ACCTMIS 2000 Study Guide - Midterm Guide: Income Statement, Accounts Receivable

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harlequinprairie-dog105

4 Oct 2018

School

Ohio State University

Department

Accounting and Management Info

Course

ACCTMIS 2000

Professor

All

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Document Summary

Offer a cash discount to a credit customer for the prompt payment of a balance due. Means a 3% discount is allowed on all payments within 10 days, after 10 days there is no discount available and remaining balance is due in 30 days. Contra revenue account results in a decrease to revenues on the income statement and thus a decrease to net income ex. sales discounts. Should be recorded in the year the credit sale is made b/c of matching concept. Expenses are to be recorded in the same year they help to generate revenues. Revenue is earned when the sale is made, so bad debt expense must be recorded in the same year. Found on balance sheet under accounts receivable as a decrease. Represents amount of accounts receivable the company will not collect. Represent the actual bad debts of the company, and can occur at any point during the year.

Related Questions

17) Which financial statement is prepared last?

A) statement of retained earnings

B) income statement

C) balance sheet

D) The financial statements can be prepared in any order

18) Net sales revenue is calculated by

A) subtracting sales discounts and estimated sales returns and allowances from sales revenue

B) subtracting cost of goods sold from sales revenue

C subtracting sales discounts and selling expenses from sales revenue

D) adding sales discounts and sales returns and allowances to sales revenue

19) Which of the following is the correct formula to calculate weighted- average unit cost for merchandise inventory?

A) Weighted- average unit cost = Cost of goods available for sale x Number of units available

B) Weighted-average unit cost = Cost of goods available for sale/Number of units available

C) Weighted- average unit cost = Cost of goods available for sale+ Number of units available

D) Weighted-average unit cost = Cost of goods available for sale- Number of units available

20) Which of the following items must be examined by the controller or treasurer before signing a check?

A) the journal entry

C) the confirmation report

B) the ledger

D) the purchase order

21) At the beginning of 2019, Patriots, Inc. has the following account balances:

Accounts Receivable $45,000 (Debit)

Allowance for Bad Debts $8,000 (Credit)

Bad Debts Expense $0

During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $770,000, and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The amount of bad debt expense for 2019 is.

A) $18,000

B) $18,350

C) $28,350

D) $56,875

champagneraccoon18

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

12. Raintree Cosmetic Company sells its products to customers ona credit basis. An adjusting entry for bad debt expense is recordedonly at December 31, the companyâs fiscal year-end. The 2015balance sheet disclosed the following:


Current assets:
Receivables, net of allowance for uncollectibleaccounts of $39,000 $477,000

During 2016, credit sales were $1,795,000,cash collections from customers $1,875,000, and $44,000 in accountsreceivable were written off. In addition, $3,900 was collected froma customer whose account was written off in 2015. An aging ofaccounts receivable at December 31, 2016, reveals thefollowing:

	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:

2.	Prepare the year-endadjusting entry for bad debts according to each of the followingsituations:

a.	Bad debt expense isestimated to be 4% of credit sales for the year.
b.	Bad debt expense is estimated by computing net realizable valueof the receivables. The allowance for uncollectible accounts isestimated to be 10% of the year-end balance in accountsreceivable.
c.	Bad debt expense is estimated by computing net realizable valueof the receivables. The allowance for uncollectible accounts isdetermined by an aging of accounts receivable.
	(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)

3.	For situations (a)â(c) in requirement 2 above, what would be thenet amount of accounts receivable reported in the 2016 balancesheet?

sapphiredeer171

ACCTMIS 2000 Study Guide - Midterm Guide: Income Statement, Accounts Receivable

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