Accounts Receivable

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Accounts Receivable Questions and Answers

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How does the use of a factor accelerate the receipt of cash from receivables? Why do companies pay fees for this service?
Conner pride reports year-end credit sales in the amount of $567,000 and accounts receivable of $134,000. Conner uses the balance sheet method to report bad debt estimation. The estimation percenta...
A car dealership sells a car to a customer for $35,000. The customer makes a 10% down payment, and the dealership finances the remaining 90% in-house. How much will the car dealership record in acc...
An auditor calculated the accounts receivable turnover for the year. What type of auditing procedure is being described?
Alpha Company uses an allowance method for recording bad debts. On July 15, 2016, Alpha Company was advised of the bankruptcy of the Broken Corporation and wrote off their $1,500 of accounts receiv...
HH Consulting and Design provided $800 of Consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next mo...
What are the three conditions that must be made in order for a transfer of accounts receivable (with recourse) to be accounted for as a sale?
Suppose that the accounts receivable turnover ratio of a company is low when compared with other firms within its industry. How would this information be useful to the managers of a company?
Diamond Window Corp.'s sales, half of which are for cash, over the past three months were March- $140,000 April- $240,000 May- $160,000 a. Estimate cash receipts in May if the collection period is...
What type of account must the sum of all subsidiary accounts be equal to? What are some benefits to a business in accepting credit cards and debit cards? What are two common methods used when accep...
Ralntree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense Is recorded only at December 31, the company's fiscal year-end. The 2017 balance...
Examine the five steps to managing accounts receivable.
What is the correct accounting treatment for the transfer of a debit balance from the trade payables ledger to the trade receivables ledger? Trade receivables control Trade payables control (1) Cr...
Lirin Inc. factors $6,000,000 of its accounts receivables without recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adj...
Accounting Corp began operations on January 1, 2016. At the end of 2016, the company recorded bad debt expense of $1,500. On July 1, 2017, Accounting Corp wrote off as uncollectible $800 of account...
On January 15, 2016, Bravo Company billed a customer for $20,000 of services rendered to be collected at a later date. Prepare the general journal entry (without explanation) needed.
Roster Co. adjusts its allowance for uncollectible accounts at year-end. The general ledger balances for the accounts receivable and the related allowance account before adjustment were $1,500,000...
On April 30, Victor Services had an Accounts Receivable balance of $35,600. During the month of May, total credits to Accounts Receivable were $71,200 from customer payments. The May 31 Accounts Re...
Discuss how you think accounts receivable would impact a business you would like to open or work for in the future. Be sure to include in your discussion, uncollectible accounts.
Alpha's net accounts receivable were $500,000 at December 31, 2015, and $600,000 at December 31, 2016. Net cash sales for 2016 were $200,000. The accounts receivable turnover for 2016 was 5.0. Use...
On 6 April, the company received a 90-day, 10% acceptance covering the amount owing by F. French, the acceptor, for $5,500. What would go in the general journal to record receipt of bill?
What are the consequences of a credit policy that is too strict? Too lenient? How does their credit policy impact the amount of uncollectible accounts that need to be written off?
What savings are realized when accounts receivable are factored rather than pledged?
1. What are the costs associated with carrying receivables? 2. What are the costs associated with not granting credit? 3. What do we call the sum of the costs for different levels of receivables?
Casa Development, Inc. has budgeted sales revenues as follows: Past experience indicated that 80% of sales each month are on credit and that collection of credit sales occurs as follows:
Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2016, year-end balance sheet: Current assets: Accounts receivable, net of $24,000 in allowance for uncollectibl...
Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/60. The balance of each account receiv...
What is the preferred method of dealing with "bounced checks" when the original transaction included sales tax? a. Generate a statement for the customer. b. Invoice the customer for the purchase...
Alpha Company sells goods to customers who use Worldwide Express nonbank credit cards. Credit card sales on July 15, 2016, amounted to $25,000 and were subject to a 4.5% credit card company collect...
Net sales total $912,500. Beginning and ending accounts receivable are $73,000 and $ 67,000 respectively. Calculate days' sales in receivables. a. 25 Days b. 28 Days c. 27 Days d. 34 Days
Alpha Company uses the direct write-off method of recording uncollectible accounts. On August 15, 2016, Yankee Zulu filed for bankruptcy and informed Alpha that he would be unable to pay $300 owed...
