ACCN 2010 Chapter 8 Homework

(a)

ACCN 2010 Chapter 8 Homework | Tulane University 

Written promise (as evidenced by a formal instrument) for amounts to be received.

                             Cash (net) Realizable Value Factor Notes Receivable Aging the Accounts Receivable Percentage-of-Receivables Basis Allowance Method Concentration of Credit Risk Dishonored (Defaulted) Note Direct Write-Off Method Accounts Receivable Turnover

(b)

A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period.

                             Cash (net) Realizable Value Direct Write-Off Method Concentration of Credit Risk Factor Aging the Accounts Receivable Dishonored (Defaulted) Note Notes Receivable Accounts Receivable Turnover Allowance Method Percentage-of-Receivables Basis

(c)

A measure of the liquidity of accounts receivable, computed by dividing net credit sales by average net accounts receivable.

                             Direct Write-Off Method Concentration of Credit Risk Percentage-of-Receivables Basis Aging the Accounts Receivable Factor Notes Receivable Accounts Receivable Turnover Allowance Method Dishonored (Defaulted) Note Cash (net) Realizable Value

(d)

A method of accounting for bad debts that involves charging receivable balances to Bad Debt Expense at the time receivables from a particular company are determined to be uncollectible.

                             Accounts Receivable Turnover Notes Receivable Dishonored (Defaulted) Note Direct Write-Off Method Aging the Accounts Receivable Allowance Method Concentration of Credit Risk Cash (net) Realizable Value Factor Percentage-of-Receivables Basis

(e)

A finance company or bank that buys receivables from businesses for a fee and then collects the payments directly from the customers.

                             Notes Receivable Allowance Method Aging the Accounts Receivable Accounts Receivable Turnover Direct Write-Off Method Concentration of Credit Risk Factor Cash (net) Realizable Value Percentage-of-Receivables Basis Dishonored (Defaulted) Note

(f)

The net amount a company expects to receive in cash from receivables.

                             Dishonored (Defaulted) Note Notes Receivable Cash (net) Realizable Value Concentration of Credit Risk Direct Write-Off Method Allowance Method Percentage-of-Receivables Basis Accounts Receivable Turnover Aging the Accounts Receivable Factor

(g)

The threat of nonpayment from a single large customer or class of customers that could adversely affect the financial health of the company.

                             Aging the Accounts Receivable Percentage-of-Receivables Basis Concentration of Credit Risk Allowance Method Accounts Receivable Turnover Dishonored (Defaulted) Note Direct Write-Off Method Notes Receivable Factor Cash (net) Realizable Value

(h)

A note that is not paid in full at maturity.

                             Allowance Method Factor Direct Write-Off Method Notes Receivable Aging the Accounts Receivable Dishonored (Defaulted) Note Percentage-of-Receivables Basis Concentration of Credit Risk Cash (net) Realizable Value Accounts Receivable Turnover

(i)

A method of estimating the amount of bad debt expense whereby management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts.

                             Aging the Accounts Receivable Notes Receivable Cash (net) Realizable Value Concentration of Credit Risk Dishonored (Defaulted) Note Percentage-of-Receivables Basis Direct Write-Off Method Factor Accounts Receivable Turnover Allowance Method

(j)

A schedule of customer balances classified by the length of time they have been unpaid.

At December 31, 2021, Pharoah Imports reported this information on its balance sheet.

During 2022, the company had the following transactions related to receivables.

(a)

Your answer is correct.

Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b)

Enter the January 1, 2022, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts and determine the balances. (Post entries in the order of journal entries posted in the previous part)

(c)

Prepare the journal entry to record bad debt expense for 2022, assuming that aging the accounts receivable indicates that estimated bad debts are $52,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

                             Aging the Accounts Receivable Dishonored (Defaulted) Note Direct Write-Off Method Allowance Method Notes Receivable Cash (net) Realizable Value Concentration of Credit Risk Factor Accounts Receivable Turnover Percentage-of-Receivables Basis