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Exam 8: Accounting for Receivables

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Question 141

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Flint Distributors has the following transactions related to notes receivable during the last two months of the year. Dec. 1 Loaned $18,000 cash to G. Kingsley on a 1-year, 6% note. 16 Sold goods to D. Jones, receiving a $4,800, 60-day, 7% note. 31 Accrued interest revenue on all notes receivable. Instructions Journalize the transactions for Flint Distributors.

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Question 142

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Gowns, Inc. uses the percentage of receivables basis to estimate its bad debts. At December 31, 2014, Gowns estimates total bad debts that will become uncollectible in the future as €5,570. The existing balance in the Allowance for Doubtful Accounts is a debit balance of €1,320. The Accounts Receivable balance at December 31, 2014 is €99,000. The cash realizable value of Accounts Receivable reported on the statement of financial position at December 31, 2014 is

A) €92,110.
B) €104,570.
C) €93,430.
D) €94,750.

E) B) and C)
F) A) and D)

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Question 143

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Allowance for Doubtful Accounts is a contra asset account.

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

Listed below are two independent situations involving the disposition of receivables. 1. Fultz Company sells $250,000 of its receivables to Quick Factors, Inc. Quick Factors assesses a finance charge of 2% of the amount of receivables sold. Instructions Prepare the journal entry to record the sale of the receivables on Fultz Company's books. 2. A restaurant is the site for a large company party. The bill totals $4,000 and is charged by the patron on a Visa credit card. Instructions Assume a 3% service fee is charged by Visa. Record the entry for the transaction on the restaurant's books.

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest.

Parks Company receives a $15,000, 3-month, 8% promissory note from Todd Company in settlement of an open accounts receivable. What entry will Parks Company make upon receiving the note?

Charlie Co. lends Caroline Green Inc. $20,000 on June 1, 2014, accepting a five-month, 9% interest-bearing note. Assuming the date Charlie's statement of financial position is September 30, 2014, what amounts will Charlie record related to this note?