A/R

Question 1

Accounts receivable

Answer 1

Debit balance account

Increase w debits
Decrease w credits when cash received

Question 2

Sales discounts what to record at time of sale? Gross method

Answer 2

Gross method record 100 percent of the sale
D acct Rec
C sales

Question 3

If the buyer takes the discount when gross method was used then the JV will

Answer 3

D cash
D sales discount taken for the amount of the discount
C accounts receivable

Question 4

Discount net method

Answer 4

Sale is recorded w the discount

You calculate the discount and net it out before recording the accounts receivable journal entry

Question 5

Bad debt

Answer 5

Percent of sales allowed
Percent of receivables allowed
Direct write off method not allowed!

Question 6

JV accts receivable

Answer 6

D accounts receivable

C allowance for doubtful accounts

Question 7

Order to calculate bad debt expense

Answer 7

1 take percent of acct rec expected to be bad - this is the ending balance allowance for doubtful accounts
2 review allow for doubtful account begin balance
3 use the two to back into bad debt expense

Question 8

Bad debt expense JV

Answer 8

D bad debt expense

C allowance for doubtful accounts

Question 9

Allowance for doubtful accounts

Answer 9

Asset account - contra asset
Balance sheet
Natural credit balance

Question 10

Write off when account is deemed uncollectible - do a formal write off on the balance sheet, won’t involve income statement at all

Answer 10

D allowance for doubtful accounts

C accounts receivable

Question 11

A/R factoring

Answer 11

Factoring to a bank to get income from your sales on credit now instead of later

Question 12

Factoring - you remove the accounts receivables from the books

Answer 12

D cash received now from the bank
D hold back from the factoring (holding in case of sales returns)
D factoring fees- loss on receivables
C acct receivables to remove from the books

Question 13

With and without recourse

Answer 13

With recourse means you also have to account for people who default on their debt

Question 14

With recourse

Answer 14

Do the factoring and D cash for the normal amount to be received, C acct Rec
But also figure the recourse liability and add that amount as a D to loss on factoring and a C to recourse liability

Question 15

Assigned acct rec

Answer 15

Acct rec used as collateral- acct rec stay on the books, but are moved to an account labeled assigned accounts receivable

Question 16

Pledging of accts receivable

Answer 16

Instead of some of the acct rec being designated, ALL of acct rec are pledged
Still stay on books, no reclassification JV, requires a footnote

Question 17

Discounting a note

Answer 17

1 calculate interest lender would have earned - this would be annual interest
2 calculate interest bank will earn at their rate ( use the updated face amount from number 1) times the amount of time they will have the note
3 bank will give lender the face amount of the note and the remaining interest the lender can earn for the time they held it

Question 18

Gross method acct rec

Answer 18

D receivables
C sales
No entry for possible discount on gross method

Question 19

JV if buyer takes the discount under gross method

Answer 19

D cash
D sales discount for the amt of the discount
C accounts receivable (always have to clear AR)

Question 20

JV acct receivable net method

Answer 20

D acct receivable
C sales
The acct rec amount is net of the discount because we are expecting the discount

Question 21

JV acct rec if net method and discount not taken

Answer 21

D cash
C acct rec
C sales discount not taken
We thought they would take the discount and they didn’t

Question 22

Net method - no mention of the discount in the original recording

Answer 22

Yes - you just bet it from acct rec before recording it