copyright © 2007 prentice-hall. all rights reserved 1 receivables chapter 9
Post on 21-Dec-2015
215 views
TRANSCRIPT
Copyright © 2007 Prentice-Hall. All rights reserved
2
The receivable that is usually evidenced by a formal written document is a(n)
1. account receivable2. trade receivable3. note receivable4. other receivable
Copyright © 2007 Prentice-Hall. All rights reserved
3
Answer: 3 A note is a written promise to pay a definite sum at a future date.
Copyright © 2007 Prentice-Hall. All rights reserved
4
Under the direct write-off method of accounting for uncollectible accounts, Uncollectible Accounts Expense is debited
1. When an account receivable is past due
2. When end of period adjusting entries are prepared
3. When a specific account is determined to be uncollectible
4. This method does not recognize uncollectible accounts expense
Copyright © 2007 Prentice-Hall. All rights reserved
6
Under the allowance method of accounting for uncollectible accounts, Uncollectible Accounts Expense is debited
1. When an account receivable is past due
2. When end of period adjusting entries are prepared
3. When a specific account is determined to be uncollectible
4. This method does not recognize uncollectible accounts expense
Copyright © 2007 Prentice-Hall. All rights reserved
8
Gordon Company has the following balances in selected accounts:Accounts receivable $9,000Allowance for Uncollectible Accounts 1,000Uncollectible Accounts Expense 2,000
What is the net realizable value of the accounts receivables?
Copyright © 2007 Prentice-Hall. All rights reserved
9
Answer: Accounts receivable $9,000Allowance for uncollectible accounts (1,000) Net realizable value $8,000
Accounts receivable should be reported on the balance sheet at net realizable value.
Copyright © 2007 Prentice-Hall. All rights reserved
10
Gordon Company has the following balances in selected accounts on May 1Accounts receivable $9,000Allowance for Uncollectible Accounts 1,000Uncollectible Accounts Expense 2,000On May 15, the company writes off accounts receivable of $100.What is the net realizable value of the accounts receivables on May 15?
Copyright © 2007 Prentice-Hall. All rights reserved
11
Answer: Below is the entry to write off an account.
The new net realizable value isAccounts receivable ($9000-100) $8,900Allowance for uncollectible accounts (900) Net realizable value $8,000
Allowance for Uncollectible Accounts 100
Accounts Receivable 100
Copyright © 2007 Prentice-Hall. All rights reserved
12
Jeffries Company uses the aging approach to estimate uncollectible accounts.
• An aging of the company's accounts receivable indicates that $800 are estimated to be uncollectible.
• The Allowance for Uncollectible Accounts has a $100 credit balance.
How much is the uncollectible accounts expense?
Copyright © 2007 Prentice-Hall. All rights reserved
13
Answer: The desired balance in the Allowance for Uncollectible Accounts is $800 credit. Since the account already has a credit balance of $100, $700 needs to be added to the account. The entry is:
Uncollectible accounts expense 700Allowance for uncollectibleaccounts 700
Copyright © 2007 Prentice-Hall. All rights reserved
14
Jeffries Company uses the percent of sales approach to estimate uncollectible accounts.
• Credit sales for the period are $65,000.• The company estimates that 1% of credit sales
will be uncollectible.• The Allowance for Uncollectible Accounts has
a $100 credit balance.How much is the uncollectible accounts
expense?
Copyright © 2007 Prentice-Hall. All rights reserved
15
Answer: $650 The percent of sales method does not take into consideration the balance in the allowance account. The amount computed ($65,000 x .01) is the amount of the expense.
Uncollectible accounts expense 650Allowance for uncollectibleaccounts 650
Copyright © 2007 Prentice-Hall. All rights reserved
16
A 60-day note receivable dated April 14 has a maturity date of
1. June 112. June 123. June 134. June 14
Copyright © 2007 Prentice-Hall. All rights reserved
17
Answer: Total days in note 60Days outstanding in Apr (30-14) (16) Days left 44 Days in May (31)Maturity date in June 13
Copyright © 2007 Prentice-Hall. All rights reserved
18
What is the maturity value of a $10,000, 6%, 60-day note receivable dated August 3?
Copyright © 2007 Prentice-Hall. All rights reserved
19
Answer: Face $10,000Interest ($10,000 x .06 x 60/360 100Maturity value $10,100
Copyright © 2007 Prentice-Hall. All rights reserved
20
Morton Company has a 60-day note receivable, dated December 1. Interest of $400 has accrued as of December 31. The adjusting entry that should be prepared is
1. Debit interest receivable; credit interest revenue
2. Debit cash; credit interest revenue
3. Debit cash; credit interest expense
4. Debit interest expense; credit interest payable