Account Receivables

Question 1

Under the allowance method of recognizing uncollectible accounts, the entry to write off and uncollectible account:

Answer 1

Has no effect on net income
Credit or Decrease the amount of A/R
Debit or Decrease the amount of Allowance
Allowance for uncollectible accounts
      Account Receivables

Question 2

When the allowance method of recognizing uncollectible accounts is used, the entries at the time of collection of a small account previously written off would:

Answer 2

Increase the allowance for uncollectible accounts.
Increase the Account receivables:

Reverse the original write off entry

Account receivables
Allowance of uncollectible accounts

Cash
Account Receivables
So net effect on A/R is Zero

Question 3

NRV of Account Receivables are 435,000 and Account Receivables at Dec 31 respectively. What will be Ending Balance of Allowance for Uncollectible at Dec 31.

Answer 3

$265,000

Question 4

Important factors of Service Revenue for company that keeps accounting Record. He collects cash , there is increase in A/R, Unearned Fee is collected.

Answer 4

For accrual

Sales = Cash collected + increase in sale - Unearned Fee

Question 5

Do we add Security depossit on lease of warehouse used for storing inventories in Account Receivables.

Answer 5

NO

Question 6

Do we add claim against shipper of goods lost in transit in current year

Answer 6

Yes. We add this in Account receivables to get net receivables.

Question 7

Do we add selling price of unsold goods sent by company on consignment?

Answer 7

No this is consignment

Question 8

What is Accounting receivable BASE Formula

Answer 8

Beginning Balance
\+ Add Credit Sales
- Subtract Write-offs
- Subtract Sales Returns
= Ending Balance