Question 1

Listed below are two independent situations involving the disposition of receivables.
1. Fultz Company sells $300,000 of its receivables to Quick Factors, Inc. Quick Factors assesses a finance charge of 2% of the amount of receivables sold.
Instructions
Prepare the journal entry to record the sale of the receivables on Fultz Company's books.
2. A restaurant is the site for a large company party. The bill totals $3,000 and is charged by the patron on a Visa credit card.
Instructions
Assume a 3% service fee is charged by Visa. Record the entry for the transaction on the restaurant's books.

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Question 2

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

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Question 3

Prepare journal entries to record the following transactions entered into by Glaser Company:
2010
June 1 Received a $20,000, 12%, 1-year note from Ann Duff as full payment on her account.
Nov. 1 Sold merchandise on account to Malone, Inc. for $10,000, terms 2/10, n/30.
Nov. 5 Malone, Inc. returned merchandise worth $500.
Nov. 9 Received payment in full from Malone, Inc.
Dec. 31 Accrued interest on Duff's note.
2011
June 1 Ann Duff honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2011.

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Question 4

The December 31, 2009 balance sheet of Sauder Company had Accounts Receivable of $500,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2010, the following transactions occurred: sales on account $1,400,000; sales returns and allowances, $50,000; collections from customers, $1,150,000; accounts written off $35,000; previously written off accounts of $5,000 were collected.
Instructions
(a) Journalize the 2010 transactions.
(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of net sales to be uncollectible, what is the adjusting entry at December 31, 2010?
(c) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 4% of accounts receivable, what is the adjusting entry at December 31, 2010?
(d) Which basis would produce a higher net income for 2010 and by how much?

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Question 5

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 $____________.

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Question 6

Record the following transactions for Yockey Company.
1. On April 12, sold $12,000 of merchandise to Hauser Inc., terms 2/10, n/30.
2. On April 15, Hauser returned $2,000 of merchandise.
3. On April 22, Hauser paid for the merchandise.

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1....

Question 7

Compute bad debts expense based on the following information:
(a) Ramsey Company estimates that 1% of net credit sales will become uncollectible. Sales are $600,000, sales returns and allowances are $30,000, and the allowance for doubtful accounts has a $6,000 credit balance.
(b) Ramsey Company estimates that 3% of accounts receivable will become uncollectible. Accounts receivable are $100,000 at the end of the year, and the allowance for doubtful accounts has a $500 debit balance.

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Question 8

Coffeldt Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2009, and December 31, 2010, appear below:  
Instructions
(a) Record the following events in 2010.
Aug. 10 Determined that the account of Sue Lang for $1,000 is uncollectible.
Sept. 12 Determined that the account of Tom Woods for $4,000 is uncollectible.
Oct. 10 Received a check for $550 as payment on account from Sue Lang, whose account had previously been written off as uncollectible. She indicated the remainder of her account would be paid in November.
Nov. 15 Received a check for $450 from Sue Lang as payment on her account.
(b) Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2010.
(c) What is the balance of Allowance for Doubtful Accounts at December 31, 2010?

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Question 9

Kosko Furniture Store has credit sales of $400,000 in 2010 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2010, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that $3,000 will prove to be uncollectible.
On March 4, 2011, the credit manager authorizes a write-off of the $1,000 balance owed by A. Noonan.
Instructions
(a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2010.
(b) Show the balance sheet presentation of accounts receivable on December 31, 2010.
(c) On March 4, before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $2,000. Make the appropriate entry to record the write-off of the Noonan account. Also show the balance sheet presentation of accounts receivable before and after the write-off.

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Question 10

Horton Company has the following accounts receivable in its general ledger at July 31: Accounts Receivable $32,000. During August, the following transactions occurred.
Aug. 1 Added 1% finance charges to $12,000 of credit card balances for not paying within the 30 day grace period.
15 Sold $20,000 of accounts receivable to Fast Factors Inc. who charge a 2% commission.
28 Collected $7,000 from Horton credit card customers including $350 of finance charges previously billed.
Instructions
(a) Journalize the transactions.
(b) Indicate the statement presentation of finance and service charges.

