ACCT 1201 Chapter Notes - Chapter 8: Interest Rate, Accounts Receivable, Accounts Payable

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periwinklelizard551

5 May 2015

School

Northeastern University

Department

Accounting

Course

ACCT 1201

Professor

A L L

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Document Summary

Types of receivables: 1) accounts receivable: amounts customers owe as a result of the sale of company"s product, and expected to be collected within 30 to 60 days. 2) notes receivable: (trade receivables) are a written promise for amounts which are expected to extend 60 - 90 days or longer, they are collected with interest. 3) other receivables: include nontrade receivables which do not result from the operations of the business. Accounts receivables: recognizing, valuing and disposing accounts receivable: recognizing: when a company provides its product (service or good) on account. Selling on account increases (debits) accounts receivable and increases (credits) sales revenue. Sales returns decreases (credits) accounts receivable , and increases (debits) sales returns. To encourage early payments , the seller offers discount , so when it"s paid both of. Cash and discount increase (debit), and accounts receivables decreases (credit).

Related Questions

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.

ochrecricket36

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the companyâs fiscal year-end. The 2017 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $48,000 $ 522,000 During 2018, credit sales were $1,840,000, cash collections from customers $1,920,000, and $57,000 in accounts receivable were written off. In addition, $4,800 was collected from a customer whose account was written off in 2017. An aging of accounts receivable at December 31, 2018, reveals the following: Percentage of Year-End Percent Age Group Receivables in Group Uncollectible 0â60 days 70 % 5 % 61â90 days 20 15 91â120 days 5 20 Over 120 days 5 40 Required: 1. Prepare summary journal entries to account for the 2018 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: Bad debt expense is estimated to be 4% of credit sales for the year. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable. 3. For situations (a)â(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet?

pinkantelope545

The Septemberâ30,2017â,records of Perfecto Communications include theseâ accounts:

Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .	$250,000
Allowance for Doubtful Accounts . . . . . . . . . . . . . . . . . . .	(8,300)

During theâ year,

Perfecto Communications estimatesâ doubtful-account expense atâ 1% of credit sales. Atâ year-end (Decemberâ 31), the company ages its receivables and adjusts the balance in the Allowance for Doubtful Accounts to correspond to the aging schedule. During the last quarter of 2017â, the company completed the following selectedâ transactions:

Nov 30

Wrote off as uncollectible the $1,300 account receivable from Brown Carpets and the $400 account

receivable from Priceless Antiques.

Dec 31

Adjusted the Allowance for Doubtful Accounts and recorded doubtful-account expense at year-end,

based on the aging of receivables.

	Age of Accounts
Accounts Receivable	1-30 Days	31-60 Days	61-90 Days	Over 90 Days
$236,000	$135,000	$55,000	$10,000	$36,000
Estimated percent uncollectible	0.2%	2%	15%	35%

Requirement 1. Record the transactions for the last quarter of 2017 in the journal. Explanations are not required. â(Record debitsâ first, then credits. Exclude explanations from any journalâ entries.)

Wrote off as uncollectible the $1,300 account receivable from Brown Carpets and the $400 account receivable from Priceless Antiques

Journal Entry
Date		Accounts	Debit	Credit
Nov	30

Adjusted the Allowance for Doubtful Accounts and recordedâ doubtful-account expense atâ year-end, based on the aging of receivables.

Journal Entry
Date		Accounts	Debit	Credit
Dec	31

Requirement 2. Prepare aâ T-account for Allowance for Doubtful Accounts with the appropriate beginning balances. Post the entries from Requirement 1 to that account.

Open theâ T-account by posting the beginning balance. Then post the entries to the Allowance for Doubtful Accountsâ T-account and calculate the ending balance.

Allowance for Doubtful Accounts

Requirement 3.will report its accounts receivable in a comparative balance sheet for

2016

and

2017

Use theâ three-line reporting format. At

December

â31,

2016

â,

theâ company's Accounts Receivable balance was

$ 213 comma 000

â,

and the Allowance for Doubtful Accounts stood at

$ 4 comma 700

	Perfecto Communications
	Comparative Balance Sheet (partial)
	December 31, 2017 and 2016

		2017

Less:

2016

Choose from any list or enter any number in the input fields and then continue to the next question.

redshark999

ACCT 1201 Chapter Notes - Chapter 8: Interest Rate, Accounts Receivable, Accounts Payable

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