ACT 205 Chapter Notes - Chapter 5.1: Accounts Receivable

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skykangaroo617

8 Mar 2018

School

CSU

Department

Accounting

Course

ACT 205

Professor

Sally Plasterer Whitney

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Document Summary

The amount of cash owed to a company by its customers for the sale of something on account. There is a risk that the customer will not pay. Transfer products and services to a customer today while bearing the risk of collecting payment in the future. Usually includes an informal credit agreement and invoice. *even though the seller doesn"t get cash at the time of credit sale, the firm records the revenue when goods and services are provided to the customer. The legal right to receive cash is valuable. Therefore, it represents an asset to a company. Receivables that originate from sources other than customers. When receivables are accompanied by formal credit arrangements made with written debt instruments (notes) A reduction in listed price of a good or service. Companies use this as an incentive for large customers/consumer groups to buy.

Related Questions

13.
value:
4 points

What would be the appropriate entry for the followingtransaction?
Bill Co. performed $5,200 in consulting services on account

1.Credit to Cash, Debit to Accounts Receivable

2.Debit to Revenue, Debit to Cash

3.Debit to Accounts Receivable, Credit to Cash

4.Debit to Revenue, Credit to Cash

5.Debit to Accounts Receivable, Credit to Revenue

14.
value:
4 points

Which of the following is the appropriate journal entry if acompany performs a service and then bills the customer?

1.Debit to Cash, Debit to Revenue

2.Debit to Cash, Credit to Revenue

3.Debit to Accounts Receivable, Credit to Cash

4.Debit to Revenue, Credit to Accounts Receivable

5.Debit to Accounts Receivable, Credit to Revenue

15.
value:
4 points

Of the following accounts, the one that normally has a creditbalance is:

1.Cash

2.Office Equipment

3.Sales Salaries Payable

4.Dividends

5.Sales Salaries Expense

16.
value:
4 points

For what reason do most sellers require customers to have theirreceipts in order to exchange or return purchased items?

The receipt contains coded information which the seller needs toprepare and analyze the trial balance.

Sellers wish to ensure that the sale in question was rung up on theregister in the first place.

This is a legal requirement mandated by a federal law.

The receipt is serving as a promissory note.

To create an environment in which customer's do not want to returnitems.

17.
value:
4 points

A ledger is:

A record containing increases and decreases in a specific asset,liability, equity, revenue or expense item

A journal in which transactions are first recorded

A collection of documents that describe transactions and eventsduring the accounting process

A list of all accounts with their debit balances at a point intime

A list of all accounts a company uses and includes anidentification number assigned to each account

18.
value:
4 points

Stride Rite has total assets of $425 million. Its total liabilitiesare $110 million. Its equity is $315 million. Calculate the debtratio.

38.6%

13.4%

34.9%

25.9%

14.9%

19.
value:
4 points

The accounting process begins with:

Analysis of business transactions and events

Preparation of financial statements and other reports

Summarizing the recorded effects of business transactions

Presentation of financial information to decision-makers

Preparation of the trial balance

20.
value:
4 points

Which of the following statements is correct?

When a future expense is paid in advance, the payment is normallyrecorded in a liability account called Prepaid Expense

Promises of future payment are called accounts payable

Increases and decreases in cash are always recorded in the retainedearnings account

An account called Land is commonly used to record increases anddecreases in both the land and buildings owned by a business

Accrued liabilities include accounts receivable

21.
value:
4 points

The adjusted trial balance contains information pertainingto:

Asset accounts only

Balance sheet accounts only

Income statement accounts only

All general ledger accounts

Revenue accounts only

22.
value:
4 points

A classified balance sheet:

Measures a company's ability to pay its bills on time

Organizes assets and liabilities into important subgroups

Presents revenues, expenses and net income

Reports operating, investing and financing activities

Reports the effect of profit and dividends on retainedearnings

23.
value:
4 points

If accrued salaries were recorded on December 31 with a credit toSalaries Payable, the entry to record payment of these wages on thefollowing January 5 would include:

A debit to Cash and a credit to Salaries Payable

A debit to Cash and a credit to Prepaid Salaries

A debit to Salaries Payable and a credit to Cash

A debit to Salaries Payable and a credit to Salaries Expense

No entry would be necessary on January 5

24.
value:
4 points

If a company records prepayment of expenses in an asset account,the adjusting entry would:

Result in a debit to an expense and a credit to an assetaccount

Cause an adjustment to prior expense to be overstated and assets tobe understated