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Question 11

Remington Company had the following select transactions.
Apr. 1, 2010 Accepted Carter Company's 1-year, 12% note in settlement of a $30,000 account receivable.
July 1, 2010 Loaned $20,000 cash to David Pratt on a 9-month, 10% note.
Dec. 31, 2010 Accrued interest on all notes receivable.
Apr. 1, 2011 Received principal plus interest on the Carter note.
Apr. 1, 2011 David Pratt dishonored its note: Remington expects it will eventually collect.
Instructions
Prepare journal entries to record the transactions. Remington prepares adjusting entries once a year on December 31.

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Apr....

Question 12

The income statement approach to estimating uncollectible accounts expense is used by Landis Company. On February 28, the firm had accounts receivable in the amount of $437,000 and Allowance for Doubtful Accounts had a credit balance of $2,140 before adjustment. Net credit sales for February amounted to $3,000,000. The credit manager estimated that uncollectible accounts expense would amount to 1% of net credit sales made during February. On March 10, an accounts receivable from Kathy Brown for $6,100 was determined to be uncollectible and written off. However, on March 31, Brown received an inheritance and immediately paid her past due account in full.
Instructions
(a) Prepare the journal entries made by Landis Company on the following dates:
1. February 28
2. March 10
3. March 31
(b) Assume no other transactions occurred that affected the allowance account during March. Determine the balance of Allowance for Doubtful Accounts at March 31.

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Question 13

An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct.  
Instructions
Prepare the correcting entries.

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Question 14

Compute the maturity date and interest for the following notes.

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Question 15

Newman Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred.
Jan. 15 Made Newman credit card sales totaling $22,000. (There were no balances prior to January 15.)
20 Made Visa credit card sales (service charge fee 2%) totaling $5,500.
Feb. 10 Collected $12,000 on Newman credit card sales.
15 Added finance charges of 1% to Newman credit card balance.
Instructions
(a) Journalize the transactions for Newman Stores.
(b) Indicate the statement presentation of the financing charges and the credit card service charge expense for Newman Stores.

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Question 16

Nolte Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2010, the balance in Accounts Receivable was $680,000 and net credit sales amounted to $3,500,000 during 2010. An aging analysis of the accounts receivable indicated that $36,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible.
Instructions
Prepare the adjusting entries to record estimated bad debts expense using the (1) percentage of sales basis and (2) the percentage of receivables basis under each of the following independent assumptions:
(a) Allowance for Doubtful Accounts has a credit balance of $3,200 before adjustment.
(b) Allowance for Doubtful Accounts has a debit balance of $730 before adjustment.

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Question 17

On January 6, Stegner Co. sells merchandise on account to Molina Inc. for $7,000, terms 2/10, n/30. On January 16, Molina Inc. pays the amount due. Prepare the entries on Stegner's books to record the sale and related collection.
(b) On January 10, Jill Flynn uses her Calhoun Co. credit card to purchase merchandise from Calhoun Co. for $9,000. On February 10, Flynn is billed for the amount due of $9,000. On February 12, Flynn pays $4,000 on the balance due. On March 10, Flynn is billed for the amount due, including interest at 2% per month on the unpaid balance as of February 12. Prepare the entries on Calhoun Co.'s books related to the transactions that occurred on January 10, February 12, and March 10.

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Question 18

Prepare the necessary journal entry for the following transaction. Francis Company sold $200,000 of its accounts receivables to a factor. The factor charges a 3% fee.

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Question 19

Ripken Supply Co. has the following transactions related to notes receivable during the last 2 months of 2010.
Nov. 1 Loaned $30,000 cash to Linda Waters on a 1-year, 10% note.
Dec. 11 Sold goods to Wainwright, Inc., receiving a $10,800, 90-day, 8% note.
16 Received an $8,000, 6-month, 9% note in exchange for Don Garbo's outstanding accounts receivable.
31 Accrued interest revenue on all notes receivable.
Instructions
(a) Journalize the transactions for Ripken Supply Co.
(b) Record the collection of the Waters note at its maturity in 2011.

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Question 20

Compute the missing amount for each of the following notes:

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Quiz 9: Accounting for Receivables

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

Record the following transactions for Yockey Company. 1. On April 12, sold $12,000 of merchandise to Hauser Inc., terms 2/10, n/30. 2. On April 15, Hauser returned $2,000 of merchandise. 3. On April 22, Hauser paid for the merchandise.

An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Instructions Prepare the correcting entries.

Compute the maturity date and interest for the following notes.

Prepare the necessary journal entry for the following transaction. Francis Company sold $200,000 of its accounts receivables to a factor. The factor charges a 3% fee.

Compute the missing amount for each of the following notes: