ch 7: accounting for reciveables

Question 1

accts recieveable

Answer 1

amounts due from customers for credit sales

Question 2

credit card expenese D or C

Answer 2

D

Question 3

recording transcation with credit card

Answer 3

1- D cash
D credit card expense
C total sales

2- D cost of goods sold
C merchandise inventory

Question 4

what does cost of goods sold/merchandise inventory represent

Answer 4

how much goods had actually cost

Question 5

control account

Answer 5

single total accts recievable account

Question 6

accts receievable ledger

Answer 6

a supplementary record had sep acc for each customer

Question 7

bad debts expense

Answer 7

accounts of customers who did not pay what they have promised to pay from their receivable

Question 8

schedule of acts rec

Answer 8

sum of the individual accounts in the subsidiary
ledger equals the balance of the Accounts Receivable account in the general ledger

Question 9

credit card sales advantages

Answer 9

-eliminates companys need to ecaluate each customer credit standing

-avoids seller risk

-seller recieves cash than when they grant credit directly

-more credit optionas potentially increase sales

Question 10

2 method for uncollectiable accs

Answer 10

-direct write off
-allowance method

Question 11

direct write off method definition

Answer 11

method that records the loss from an uncollectivale acc receivable at the time it is determined to be uncollectible

Question 12

entry for direct write off

Answer 12

D- bad debts expense
C- accts reciveable

Question 13

what entry if an account that has been written off is recorded later

Answer 13

D-cash
C-accts reciveable

Question 14

total entry for write off + collected

Answer 14

1- D bad debts
C acct rec

2- D Acc rec
C bad debts

3- D Cash
C acct rec

Question 15

allowance method

Answer 15

mathces. the estimated loss from the uncollectible agaisnt the sales they helped produce

(requires estimate of the total bad debts expcted from a period)

Question 16

allowance method advanatages

Answer 16

-records estimated bad debts expense in the period when the related sales are recorded

2-reports accounts receiavle on the balance sheet at the amt to be collected

Question 17

allowance for doubtful accounts

Answer 17

contra asset acct with balance approximating uncollectibale accts rec

Question 18

entry for record bad debts expense (allowance method)

Answer 18

D-bad debts expense
C- allowance for doubtful accounts

Question 19

entry for when an account actually becomes uncollectible

Answer 19

D-allowance for doubtful acc
C-acct recievable

Question 20

full entry allowance method (estimate uncollectible, become uncollectibale, collected)

Answer 20

D-bad debts expense
C- allowance for doubtful accounts

D-allowance for doubtful acc
C-acct recievable

D-Acc rec
C- allowance for doubful acc

D-cash
C-acc recievable

Question 21

percent of sales method

Answer 21

assume that a percent of credit sales for the period is uncollectible

(same bad debts allowance method)

Question 22

percent of receivables method

Answer 22

assumes that a percent of companys receivble is uncollectable

Question 23

note

Answer 23

written promise to pay a specificed amount either on demand or at a future date

Question 24

principle of the note

Answer 24

the amount specifieced to pay

Question 25

interest

Answer 25

charge of using money till its due

Question 26

maturity date of note

Answer 26

the day the note must be repaid

Question 27

ex: 90 day note dated july 10 (how do you find maturity date)

Answer 27

Julydays(31)-date of note (10)
=21+ (31) august +30(sept)
days to equal 90 days = october 8

Question 28

how to calculate interest

Answer 28

principal X interest rate X time in fraction

Question 29

recording notes rec

Answer 29

D-notes rec
C-sales

Question 30

interest revenue vs interest reciebale

Answer 30

reciable- interest earned during said time period

revenue- interest earned from the resy of the priod

Question 31

entry if one dishonors a note

Answer 31

D-acc rec
C-interest revenue
C-interest rec
C-notes rec

Question 32

first entry honoring dishonoring notes

Answer 32

D- notes rec
C-sales

D-interest rec
C-interest rev

Question 33

how to record if one honors the note

Answer 33

D-cash
C-interest rev
C-interest rec
C-notes rec

Question 34

how to do entry if one honors the note and it is wirtten off (allowance method)

Answer 34

D-allowance for d
C-acc rec

Question 35

goal of the accounts receivable methods is to adjust the Allowance for Doubtful Accounts balance so that

Answer 35

The adjusted balance is equal to the estimate of the uncollectible accounts receivable

Question 36

Bad Debts Expense for the current year.

Answer 36

allowance for doubt (current)
+ write off
-allowance for doubt (previous)