Accounts receivable $1,400,000 (120,000) 1,280,000 Allowance for doubtful accoun
ID: 2523639 • Letter: A
Question
Accounts receivable $1,400,000 (120,000) 1,280,000 Allowance for doubtful accounts (credit) During 2017 sales on account were $390,000 and collections on account were $230,000. Also, during 2017 the company wrote off $22,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $144,000. The change in the cash realizable value from the balance at 12/31/16 to 12/31/17 was a. $136,000 increase. b. $160,000 increase. c. $114,000 increase. d. $138,000 increase. (6) Young Company lends Dobson industries $40,000 on August 1, 2017, accepting a 9-month, 9% interest note. If Young accrued interest at its December 31, 2017 year-end, what entry must it make to record the collection of the note and interest at its maturity date? a. Cash 42,700 Notes Receivable Interest Revenue 40,000 2,700 b. Cash 42,700 Notes Receivable 42,700 40,000 1,500 1,200 c. Notes Receivable Interest Receivable Interest Revenue Cash 42,700 d. Cash 42,700 40,000 1,500 1,200 Which one of the following is not a principle of sound accounts receivable management? Notes Receivable Interest Receivable Interest Revenue (7)Explanation / Answer
Q5. Answer is C: $ 114,000 increasse Explanation: Accounts receivable balance at end: Beginning Balance in AR: 1,400,000 Add: Credit sales 390,000 Less: Collections -230,000 Less: Write off -22,000 Ending Balancec in AR (Gross) 1,538,000 Less: Allowance balance at end -144,000 Cash realizable value of AR 1,394,000 Less: Beginning Value 1,280,000 Increase in value 114,000 Q6. Answer is D. Cash Dr. 42700; Note receivable Cr $ 40000; Interest receivable Cr: 1500; Interest revenue Cr $ 1200. Explanation: Note receiivable amount 40,000 Interest rate 9% Interest receivable at Dec31 (40000*9%*5/12) 1500 Interest income of next year (40000*9%*4/12) 1200 Total amount Received 42700 Journal entry: Cash Account Ddr. 42700 Note receivable 40000 Interest receivable 1500 Interest revenue 1200