Cause an accrued liability account to exist

Result in a debit to a liability and a credit to an assetaccount

Decrease cash

tealfox592

Question 26

Corresponds to CLO 6(b) Mann Corporation's employees workedovertime to complete an order that is sold on July 27. The officesends a statement to the customer on August 15, and payment isreceived on September 5. Mann follows generally accepted accountingprinciples (GAAP). In what month should the overtime wages beexpensed?

		either July or August, depending on when the pay period ends
		September
		August
		July

3 points

Question 27

Corresponds to CLO 6(c) Sight Company had the followingtransactions during 2013: sales of $5,000 on account; collected$1,600 for services to be performed in 2014; paid $4,100 cash for2013 salaries; purchased airline tickets for $800 in December for atrip to take place in 2014. What is Sight's 2013 net income usingaccrual accounting?

		$1,700
		$900
		$2,500
		$5,800

3 points

Question 28

Corresponds to CLO 6(d) Lyme Corporation had the followingtransactions during 2013: sales of $8,000 on account; collected$4,500 for services to be performed in 2014; paid $3,000 cash for2013 salaries; paid $400 for airline tickets for a trip to takeplace in 2014. What is Lyme's 2013 net income using cash basisaccounting?

		$4,600
		$9,100
		$1,100
		$1,500

3 points

Question 29

Corresponds to CLO 7(a) Ping Sports Company purchases $1,000 ofmerchandise on credit. Using the perpetual inventory approach, thejournal entry to record this transaction would be:

		debit: Inventory $1,000; credit: Accounts Payable $1,000
		debit: Accounts Payable $1,000; credit: Inventory $1,000
		debit: Accounts Payable $1,000; credit: Purchases $1,000
		debit: Purchases $1,000; credit: Accounts Payable $1,000

3 points

Question 30

Corresponds to CLO 7(b) Gardner Corporation had sales of $2,400on account on January 9, 2013. Gardner uses the periodic inventorymethod. The journal entry to record this transaction wouldinclude:

		a debit to Sales Revenue and a credit to AccountsReceivable.
		a debit to Accounts Receivable, a credit to Sales Revenue, adebit to Cost of Goods Sold, and a credit to Inventory.
		a debit to Accounts Receivable and a credit to SalesRevenue.
		a debit to Accounts Receivable, a credit to Sales Revenue, adebit to Cost of Goods Sold, and a credit to Purchases.

sangriamole743

I need some help with general journal entries.

1. On July 1, receive 69,100 cash from new investors and issue69,100 common stock to them.

Debit cash for 69100, credit common stock?

2. On July 1, Purchase 93,000 of new mowing equipment, payingcash to mower dealer.

Debit Equpment for 93,000 Credit cash for 93,000?

3. July 1 Pay 500 cash for july truck rental.

Debit truck rental expense, Credit cash?

4. July 3, invoice a customer 1870 for completed mowing job,customer will pay in 10 days.

Debit Accounts Receivable 1870, Credit Unearned revenue for1870? Not sure if this one is right.

*****5. July 5, The board of directors declares a cash dividend,the total amount of the dividend is 27000, the date of record isset as July 15, the Date of payment is set as July 31.

I'm not sure how to enter this one. Debit Dividends payableCredit Accounts receivable????*****

6. July 7, pay the employees 12,000 for work performed duringthe first week of july.

Debit Wages expense 12,000, Credit cash 12,000?

7. July 10, Complete a mowing job for a new customer. Customerpays 950 cash for the job.

Debit cash 950, Credit service revenue 950?

8. July 12 collect 3,500 cash from a golf course for a specialrush mowing job completed on May 31.

Debit 3,500 cash, but what do I credit? Can I get an explanationon this one too please?

9. July 14, pay employees 7200 for work performed during thesecond week of july.

Debit Wages Expense 7200, credit cash 7200.

***What's the difference between wages payable and wagesexpense? When do I know to use the expense vs liability account? Iswages payable when they are owed money in the future?

10. July 15, purchase $750 of supplies from the mower dealer.The supplies are consumed immediately. The mower dealer will bepayed in two weeks.

Debit Supplies expense $750, Credit accounts payable 750? Isthere anything else to this?

****11. July 15, collect 1870 on account. The cash that isreceived is from the new customer For the job completed on July3.

If looking back at #4, would I debit Cash for 1870, creditAccounts Receivable for 1870, then what else??*****

If anyone could help it would be greatly appreciated. I'm reallystruggling in this class and am trying to understand things, butnot having much luck.

ACT 205 Chapter Notes - Chapter 5.1: Accounts Receivable

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