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What are account receivables?

Amounts owed by customers on account which result from the sale of goods and services.

100
What is a subsidiary ledger account?
They are accounts for keeping track of each individual account receivable accounts
100
What is one way of estimating the allowance?
1) Percentage of Sales? 2) Percentage of Receivables
100
What's another word for paying a note receivable?
Honoring a note receivable
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Where are short-term receivables reported on the balance sheet?
In the current assets section
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What are trade receivables?
Notes and accounts receivable that result from sales transactions are often called trade receivables.
200
What is interest revenue?
If a customer does not pay in full within a specific period, most retailers add an interest charge to the balance due.
200
What is a promissory note?
A promissory note is a written promise to pay a specified amount of money on demand or at a definite time
200
Notes receivable can be either classified as a current asset or long-term assets, depending on _____________
their due date
200
The balance of the ________ account has to match the total balance in the individual accounts receivable accounts in the subsidiary ledger.
Control
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What are Note Receivables
Claims for which formal instruments of credit are issued as proof of the debt. (written notes)
300
What are nonbank credit card sales?
Sales on credit cards that are not directly associated with a bank are reported as credit sales, not cash sales.
300
What's the difference between a note receivable and an account receivable
The difference between an account receivable is an informal promise to pay, while a note receivable is a written promise to pay, which gives the payee a stronger legal claim.?
300
In some cases, a company will collect cash from a customer after the account has already been written off. Two entries are required to record the recovery of a bad debt.Describe what happens in each entry.
First, The entry made in writing off the account is reversed to restore the customer’s account.(this is done by debited Accounts receivable and credited Allowance for Doubtful accounts) Second, The collection is recorded in the usual way ( this is done by debited cash and credited accounts receivable.
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When all the ways of collecting a past-due account have been tried and collection appears impossible, the account should be ________.
written-off
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What does notes receivable require?
Requires the debtor to pay interest and extends for periods of 30 days
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What are 2 of the 3 features of the allowance method?
1) Recoding estimated uncollectibles 2) Recording the write-off of an uncollectible account 3) Recovery of an uncollectible account
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What is the party to whom the payment is to be made called?
The payee
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Net realizable value can be calculated by the following formula: Accounts Receiavble - ___________________ = Net realizable value.
Allowance for Doubtful accounts
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________ period states the number of days that receivables were outstanding.
Collection
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What are 2 ways we can tell if a company's management of its receivables is helping or hurting the company's liquidity?
1) Receivables turnover ratio 2) Collection Period
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What does the allowance method ensure?
The allowance method ensures that receivables are stated at their net realizable value on the balance sheet. It removes the amounts that the company estimates it will not collect.
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List 2 of the 3 ways a promissory note may be used
1.) When individuals and companies lend or borrow money. 2.) When the amount of the transaction and the credit period are longer than normal limits. ? 3.) In settlement of accounts receivable.
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Assume that Company D has net credit sales of $1.5 million in 2009. Of this amount, $100,000 remains uncollected at December 31. The credit manager estimated that $17,000 of these receivables will remain uncollected. How would the adjusting entry to recrod the estimated uncollectible look like?
Bad Debts Expense 17000(debit) Allowance for Doubtful Accounts 17000(credit)
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If Company A still owes $4000 for example, at the end of the MONTH, and Company B charges 18% on the balance due,what amount would Company B credit for Interest Revenue?
$60 (4000 x 0.18 x 1/12)
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