ACCT 1220 Chapter Notes - Chapter 8: Subledger, General Ledger, Debits And Credits

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6 Mar 2017

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The term receivables refers to amounts that are due to a business from its customers or other entities. Receivables are frequently classified as (1) accounts receivables, (2) notes receivables, and (3) other receivables. Receivables and certain types of investments are considered financial assets. Accounts receivables are amounts owed by customers on account. Receivables are generally expected to be collected within 30 days or so, and are classified as current assets. Notes receivables are claims where formal instruments of credit are issued as evidence of debt. The credit instrument normally requires the debtor to pay interest and is for time periods of 30 days or longer. Depending on their due date, they can be current or non- current assets. Accounts and notes receivable that result from sales transactions are often called trade receivables. Other receivables include nontrade receivables that do not result from the operations of the business.

Related Questions

Calculate cost of goods available for sale and cost of goodssold for the month.

5. Principles of an efficient and effectiveaccounting information system include all of the followingexcept

a. cost effectiveness.

b. flexibility.

c. useful output.

d. All of these options are principles.

6. Which of the following statements isincorrect?

a. A major consideration in developing an accountingsystem is cost effectiveness.

b. When an accounting system is designed, noconsideration needs to be given to the needs and knowledge of thevarious users.

c. The accounting system should be able toaccommodate a variety of users and changing information needs.

d. To be useful, information must be understandable,relevant, reliable, timely, and accurate.

7. All of the following are advantages ofusing subsidiary ledgers except they

a. eliminate errors in individual accounts.

b. free the general ledger of excessive details.

c. show, in a single account, transactions affectingone customer or one creditor.

d. make possible a division of labor.

8. Which of the following is notan advantage of a subsidiary ledger?

a. Shows transactions affecting one customer or onecreditor in a single account.

b. Helps locate errors in individual accounts.

c. Puts greater detail in the general ledger.

d. Makes possible a division of labor.

9. Credit sales of assets other thanmerchandise are recorded in the

a. cash payments journal.

b. cash receipts journal.

c. general journal.

d. sales journal.

10. When the totals of the sales journal are posted at the end of themonth, there will be credits to

a. Sales and Merchandise Inventory and debits toAccounts Receivable and Cost of Goods Sold.

b. Accounts Receivable and Cost of Goods Sold anddebits to Sales and Merchandise Inventory.

c. Sales and debits to each individual customeraccount.

d. the Sales account only, and no debits.

11. TheOther Accounts column of a multi-column journal is often referredto as the

a. Sundry Accounts column.

b. Controlling Account column.

c. Credit Account column.

d. Debit Account column.

12. Companies record credit purchases of equipment or supplies inthe

a. cash payments journal.

b. cash receipts journal.

c. general journal.

d. one-column purchases journal.

13. Inthe expanded purchases journal, debits are made in whichcolumns?

a. Accounts Payable, Merchandise Inventory, andOffice Supplies

b. Merchandise Inventory, Office Supplies, and StoreSupplies

c. Cash, Office Supplies, and Store Supplies

d. Accounts Payable, Cash, and MerchandiseInventory

14. Ifa customer takes a sales discount, an entry is made in the

a. cash receipts journal.

b. sales journal.

c. cash payments journal.

d. general journal.

15. Claimsfor which formal instruments of credit are issued as proof of thedebt are

a. accounts receivable.

b. interest receivable.

c. notes receivable.

d. other receivables.

16. Interestis usually associated with

a. accounts receivable.

b. notes receivable.

c. doubtful accounts.

d. bad debts.

17. Thereceivable that is usually evidenced by a formal instrument ofcredit is a(n)

a. trade receivable.

b. note receivable.

c. accounts receivable.

d. income tax receivable.

18. Which ofthe following receivables would not be classified as an"other receivable"?

a. Advance to an employee

b. Refundable income tax

c. Notes receivable

d. Interest receivable

19. Notes oraccounts receivables that result from sales transactions are oftencalled

a. sales receivables.

b. non-trade receivables.

c. trade receivables.

d. merchandise receivables.

20. LarsonCompany on July 15 sells merchandise on account to Stuart Co. for$1,000, terms 2/10, n/30. On July 20 Stuart Co. returns merchandiseworth $400 to Larson Company. On July 24 payment is received fromStuart Co. for the balance due. What is the amount of cashreceived?

a. $600

b. $588

c. $580

d. $1,000

champagnecattle375

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.

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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.

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.

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.

Required:

Not including sales revenue, what revenue and expense amountsrelated to receivables will appear in Chamberlainâs 2017 incomestatement?

2. What amounts will appear in the 2017 year-end balance sheetfor accounts receivable (net)

3.	Calculate the receivables turnover ratio for 2017.(Round your answer to 1 decimal place.)

ACCT 1220 Chapter Notes - Chapter 8: Subledger, General Ledger, Debits And Credits

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