FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Accounting for Receivables

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Essay

Review LaterAdd Note

Review Later

The Happy Puppy Kennel provided $660,000 of services to customers during 2013. All customers paid for the services with credit cards. The company submitted the credit card receipts to the credit card company immediately, and the credit card company paid cash in the amount of face value less a 4 percent service charge. Required: Record the credit card sales and collection of the receivables in the horizontal statements model, below. Show dollar amounts of increases and decreases. For cash flows, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by an event.

Correct Answer

verified

Explanation: Revenue is recorded for th...

View Answer

Show Answer

Question 52

Essay

Review LaterAdd Note

Review Later

The following information is available from Avery, Inc. for the year 2013. Required: Calculate the following: a) Avery's inventory turnover for 2013. b) The average number of days to sell inventory for the year. c) The receivable turnover. d) The average number of days to collect accounts receivable. e) Avery's operating cycle. f) Avery's cash flow from sales.

Correct Answer

verified

a) $230,000 cost of goods sold/$17,500 e...

View Answer

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Which of the following is not a significant difference between the allowance method and the direct write-off method of accounting for uncollectible accounts?

When a company receives payment from a customer whose account was previously written off, the customer's account should be reinstated.

The following information is available for Bluefield Company for the most recent year. What was Bluefield's operating cycle for the most recent year? (rounded)

The primary reason for a business to allow customers to purchase goods or services on account is to:

Perez Company experienced the following events during 2013: 1. Recognized $8,500 of service revenue on account 2. Wrote off as uncollectible an account receivable, $35. 3. Prepared adjusting entry to recognize uncollectible accounts expense. Perez expected that 2% of service revenue would not be collected Required: Show how each of these events would affect the financial statements model, below. Include dollar amounts of increases and decreases. When an account is not affected by a particular event, indicate with NA.

Valdez Company uses the percent of receivables method to estimate uncollectible accounts expense. Valdez began 2013 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $38,250 and $2,900, respectively. During the year, the company wrote off $2,320 in uncollectible accounts. In preparation for the company's 2013 estimate, Valdez prepared the following aging schedule: What will Valdez record as Uncollectible Accounts Expense for 2013?

Which one of the following is not an accurate description of the Allowance for Doubtful Accounts?

What financial statement ratios facilitate the measurement of a company's effectiveness in collecting cash from customers?

Indicate whether each of the following statements is true or false. _____ a) The higher the accounts receivable turnover ratio, the longer is a company's cash collection period. _____ b) The accounts receivable turnover ratio is measured as the amount of accounts receivable divided by Sales. _____ c) The average days to collect accounts receivable is measured as 365 divided by the accounts receivable turnover ratio. _____ d) The higher the average days to collect accounts receivable, the greater is the amount of cash collection. _____ e) The lower the average days to collect accounts receivable, the faster is the cash inflow from accounts receivable.

The amount of uncollectible accounts expense recognized on the 2013 income statement is:

On November 1, 2013, Gannon Company accepted a credit card as payment for $2,500 of services rendered to one of its customers. Assume the credit card fee of 3% is recorded on the date of the sale. Show the effect of this transaction on Gannon's financial statements.

What type of account is Allowance for Doubtful Accounts, and what is its normal balance?

Goran Company accepted a credit card account receivable in exchange for $5,500 of services provided to a customer. The credit card company charges a 5% service charge. The collection of cash from the credit card company when it settles the account receivable balance will act to:

With the direct write-off method, writing off an account receivable is an asset use transaction.

The amount of accounts receivable that is actually expected to be collected is known as:

During 2013, Rockingham Trucking Co. had service revenue on account of $1,400,000. Rockingham had a balance in the Accounts Receivable account of $140,000 at the beginning of the year and a year-end balance of $170,000. During the year Rockingham wrote-off $35,000 of worthless receivables. Rockingham uses the direct write-off method for uncollectible accounts. a) Prepare the journal entry for Rockingham's revenue for 2013. b) Prepare the journal entry to record the write-off of the receivables. c) What amount of cash did Rockingham collect from customers during 2013?

Indicate whether each of the following statements is true or false. _____ a) Other things being equal, an operating cycle of 49 days is more desirable than an operating cycle of 120 days. _____ b) The operating cycle is longer for a winery than a fast-food restaurant. _____ c) The length of an operating cycle is not relevant to the profitability of a business. _____ d) The length of an operating cycle equals the average days to collect accounts receivable. _____ e) The length of an operating cycle is computed by adding the sum of the average days in inventory and the average number of days to collect accounts receivable.

How would accountants estimate the amount of a company's uncollectible accounts expense?