Accounts Receivables

Question 1

How to calc the AR before allowance for credit losses?

Answer 1

In order to calc we would put all the items in a T Account

In the (debt side) we will have
AR - 650,000
Credit Sales - 2,700,000

Credit Side we will have
Sales Return 75,000
Collections 2,150,000
Write offs 40,000

= 12/31 1,085,000

Question 2

How to calc the credit loss expense for trade receivable?

Answer 2

Start off with a T account where we

Debit the write offs 46,000

Credit the uncollected 42,000
(Credit loss exp) 56,000

                          12/31 52,000

Question 3

How does Write off affect the credit losses on AR?

Answer 3

Decrease the AR and increase the allowance for credit losses

Question 4

When the allowance method for credit losses is used on accounts receivable what are the affects on Net income and total assets?

Answer 4

no effect on either net income or total asserts

Question 5

When there is a factor that is without recourse is it a sale or loan?

Answer 5

It’s a Sale bc the receivable are factored without recourse the transaction is treated as a sale bc buyers accepted the risk of collectibility

Question 6

What is a factoring?

Answer 6

realizing cash on AR is factoring which outright sale of receivable for cash at discounts

Question 7

Calc the interest revenue earned for the life of the note?

Answer 7

Annual payments 5009 x 5 years = 25,045 will receive cash

Present Value 19,485

Cash 25,045 - 19,485 = 5,560 interest revenue earned

Question 8

Calc the discounted at the bank at 10%?

Answer 8

Sold goods 200,000 x 10% x 6/12 = 10,000

200,000 - 10.000 = 190,000

Question 9

Calc the interest revenue earned?

Answer 9

Step 1 calc the annual payment

20,000 /
3.992 5010 annual payment

5010 annual pay
x 3.89 discounted rate
= 19,488.9

5010 annual payment
x 5 years for the note
25050

25050 - 19489 = 5561 total interest revenue

Question 10

When a note receivable sold before maturity would that be considered discounted or pledge?

Answer 10

discount

Question 11

Calc, the net carrying amount of AR?

Answer 11

AR - 900,000
Amounts uncollectible - 64,000
= 836,000 Carrying amounts of AR

Question 12

When the allowance method is used and AR is written off what happens to AR and allowance for credit loss?

Answer 12

AR and allowance for credit loss are decreased

Question 13

When the allowance method has unexpected collection how is that account restated?

Answer 13

by increase in cash and the allowance

Question 14

If a note is received and sold before maturity is it discounted?

Answer 14

YES

Question 15

Is factoring and assignment generate cash from account receivable?

Answer 15

Assignment and factoring

Question 16

Calc the allowance method of recognizing credit losses on accounts receivable is used the write off a specific account

Answer 16

decrease in AR & allowance for credit losses

Question 17

Method of recording credit loss expense accounts receivable is consistent with accrual accounting?

Answer 17

Allowance is YES
Direct Write off is NO

Question 18

Calc the allowance for credit losses that have a credit balance?

Answer 18

Using the AR 1,000,000 x 3% = 30,000

Question 19

Calc, trade Account Receivable

Answer 19

Net 30 days terms 150,000
Credit sale special 9th months 10,000

When classified receivable financial position expected operating cycle or 1 year

Question 20

Calc, the Accumulated Depreciation for machine ?

Answer 20

Part 1

Purchased machine 264,000
Years life for machine 8 year

Depreciation per year 33,000

Question 21

Calc, the sales revenue for the long term receivable reported at the present value?

Answer 21

60,000 annual payment for 7 years x 4.36 = 261,600 + 60,000 = 321,600

Question 22

Calc, Aloe receive factored receivables?

Answer 22

factored 80,000 x 10% = 8,000

Factored 80,000 x 5% = 4,000

80,000 - 8000 - 4000 = 68,000 factored receivable

Question 23

Calc, the net sales revenue for new sales made during the month?

Answer 23

Sales 200,000 x 95% = 190,000 Net Sale recognized

Question 24

What amount of contingent liability notes must Davis disclose in the financial statements for the end of the year?

Answer 24

the full amount of 20,500 would be disclosed in the notes

Question 25

Are assignment and factoring a way for accounts receivable to generate cash?

Answer 25

Yes

Question 26

Calc, allowance for credit losses have a credit balance?

Answer 26

1,000,000 A/R
x 3%.

= 30,000 credit losses have a credit balance

Question 27

The amount if cash received from the transfer of receivable with recourse is most likely to be reported as liability under?

Answer 27

The transferor is entitled and obligated to repurchase the receivable at a later date

Question 28

Calc the cost of the merchandise?

Answer 28

20,000 list price
20% discount
(4,000)

= 20,000 - 4000 = 16,000

10% discount (1,600)

14,400 cost of merchandise

Question 29

Calc, allowance for credit losses?

Answer 29

Accounts receivable 1,000,000 x 3% = 30,000

Question 30

Calc, the recorded sales revenue noninterest bearing note?

Answer 30

60,000 annual payment x 4.36 PV of ordinary annuity 4.36 = 261,600 + 60,000 = 321,600

Question 31

Calc, the net carrying amount of the account receivable at December 31?

Answer 31

Start off with Account Receivable 900,000 - 64,000 amounts deemed uncollectible = 836,000

Question 32

Calc the amount depreciation expense be decreased for the consolidated worksheet?

Answer 32

Subsidiary 72,000 / 3 years = 24,000

Parent 80,000 / 5 years = 18,000

24,000 - 18,000 = 8,000 depreciation expense should be decreased on the consolidated financial statement

Question 33

When receivable aren’t paid are they disclosed?

Answer 33

Yes the receivable that are not paid are disclosed on the financial statements

Question 34

If someone receives a lot of funds and would like to alter the timing of the receivable recorded on books?

Answer 34

Factor the receivable outstanding would be helpful in receiving the funds a bit sooner