based only on the above transactions, and ingnoring beginning balances, compute the percentage Accounts Receivable is of the total current assets as of month end.

Accepted Answer

The answer of Finney had the following transactions during March...

Question 2

Compute the maturity value as indicated for each of the following notes receivable.

Accepted Answer

The answer of Compute the maturity value as indicated for...

Question 3

Determine the interest on the following notes:
(a) $5,000 at 6% for 90 days.
(b) $800 at 9% for 5 months.
(c) $6,000 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 4

When customers make purchases with a national credit card, the retailer

Accepted Answer

When customers make purchases with a national credit card, the retailer is not involved in the collection process. The credit card company handles the collection of payments from customers, relieving the retailer of this responsibility.

Question 5

Benson Products uses the allowance method in estimating uncollectible accounts. On December 31, 2014, the balance in Accounts Receivable was $650,000. An aging analysis of the accounts receivable indicated that $29,500 in accounts are expected to be uncollectible.
Prepare the adjusting entry to record estimated bad debts expense using the percentage of receivables basis under each of the following independent assumptions:
(a) Allowance for Doubtful Accounts has a credit balance of $3,000 before adjustment.
(b) Allowance for Doubtful Accounts has a debit balance of $830 before adjustment.

Accepted Answer

The answer of Benson Products uses the allowance method in...

Question 6

Receivables might be sold to

Accepted Answer

Selling receivables can generate cash quickly for a company, which can be used to meet operating or investment needs. Lengthening the cash-to-cash operating cycle (A) is not a desirable outcome for a company as it can lead to cash flow problems. Deep discounts on cash realizable value (B) would result in the company receiving less cash than the actual value of the receivables, which is not a financially beneficial decision. Financing companies at an amount greater than cash realizable value (D) would also not be a financially sound decision as it would result in the company paying more than the value of the receivables.

Question 7

Trent Distributors has the following transactions related to notes receivable during the last two months of the year.
Dec. 1 Loaned $16,000 cash to E. Kinder on a 1-year, 6% note.
16 Sold goods to J. Jones, receiving a $4,800, 60-day, 7% note.
31 Accrued interest revenue on all notes receivable.
Instructions
Journalize the transactions for Trent Distributors.

Accepted Answer

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

Question 8

If a company sells its accounts receivables to a factor

Accepted Answer

When a company sells its accounts receivables to a factor, the seller typically pays a commission to the factor for this service. The factor then takes on the responsibility of collecting the receivables.

Question 9

A captive finance company refers to

Accepted Answer

A captive finance company is a subsidiary or wholly-owned company of another corporation that provides financing to customers purchasing its parent company's products or services. This type of financing allows the parent company to have more control over the financing process and potentially offer better rates or terms to its customers.

Question 10

On April 5 Donna's Boutique accepted a Visa card for a $600 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a

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The answer of On April 5 Donna's Boutique accepted a...

Question 11

Strickman Company uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions:

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The answer of Strickman Company uses the allowance method for...

Question 12

Merry Co. sells Christmas angels. Merry determines that at the end of December, they have 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).

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

Question 13

The retailer considers Visa and MasterCard sales as

Accepted Answer

Retailers consider Visa and MasterCard sales as cash sales because the funds are typically deposited into the retailer's account by the card processor within a few days, similar to cash transactions.

Question 14

Prepare journal entries to record the following transactions entered into by the Castagno Company:

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 15

Gipson Furniture factors $500,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

Accepted Answer

The answer of Gipson Furniture factors $500,000 of receivables to...

Question 16

The following are sales of The Holiday Store during February. The Store sells seasonal holiday items.
2/3 Sold 50 heart balloons for $5 cash each.
2/8 Sold 100 boxes of chocolates at $10 each, terms 2/10, n/30. Collected within the
discount period.
2/10 Sold 50 heart necklaces for $25 each with no discount. Have not collected as of month end.
2/14 Sold 100 bouquets of roses at $30 per bouquet. Half the sales were on account. By month end, 75% of the credit sales were collected.
2/27 Sold 20 leftover heart necklaces to a discount store for $15 each on credit.
2/28 Sold a display cabinet at a swap meet for $100 on account.
Determine the balance in Accounts Receivable at 2/28.

Accepted Answer

The answer of The following are sales of The Holiday...

Question 17

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables?

Accepted Answer

The answer of A company regularly sells its receivables to...

Question 18

The ledger of the Ramirez Company at the end of the current year shows Accounts Receivable of $200,000.
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 8% of accounts receivable, journalize the adjusting entry for end of the period. (Show all calculations.)
(b) If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial balance and bad debts are expected to be 8% of accounts receivable, journalize the adjusting entry for end of the period. (Show all calculations.)

Accepted Answer

The answer of The ledger of the Ramirez Company at...

Question 19

Schofield Retailers accepted $60,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $60,000 and a debit(s) to

Accepted Answer

The answer of Schofield Retailers accepted $60,000 of Silver Bank...

Question 20

Assuming that the allowance method is being used, prepare general journal entries without explanations to record the following transactions.
January 1 Sold merchandise to Mary Baden for $500 on account.
February 1 Received $300 from Baden.
July 1 Wrote off Baden's account as uncollectible.
September 1 Unexpectedly received payment in full from Baden.

Accepted Answer

The answer of Assuming that the allowance method is being...

Quiz 8: Reporting and Analyzing Receivables