Question 1

Assume that part of accounts and other receivables on Thompson Toys' balance sheet is $16 million and that Thompson estimates its uncollectible accounts as 2 percent of all accounts receivable.Record the adjusting entry assuming that the company uses accounts receivable aging method to recognize uncollectible accounts if the Allowance for Uncollectible Accounts has a balance of:
a. $104,000 credit
b. $46,000 debit

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Question 2

In the journal provided,prepare entries for the following (assume a calendar-year accounting period): Omit explanations.
 Dec. 1Received a three-month, 15 percent note receivable for $ \$ 800 $ from a customer as an extension of his past-due account.
31 Made the year-end adjustment for accrued interest.

Mar. 1Received full payment on the note.

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Question 3

Sally's Dress Shop has $5,200 in Accounts Receivable at December 31.The company's accountant estimates that $300 of the $5,200 will never be collected.Complete the current asset section of the balance sheet below.
 $\begin{array}{llr}
  \text {  Current assets} &\
 \text {Cash  } &\$14,000\
 \text {  Short-term investments} &4,000\
 \text {  Accounts receivable} &\
 \text { Inventory } &50,000\
 \text { Total current assets } &\$\
\end{array}$

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Question 4

Assuming that the allowance method is being used,prepare journal entries to record the following transactions.Omit explanations.
 Mar. 15 Sold merchandies to Faust for $\$ 6,000$ on account.
Apr. $\quad 15$ Received $3,000 from Faust.
Aug $\quad 15$ Wrote off Faust's account as uncollectible.
Nov. 15 Unexgectedly received payment in full from Faust

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Question 5

At year end,Erwin Graphics has a $350 debit balance in Allowance for Uncollectible Accounts.It estimates that 5 percent of the $20,000 in sales are uncollectible.Give the amount that should be used in the adjusting entry using percentage of net sales method to record uncollectible accounts.(Show your calculations.)

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Question 6

The general ledger account for Accounts Receivable shows a debit balance of $40,000.The Allowance for Uncollectible Accounts has a credit balance of $2,000.Net sales for the year were $250,000.In the past,3 percent of net sales have proved uncollectible.An aging of accounts receivable accounts results in an estimate of $9,000 of uncollectible accounts receivable.Calculate (1)Uncollectible Accounts Expense and (2)the ending balance of the Allowance for Uncollectible Accounts using (a)the percentage of net sales method and (b)the accounts receivable aging method.

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Question 7

Carlson Corporation engaged in the following transactions involving promissory notes in 2009 and 2010.Journalize these transactions in the journal provided.(Omit explanations.)Round to nearest whole dollar.
 2009
1 Sold land to Duane Eppy for $ \$ 30,000 $. A six-month, 10 percent note was received in exchange (no gain or loss realized).
1 Received a 30-day, 12 percent note receivable from Tricha Kalson in settlement of her accounts receivable of $ \$ 500 $.

Dec. 1 Tricha Kalson dishonored her note issued 30 days earlier. Round to nearest whole dollar.
31 Recorded accined interest on the note received on September 1.

2010
Mar. 1 Received payment in full from Duane Eppy.

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Question 8

Explain the difference between the two methods used to estimate uncollectible accounts and identify which financial statement is emphasized by each method.

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Question 9

Determine the interest on the following notes payable: Round answers to two decimal places.
a. $3,000 at 10 percent for 60 days
b. $600 at 16 percent for 4 months
c. $5,000 at 12 percent for 45 days
d. $900 at 14 percent for 30 days

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Question 10

On December 31,Alsop Products has a $300 credit balance in Allowance for Uncollectible Accounts.It estimates that 4 percent of the $60,000 in sales are uncollectible.After the appropriate adjusting entry for uncollectible accounts has been made using percentage of net sales method,what will be the balance in Allowance for Uncollectible Accounts? Indicate if the balance is a debit or credit.(Show your work.)

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Question 11

Assume that part of accounts and other receivables on Thompson Toys' February 2,2010,balance sheet is comprised of $43,225,000 of notes receivable.Two notes make up the amount.The first note has a face value of $30,000,000 and bears interest at 7 percent for 90 days.The second note has a face value of $13,225,000 and bears interest at 9 percent for 120 days.Record the journal entry for the collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2.(Omit explanations; assume no interest had been accrued.)Round amounts to nearest dollar.