August bakery sales total $20,000. $7,500 of this total is on accounts receivable. Determine how this will be recorded in a general journal.
A company realizes that the last two days' revenue for the month was billed but not recorded. The adjusting entry on December 31 is a debit to Accounts Receivable and a credit to Fees Earned. True...
Which method of reporting losses on accounts receivable is required in the U.S. for income tax purposes? a. Allowance b. Direct Write-off
Wechsler Company has net accounts receivable opening balance of $250,000 and ending balance of $300,000. The total sales amount for the year is $1,700,000, of which 80% are on credit. Normal credit...
Sales revenue for a sporting goods store amounted to $528,000 for the current period. All sales are on account and are subject to a sales tax of 11?%. Which of the following would be included in th...
Frankco Company had accounts receivable of $50,000 and net credit sales of $250,000 for May 20X2. There is a balance in the allowance account of $3,500 before adjusting entries are recorded. Histor...
On Oct 1, 2017 Windsor, Inc assigns $1,205,800 of its accounts receivable to Sheridan national bank as collateral for a $722,900 note. The bank asses a finance charge of 3% of the receivables assig...
The balance in Accounts Receivable at the beginning of the period amounted to $16,000. Assume the use of the allowance method of accounting for bad debts. During the period $64,000 of credit sales...
The write-off of an uncollectible account receivable will change the value of Net Accounts Receivable on the Balance Sheet. True False
Aging Accounts Receivable measures: A. days a bill has been due but not paid. B. months a bill has been due but not paid. C. sales for the year. D. All of the above
Sweet Treat Inc. began the year with $25,000 in accounts receivable and ended the year with $13,000 in accounts receivable. If credit sales for the year were $575,000 the cash collected from the cu...
What happens if Campbell's does not write off their Uncollected Accounts Receivable?
Is it likely that all their Accounts Receivable will be collected? Why or why not and give specific reasons.
Does Campbells have Accounts Receivable? If yes, then please state $ and what financial statement you found this information on.
On January 20, 2016, Bravo Construction Company purchased $2,500 of supplies. Half were used immediately for a current job. Half of the purchase amount was paid for with cash and the rest was on ac...
K. L. Dearborn owns a department store that has a $46,000 balance in Accounts Receivable and a 3,000 credit balance in Allowance for Doubtful Accounts. 1. Determine the net realizable value of the...
Which of the following is a valid alternative action for an organization to take to minimize credit losses? a) Implement a system of formal collection policies. b) Never sell on credit. c) Force co...
North Incorporated sold $300,000 of accounts receivable to Southern Inc. on a with recourse basis. Southern assesses a 3% finance charge of the amount of accounts receivable and retains an amount e...
Oriole company has accounts receivable of $92,000 at March 31, 2017. Credit terms are 2/10, n/30. At March 31, 2017, there is a $1,949 credit balance in Allowance for Doubtful Accounts prior to adj...
Heaton Corp. sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $425,000, and its year-end receivables were $60,000. If its DSO is less than the 45-day cre...
Why should a firm actively monitor the accounts receivable of its credit customers? How are the average collection period and an aging schedule used for credit monitoring?
In the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $82,100. During the year, Dinty wrote off $30,800 of accounts receiva...
Badlands, Inc. manufactures a household fan that sells for $20 per unit. All sales are on the account, with 40 percent of sales collected in the month of sale and 60 percent collected in the follow...
True or False: A non-zero credit spread differential indicates that two markets assess the credit risk of two firms differently, which is the result of market imperfections.
Which of the following is more difficult to estimate accurately. Explain. a. Estimating receivables b. Inventory receivables c. Payables receivables
At the end of 2016, Rahal's Auto Parts estimates bad debts of $2,125 (calculated based on an aging). At the end of 2015, the company reported final accounts receivable and an allowance for uncollec...
How do you calculate Accounts Receivables when given 2 years of financial information, and the most recent year's Accounts Receivables is missing?
Accounts receivable January 1, 2017 - $236,000 Credit sales during 2017 - $820,000 Collections from credit customers during 2017 - $590,000 Customer accounts written off as uncollectable during 201...
AG Inc. made a $25,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as revenue?
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