Question 1

Ace Distributors has the following transactions related to notes receivable during the last month of the year.
Instructions
Journalize the transactions for Ace Distributors.

Accepted Answer

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

Question 2

The percentage of receivables basis of estimating expected uncollectible accounts emphasizes income statement relationships.

Accepted Answer

The percentage of receivables method emphasizes balance sheet relationships, as it focuses on estimating the allowance for doubtful accounts based on the accounts receivable balance.

Question 3

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Accepted Answer

This is the definition of a note receivable.

Question 4

Which of the following receivables would not be classified as an "other receivable"?

Accepted Answer

Notes receivable are a separate category of receivables and would not be classified as an "other receivable." Advance to an employee, refundable income tax, and interest receivable can all be classified as "other receivables."

Question 5

Lifetime sells softball equipment.On November 14, they shipped $3,000 worth of softball uniforms to Palos Middle School, terms 2/10, n/30.On November 21, they received an order from Tinley High School for $1,800 worth of custom printed bats to be produced in December.On November 30, Palos Middle School returned $300 of defective merchandise.Lifetime has received no payments from either school as of month-end.What amount will be recognized as net accounts receivable on the balance sheet as of November 30?

Accepted Answer

The net accounts receivable as of November 30 would be $2,700. This is calculated by taking the original shipment to Palos Middle School of $3,000, subtracting the $300 of returned merchandise, resulting in $2,700. The order from Tinley High School is not included as it is for future production and has not been shipped or invoiced yet.

Question 6

Bad Debt Expense is reported on the income statement as

Accepted Answer

Bad Debt Expense is considered an operating expense because it is a cost associated with the normal operations of the business, specifically related to the credit extension and collection process. It is not part of cost of goods sold, and it does not affect gross profit since it is not a direct revenue-generating activity. It is also not a contra-revenue account since it is not directly related to revenue recognition.

Question 7

An aging of a company's accounts receivable indicates that $3,000 is estimated to be uncollectible.If Allowance for Doubtful Accounts has an $800 debit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

The adjustment to record bad debts for the period requires a debit to Bad Debt Expense for $3,800. This is because the existing $800 debit balance in the Allowance for Doubtful Accounts indicates that the account is underfunded by $800. To adjust the balance to the new estimate of $3,000 being uncollectible, you need to add $3,800 ($3,000 desired balance + $800 to offset the existing debit balance) to the allowance account. This is done by debiting Bad Debt Expense for $3,800 and crediting Allowance for Doubtful Accounts for $3,800.

Question 8

An analysis and aging of the accounts receivable of Hugh Company at December 31 revealed the following data:  The cash realizable value of the accounts receivable at December 31, after adjustment, is:

Accepted Answer

The answer of An analysis and aging of the accounts...

Question 9

The basic issues in accounting for notes receivable include each of the following except

Accepted Answer

Analyzing notes receivable is not considered a basic issue in accounting for notes receivable. The primary concerns are recognizing, valuing, and disposing of notes receivable.

Question 10

On January 15, 2021, Craig Company received a two-month, 9%, $9,000 note from William Pentel for the settlement of his open account.The entry by Craig Company on March 15, 2021, if Pentel dishonors the note and collection is expected is:

Accepted Answer

The answer of On January 15, 2021, Craig Company received...

Question 11

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively.What is the average collection period for accounts receivable in days?

Accepted Answer

Average Collection Period = (Accounts Receivable / Net Sales) * Days in a Year

= ($75,000 / (($60,000 + $90,000) / 2)) * 365 days

= ($75,000 / $75,000) * 365 days

= 365 days

Therefore, the average collection period for accounts receivable in days is 36.5.

Question 12

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Accepted Answer

All of these options (use of allowance accounts and the allowance method, recording of discounts, and recording sales returns and allowances) are essentially the same under both IFRS and GAAP, indicating a high level of convergence in these areas of receivables accounting and reporting.

Question 13

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

Accepted Answer

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

Quiz 8: Accounting for Receivables

Ace Distributors has the following transactions related to notes receivable during the last month of the year. Instructions Journalize the transactions for Ace Distributors.