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Question 12

Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense.As of December 31,Caplan's accountant prepared the following data about ending receivables: $20,000 was not yet due (1 percent expected not to be collected),$10,000 was 1-60 days past due (4 percent expected not to be collected),and $2,000 was over 60 days past due (8 percent expected not to be collected).At December 31,Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $200.In the journal provided,prepare Caplan's end-of-period adjustment for estimated uncollectible accounts.Also prepare the entry that would have been made had the credit balance instead been a debit balance.Omit explanations.

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Question 13

How is the account Allowance for Uncollectible Accounts presented in the financial statements,and what purpose does this presentation serve?

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Question 14

In the journal provided,prepare the entries for the following transactions.(Omit explanations.)
 Dec. 1 Sold merchandise on account to Katurah Wells for $ \$ 600 $.
12 Received payment of $ \$ 400 $ from Katurah Wells.
31 Made adjusting entry for Uncollectible Accounts Expense, using the percentage of net sales method. Net sales for the year totaled $ \$ 14,000 $, uncollectible accounts are estimated at 2 percent, and Allowance for Uncollectible Accounts has a $ \$ 50 $ credit balance prior to adjustment.

Feb. 5 Wrote off Katurah Wells's balance because she filed for bankruptcy.
17 Unexpectedly received the $ \$ 200 $ from Katurah Wells.

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Question 15

Under what specific circumstance will application of the direct charge-off method be in accordance with the matching principle?

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Question 16

Assume that part of accounts and other receivables on Thompson Toys' balance sheet is $16 million as of February 2,2010.Also assume that Allowance for Uncollectible Accounts has a credit balance of $550,000 and that Thompson estimates its uncollectible accounts as 0.1 percent of net sales and the sales for the year is $11,019,000,000.Record the adjusting entry to recognize uncollectible accounts using the percentage of net sales method.Omit explanations.

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Question 17

At year end,Gorgin Design Company has a $1,800 credit balance in Allowance for Uncollectible Accounts.If an accounts receiving aging method analysis indicates that an estimated $11,400 of year-end receivables are uncollectible,what will be the balance in Allowance for Uncollectible Accounts after the appropriate adjusting entry for uncollectible accounts has been made? Indicate if the balance is a debit or credit.

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Question 18

On December 31,Skinner Enterprises has a $400 debit balance in Allowance for Uncollectible Accounts.If an accounts receivable aging method analysis indicated that an estimated $3,200 of December 31 receivables are uncollectible,for what amount would the adjusting entry for uncollectible accounts be recorded? (Show your work.)

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Question 19

The general ledger account for Accounts Receivable shows a debit balance of $37,500.The Allowance for Uncollectible Accounts has a debit balance of $1,000.Net sales for the year were $375,000.In the past,2 percent of net sales have proved uncollectible.An aging of accounts receivable accounts results in an estimate of $6,250 of uncollectible accounts receivable.Calculate (1)Uncollectible Accounts Expense and (2)the ending balance of the Allowance for Uncollectible Accounts using (a)the percentage of net sales method and (b)the accounts receivable aging method.

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Question 20

Match between columns
                        Premises:  Lawsuit filed against the company
 Payroll liabilities
 Unearned revenues
 Accounts payable
 Product warranty liability
 Dividend to be declared in future
 Current portion of long-term debt
 Discounted notes receivable
 Liability for vacation pay
 Guarantee of debt of other companies

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The Answer of determinable liability (D) and an estimated liability is...

Quiz 7: Cash and Receivables

Explain the difference between the two methods used to estimate uncollectible accounts and identify which financial statement is emphasized by each method.

Determine the interest on the following notes payable: Round answers to two decimal places. a. $3,000 at 10 percent for 60 days b. $600 at 16 percent for 4 months c. $5,000 at 12 percent for 45 days d. $900 at 14 percent for 30 days

How is the account Allowance for Uncollectible Accounts presented in the financial statements,and what purpose does this presentation serve?

Under what specific circumstance will application of the direct charge-off method be in accordance with the matching principle?

State whether each situation below implies a definitely determinable liability (D), an estimated liability (E), a contingent liability (C), or no liability at all (X).