(1)
Accounts receivable:
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.
To interpret: The impairment of (€167) in 2015 in terms of how that amount would typically be described in U.S. GAAP.
(2)
At what extent does Company SA factor or securitize the accounts receivable and also describe how to find out.
(3)(a)
To indicate: The effects of accounts receivable in the period of the change.
(b)
To indicate: The effects of cash flow from operation in the period of the change.
(c)
To indicate: The effects of accounts receivable in subsequent periods.
(d)
To indicate: The effects of cash flow from operation in subsequent periods.
(4)
To Explain: Whether a company can change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow.
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Chapter 7 Solutions
INTERMEDIATE ACCOUNTING RMU 9TH EDITION
- Question 8 of 8 -/ 20 View Policies Current Attempt in Progress Select financial information from Marshall Inc. is shown below: 2022 2021 Receivables $423,018 $376,089 less allowance for doubtful accounts 45,890 32,236 Receivables, net 377,128 343,853 Credit sales 5,245,000 4,846,300 Calculate the receivables turnover and the collection period for 2022. (Round answers to 1 decimal place, e.g. 12.3.) Receivables Turnover Ratio times Average Collection Period days Save for Later Attempts: 0 of 1 used Submit Answer IIarrow_forwardMultiple Choice Question 110 Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45000. If the balance of the Allowance for Doubtful Accounts is an $9000 debit before adjustment, what is the amount of bad debt expense for that period? $9000 $54000 $45000 $36000arrow_forwardExercise 7-16 (Static) Uncollectible accounts; allowance method; balance sheet approach; financial statement effects [LO7-5, 7-6] Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2024, accounts receivable totaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $32,000 at the beginning of 2024 and $21,000 in receivables were written off during the year as uncollectible. Also, $1,200 in cash was received in December from a customer whose account previously had been written off. The company estimates bad debts by applying a percentage of 10% to accounts receivable at the end of the year. Required: 1. Prepare journal entries to record the write-off of receivables, the collection of $1,200 for previously written off receivables, and the year-end adjusting entry for bad debt expense. 2. How would accounts receivable be shown in the 2024 year-end balance sheet?…arrow_forward
- Question 10 Using the following balance sheet items and amounts, calculate the total current liabilities. • Money market account $7844 • Retirement account $90600 • Medical bills $395 Checking account $3877 • Credit card balance $1309 Your Answer: Answerarrow_forward5:57 l LTE Assignment Details FINANCIAL ACCOUNTING II 1221_ACC1112_OL2 What are the three classifications of receivables? Which does your company have? Look in the notes to the financial statement to find out which method they use for writing off receivables. Part 2 Dan's Hardware is a small hardware store in the rural township of Twin Bridges. It rarely extends credit to its customers in the form of an account receivable. The few customers who are allowed to carry accounts receivable are long-time residents of Twin Bridges with a history of doing business at Dan's Hardware. What method of accounting for uncollectible receivables should Dan's Hardware use? Why?arrow_forward12.10 Doubtful debts – ageing method * LO3 On 1 June, McLean, Roberts and Associates had Accounts Receivable and Allowance for Doubtful Debts accounts as set out below. Ignore GST. Accounts Receivable 1/6 Balance 847 000 Allowance for Doubtful Debts 1/6 Balance 12 250 During June, the following transactions occurred: 1. fees earned on credit, $1 200 000 2. fees refunded, $25 000 3. accounts receivable collected, $1450 000 4. accounts written off as uncollectable, $14 740. Based on an ageing of accounts receivable on 30 June, the firm decided that the Allowance for Doubtful Debts account should have a credit balance of $13 000 on the balance sheet as at 30 June. Required (a) Prepare general journal entries to record the four transactions above and to adjust the Allowance for Doubtful Debts account. (b) Show how accounts receivable and the allowance for doubtful debts would appear on the balance sheet at 30 June. (c) On 29 July, Blundell Ltd, whose $1870 account had been written off as…arrow_forward
- 10:43 |0 • 0.16 4G KB/S 70 Document View 1. Credit memos are items that are already added by the bank but have not been added by the book as of the cut off date. 2. Debit memos are amounts that have been deducted by the bank but have not been deducted per book. 3. Examples of debit memo include accounts receivable collected by the bank in favor of the company and loan proceed directly credited by the bank to the account of the customer. 4. Monthly bank reconciliation is one of the internal control features in every company, which is created to show that there is no discrepancy between the cash balance per book records and the cash balance per bank records. 5. Reciprocal accounts should have the same balance after ail adjustments have been made. Determine whether the following reconciling items should be added to the book or bank account balance or deducted from the book or bank account by putting (/) check mark or (x) cross mark on the corresponding column. ADD DEDUCT DEDUCT ADD TO…arrow_forwardQuestion 3 of 8 > -/2 View Policies Current Attempt in Progress What is the journal entry to record an uncollectible accounts receivable? Bad Debt Expense XXX Allowance for Doubtful Accounts XXX Bad Debt Expenses XXX Accounts Receivable XXX Accounts Receivable XXX Allowance for Doubtful Accounts XXX Allowance for Doubtful Accounts XXX Accounts Receivable XXX Save for Later Attempts: 0 of 1 used Submit Ansarrow_forwardQuestion 7 of 9 Identify the last date of the discount period and the credit period for the payment terms with ordinary dating. Invoice Date: August 29, 2021 Payment Terms: 3/10, 2.5/30, n/60 a. What is the last date of discount period? September 8, 2021 September 8, 2021 September 28, 2021 September 28, 2021 September 12, 2021 September 12, 2021 b. What is the last date of credit period? October 13, 2021 October 13, 2021 October 28, 2021 October 28, 2021 September 28, 2021 September 28, 2021arrow_forward
- Exercise 6-12 (Algo) Time value of money for accounts receivable [LO6-6] Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2021, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $45,800 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 8%. (FV of $1. PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Assume the note indicates that Seneca is to pay Arctic the $45,800 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021. 2. Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2021. 3. Assume instead that Seneca is to pay Arctic the $45,800 due on the note on…arrow_forwardWhat is the amount received by partially secured creditor? A. P40,000B. P60,000C. P70,000D. P65,000arrow_forwardACTIVITY 59 EVALUATING ACCOUNTS RECEIVABLE Purpose: • Analyze trends in Accounts Receivable and the Allowance for Bad Debt accounts. Assume you work in the corporate loan office of Lanford Bank. Chris Ives, owner of CI Manufacturing, Inc. has come to you seeking a loan of $350,000 for new manufacturing equipment to expand his operations. He proposes to use his accounts receivable as collateral for the loan and has provided you with the following financial statements. 02 Q3 (5 in thousands) Income Statement Sales revenue Cost of goods sold Gross profit Q4 Operating expenses Operating income Balance Sheet Q1 Accounts receivable Allowance for bad debts. Ratio Analysis Accounts receivable turnover ratio Allowance as a percentage of sales revenue b. C. d. e. f. Year 7 $1,475 876 599 518 $.81 $ 458 23 Specific Accounts 3.22 1.56% Year 6 $1,589 947 642 487 $ 155 $387 31 Examine the trend in each of the following accounts. Sales revenue: In Year 6 it (increased / decreased), and then in Year 7…arrow_forward