1. Copyright © 2007 Prentice-Hall. All rights reserved 1 Receivables Chapter 9

2. Copyright © 2007 Prentice-Hall. All rights reserved 2 The receivable that is usually evidenced by a formal written document is a(n) 1.account receivable 2.trade receivable 3.note receivable 4.other receivable

3. 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.

4. 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

5. Copyright © 2007 Prentice-Hall. All rights reserved 5 Answer: 3

6. 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

7. Copyright © 2007 Prentice-Hall. All rights reserved 7 Answer: 2

8. Copyright © 2007 Prentice-Hall. All rights reserved 8 Gordon Company has the following balances in selected accounts: Accounts receivable$9,000 Allowance for Uncollectible Accounts1,000 Uncollectible Accounts Expense2,000 What is the net realizable value of the accounts receivables?

9. Copyright © 2007 Prentice-Hall. All rights reserved 9 Answer: Accounts receivable$9,000 Allowance for uncollectible accounts(1,000) Net realizable value$8,000 Accounts receivable should be reported on the balance sheet at net realizable value.

10. Copyright © 2007 Prentice-Hall. All rights reserved 10 Gordon Company has the following balances in selected accounts on May 1 Accounts receivable$9,000 Allowance for Uncollectible Accounts1,000 Uncollectible Accounts Expense2,000 On May 15, the company writes off accounts receivable of $100. What is the net realizable value of the accounts receivables on May 15?

11. Copyright © 2007 Prentice-Hall. All rights reserved 11 Answer: Below is the entry to write off an account. The new net realizable value is Accounts receivable ($9000-100)$8,900 Allowance for uncollectible accounts(900) Net realizable value$8,000 Allowance for Uncollectible Accounts100 Accounts Receivable 100

12. 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?

13. 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 expense700 Allowance for uncollectible accounts700

14. 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?

15. 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 expense650 Allowance for uncollectible accounts650

16. Copyright © 2007 Prentice-Hall. All rights reserved 16 A 60-day note receivable dated April 14 has a maturity date of 1.June 11 2.June 12 3.June 13 4.June 14

17. Copyright © 2007 Prentice-Hall. All rights reserved 17 Answer: Total days in note60 Days outstanding in Apr (30-14)(16) Days left44 Days in May(31) Maturity date in June13

18. 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?

19. Copyright © 2007 Prentice-Hall. All rights reserved 19 Answer: Face$10,000 Interest ($10,000 x.06 x 60/360100 Maturity value$10,100

20. 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

21. Copyright © 2007 Prentice-Hall. All rights reserved 21 Answer: 1

22. Copyright © 2007 Prentice-Hall. All rights reserved 22