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Exam 8: Accounting for Receivables

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Question 81

True/False

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If a retailer accepts a national credit card such as Visa, the retailer must maintain detailed records of customer accounts.

A) True
B) False

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Question 82

Multiple Choice

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A reasonable amount of uncollectible accounts is evidence

A) that the credit policy is too strict.
B) that the credit policy is too lenient.
C) of a sound credit policy.
D) of poor judgments on the part of the credit manager.

E) A) and D)
F) None of the above

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Question 83

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When counting the exact number of days to determine the maturity date of a note, the date of issue is included but the due date is omitted.

Compute the maturity date and interest for the following notes.

In order to accelerate the receipt of cash from receivables, owners may sell the receivables to another company for cash.

Allowance for Doubtful Accounts is a contra asset account.

Using the following information: During 2018, sales on account were $145,000 and collections on account were $100,000. Also during 2018, the company wrote off $4,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. The change in the cash realizable value from the balance at 12/31/17 to 12/31/18 was a

Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $38,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debt expense for the period?

The average collection period is computed by dividing

The net amount expected to be collected in cash from receivables is the _________________.

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

The interest on a $6,000, 6%, 60-day note receivable is

Notes receivable represent claims for which formal instruments of credit are issued as evidence of debt.

The average collection period for accounts receivable is computed by dividing 365 days by

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

Compute the missing amount for each of the following notes:

The three primary accounting problems associated with accounts receivable are (1) ______________, (2) _______________, and (3) ______________ of accounts receivable.

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from net sales.

Prepare the necessary journal entries for the following transactions for Kennedy Co. May 25 Kennedy Co. received a $30,000, 2-month, 6% note from Holt Company in settlement of an account receivable. July 25 Kennedy Co. received payment on the Holt note.

The net amount expected to be received in cash from receivables is called the