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WorksheetsIA - Receivables
Total questions: 39
Worksheet time: 39mins
When an account becomes uncollectible and must be written off,
Bad Debt Expense should be credited.
Allowance for Doubtful Accounts should be credited.
Sales Revenue should be debited.
Accounts Receivable should be credited.
What are the double entries to record bad debt?
dr. Bad Debt, cr. Allowance for Doubtful Debts
dr. Profit and Loss, cr. Bad Debt
dr. Bad debt, cr. Profit and Loss
dr. Bad debt, cr. Accounts Receivable
Bad debts can be classified as:
a current asset
a current liability
an expense
a revenue
Accounts Receivable refer to the amounts owed by customers.
True
False
When does an account become uncollectible?
when the debtor fails to pay an account according to a sales contract
when the debtor fails to pay a note on the due date
there is no general rule for when an account becomes uncollectible
at the end of the fiscal year
State a proper credit term if the debtors will be given 2% discounts if making payment in 10 days after the transaction date and the credit period is 45 days.
0.02/10 ; no/45
2/10 ; n/eom
2/10 ; n/45
2%/10 ; n/45
Two methods of accounting for uncollectible accounts are the
allowance method and the accrual method.
direct write-off method and the accrual method.
direct write-off method and the allowance method.
allowance method and the net realizable method.
Two bases for estimating uncollectible accounts are:
percentage of current assets and percentage of sales.
percentage of assets and percentage of net sales.
percentage of receivables and percentage of net sales.
percentage of receivables and percentage of total revenue.
Bad debt recovery is
an amount of Accounts Receivable that is not collectible after the due date of credit terms
provision to estimate the uncollectible debts
amount of debt that is recovered after it has been written off or classified as bad debts
an amount of Accounts Receivable that is collectible before the due date of credit terms
The journal entry for recording accounts receivable is:
Dr. Sales; Cr. Accounts Receivable
Dr. Accounts Receivable: Cr. Sales
Dr. Cash; Cr. Sales
Dr. Sales; Cr. Accounts Payable
Beach Bums Surf Shop signed a 90-day, 5%, interest-bearing note for $3,000.00 with First National Bank. The Beach Bums Surf Shop journal entry for the issuance of the note payable is:
debit Cash, $3,037.50; credit Notes Payable, $3,037.50.
debit Cash, $3,000.00; credit Notes Payable, $3,000.00.
debit Notes Payable, $3,000.00; credit Cash, $3,000.00.
debit Notes Payable, $3,150.00; credit Cash, $3,150.00.
concept where interest and principal both earns interest
Compound interest
Simple interest
Interest bearing
Noninterest bearing
concept where principal only earns interest
Compound interest
Simple interest
Interest bearing
Noninterest bearing
Face value is less than the present value
Discount
Premium
Adjunct
Contra account
Face value is greater than present value
Discount
Premium
Adjunct
Contra
A negotiable instrument supported by a formal promise to pay or promissory note.
Notes receivable
Accounts receivable
Promissory note
Bank drafts
Principal is collected all at once
Installment
Lumpsum
Cash basis
Accrual basis
Notes or accounts receivables that result from sales transactions are often called
non-trade receivables.
trade receivables.
merchandise receivables.
sales receivables.
Notes or accounts receivable from officers, employees, or affiliated companies should be reported on the balance sheet
As assets, either current or noncurrent, but separately from other receivables.
As noncurrent assets only.
As trade notes and accounts receivable if they otherwise qualify as current assets.
As offsets to capital.
When does an account become uncollectible?
when the debtor fails to pay an account according to a sales contract
when the debtor fails to pay a note on the due date
there is no general rule for when an account becomes uncollectible
at the end of the fiscal year
On February 1, 2019, Henson Company factored receivables with a carrying amount of €300,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a without guarantee (recourse) basis. The loss to be reported is
0
9.000
15.000
24.000
On February 1, 2019, Henson Company factored receivables with a carrying amount of €300,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a with guarantee (recourse) basis. The amount of cash received is
285.000
276.000
291.000
300.000
Maxwell Corporation factored, with guarantee (recourse), £100,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. What amount of cash would Maxwell receive on the sale of receivables?
97.000
95.000
92.000
100.000
Moon Inc assigns €1,500,000 of its accounts receivables as collateral for a €1 million loan with a bank. The bank assesses a 3% finance fee and charges interest on the note at 6%. What would be the journal entry to record this transaction?
Debit Cash
for €970,000, debit Interest Expense for €30,000, and credit Notes Payable for €1,000,000.
Debit Cash for €970,000, debit Interest Expense for €30,000, and credit Accounts Receivable for €1,000,000.
Debit Cash for €970,000, debit Interest Expense for €30,000, debit Due from Bank for €500,000, and credit Accounts Receivable for €1,500,000.
Debit Cash for €910,000, debit Interest Expense for €90,000, and credit Notes Payable for €1,000,000.
Sun Inc. factors €2,000,000 of its accounts receivables without guarantee (recourse) for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. What would be recorded by Sun as a gain (loss) on the transfer of receivables?
loss 100.000
gain 100.000
loss 300.000
loss 200.000
Moon Inc assigns €1,500,000 of its accounts receivables as collateral for a €1 million loan with a bank. The bank assesses a 3% finance fee and charges interest on the note at 6%. What would be the journal entry to record this transaction?
Debit Cash
for €970,000, debit Interest Expense for €30,000, and credit Notes Payable for €1,000,000.
Debit Cash for €970,000, debit Interest Expense for €30,000, and credit Accounts Receivable for €1,000,000.
Debit Cash for €970,000, debit Interest Expense for €30,000, debit Due from Bank for €500,000, and credit Accounts Receivable for €1,500,000.
Debit Cash for €910,000, debit Interest Expense for €90,000, and credit Notes Payable for €1,000,000.
Wilkinson Corporation factored, with guarantee (recourse), €400,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. What amount of cash would Wilkinson receive on the sale of receivables?
388.000
380.000
368.000
400.000
On May 1, Wilton sold merchandise on account to Bates for RM50,000 terms 3/15, net 45. What do these terms: 3/15, net 45 mean?
15% discount if payment made in 3 days, otherwise net payment in 45 days
3% discount if payment made in 15 days, otherwise full payment in 45 days
15% discount if payment made in 12 days, otherwise full payment after 45 days
3% discount if payment made in 12 days, otherwise full payment after 45 days
On May 1, Wilton sold merchandise on account to Bates for RM50,000 terms 3/15, net 45. What is the entry for this transaction?
Accounts Receivable—Bates 50,000
Sales Revenue 50,000
Cash—Bates 50,000
Sales Revenue 50,000
Accounts Receivable—Bates 50,000
Inventory 50,000
Other Receivable—Bates 50,000
Sales Revenue 50,000
"The note payable to BDO matures on January 15, 2023 and is secured by accounts receivable amounting to P5,000,000".
This statement can be found in the notes if
Pledging/Secured Borrowing
Factoring
Assignment
Discounting
If the loan is discounted, it means that
the interest is paid by the bank
the interest is paid by the borrower
the interest is deducted in advance
the interest is waived.
A factoring arrangement can be both with recourse as well as without recourse:
True
False
Partially Correct
Cannot Say
When receivables are analysed to their age, the process is known as preparing the
Receivable Management
ageing schedules of receivables
Cash Management
None of these
Accounts Receivable = RM10,000
Allowance for Doubtful Accounts = RM2,000
How much is the net realizable value of the Accounts Receivable?
RM8,000
RM10,000
RM12,000
RM2,000
A secured loan...
does not require collateral
requires collateral
