ACC-1A Lecture Notes - Lecture 29: Promissory Note, Current Asset, Accounts Receivable
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Select the term that best fits each of the following definitions and descriptions.
a. | Notes receivable |
b. | Nontrade receivables |
c. | Net realizable value |
d. | Direct write-off method |
e. | Interest-bearing note |
f. | Maturity date |
g. | Promissory note |
h. | Factoring receivables |
i. | Trade discount |
j. | Present value |
k. | Allowance method |
l. | Sales discount |
m. | Negotiable note |
n. | Non-interest-bearing note |
o. | Assignment of receivables |
p. | Valuation date |
____ 21. Receivables that are evidenced by a formal written promise to pay a certain sum of money at a specified date.
____ 22. The date the principal amount of a note is due to be paid.
____ 23. The sum of future receipts or payments discounted to the present date at an appropriate rate of interest.
____ 24. A method of recognizing the estimated losses from uncollectible accounts as expenses during the period in which the sales occur.
____ 25. A note that is legally transferable by endorsement and delivery.
____ 26. Any receivable arising from transactions that are not directly associated with the normal operating activities of a business.
____ 27. A note written in the form where the face amount includes the interest charges.
____ 28. The borrowing of money with receivables pledged as security on the loan.
____ 29. A note written in the form where the maker promises to pay the face amount plus interest at a specified rate.
____ 30. An unconditional written promise to pay a certain sum of money at a specified time.
Prepare the Income Statement, Statement of Ownersâ Equity and the Balance Sheet for the fiscal year ending September 30, 2017. To support your work prepare the appropriate journal entries and post to the related Accounting Equation or âT-accounts".
The attached Balance Sheet gives your firm's position at the end of fiscal 2016. During fiscal 2017, your firm has the following transactions:
Your firm has total sales for the year of $1,210,500. Included in the total sales figure are $1,010,500 sales on credit. During the year, the firm received $792,000 of payments on account. Customers returned $7,800 for cash refunds during the year.
During the year, the firm determined that accounts totaling $2,900 were uncollectible. Moreover, a $375 receivable written off during the year was subsequently collected. The $375 is not included in âA.â above.
Your firm uses the allowance method to record bad debts. Specifically, the firm uses the percentage of receivables method to compute the allowance for doubtful accounts. The firm uses the following information to determine the allowance:
Age of Receivables | Percent of current balance | Percent expected uncollectible |
<30 days | 70% | 2% |
< 60 days | 23% | 10% |
>60 days | 7% | 50% |
Your Firm | |||
Balance Sheet | |||
September 30, 2016 | |||
Assets | |||
Cash | $ 102,530 | ||
Accounts receivable | $ 101,640 | ||
Allowance for doubtful accounts | (6,160) | ||
Accounts receivable, net | 95,480 | ||
Inventories | 136,400 | ||
Trading securities | 111,100 | ||
Prepaid insurance | 17,100 | ||
Total Current Assets | 462,610 | ||
Property, Plant and Equipment, gross | $ 1,633,500 | ||
Accumulated depreciation | (546,975) | ||
Property, Plant and Equipment, net | 1,086,525 | ||
Total Assets | $ 1,549,135 | ||
Liabilities and Shareholders' Equity | |||
Accounts payable | $ 89,645 | ||
Salaries payable | 31,575 | ||
Dividends payable | 4,400 | ||
Total Current Liabilities | 125,620 | ||
Long-term note payable | 380,000 | ||
Total Liabilities | 505,620 | ||
Common stock, no par | 490,000 | ||
Retained Earnings | 591,215 | ||
Accumulated Other Comprehensive Income | 4,300 | ||
Treasury stock | (42,000) | ||
Total Shareholder's Equity | 1,043,515 | ||
Total Liabilities and Shareholder's Equity | $ 1,549,135 |