ACC-1A Lecture Notes - Lecture 13: Promissory Note, Matching Principle, Accounts Receivable
Document Summary
Get access
Related Documents
Related Questions
Chamberlain Enterprises Inc. reported the following receivablesin its December 31, 2016, year-end balance sheet:
| Current assets: | |||
| Accounts receivable, net of $28,000 inallowance for uncollectible accounts | $ | 238,000 | |
| Interest receivable | 10,700 | ||
| Notes receivable | 300,000 | ||
| Additional Information: |
| 1. | The notes receivable account consists of two notes, a $65,000note and a $235,000 note. The $65,000 note is dated October 31,2016, with principal and interest payable on October 31, 2017. The$235,000 note is dated June 30, 2016, with principal and 8%interest payable on June 30, 2017. |
| 2. | During 2017, sales revenue totaled $1,380,000, $1,300,000 cashwas collected from customers, and $26,000 in accounts receivablewere written off. All sales are made on a credit basis. Bad debtexpense is recorded at year-end by adjusting the allowance accountto an amount equal to 10% of year-end accounts receivable. |
| 3. | On March 31, 2017, the $235,000 note receivable was discountedat the Bank of Commerce. The bank's discount rate is 10%.Chamberlain accounts for the discounting as a sale.
|
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.
