Accounting 201 Chapter 7

Front 1

Accounts receivable is?

Back 1

A control account

Front 2

What is a supplementary record for accounts receivable?

Back 2

Accounts receivable Ledger or accounts receivable subsidiary ledger

Front 3

What does the schedule of accounts receivable show?

Back 3

That the balance of accounts receivable in the general ledger equals the total of its customers balances in the accounts receivable Ledger

Front 4

Credit card entry when cash is received immediately on deposit :

Back 4

Debit cash , debit credit card expense, and credit sales

Front 5

Credit card entry when cash is received some time after deposit :

Back 5

Debit accounts receivable credit card company , debit credit card expense, and credit sales

Front 6

Entry to record cash later received by the credit card company on sale :

Back 6

Debit cash and credit accounts receivable credit card company

Front 7

What is installment account receivable?

Back 7

An account that record amounts owed by customers from credit sales for which payment is required in periodic amounts over an extended time period.

Front 8

What are uncollectible accounts / bad debts?

Back 8

When customers will not pay what they owe the company

Front 9

What is the direct write off method?

Back 9

A method for accounting for bad debts by writing them off directly but is not gaap because it goes against the matching principle so we do not use it!!

Front 10

What is the allowance method?

Back 10

A system for accounting for bad debts using an account called the allowance for doubtful accounts

Front 11

What type of account is the allowance for doubtful accounts?

Back 11

It is a contra asset account and it takes away from Total accounts receivable

Front 12

What is the normal balance of allowance for doubtful accounts?

Back 12

Credit

Front 13

What is the entry to record the establishment of allowance for doubtful accounts?

Back 13

Debit bad debt expense and credit allowance for doubtful accounts

Front 14

What is the realizable value?

Back 14

The expected proceeds from converting an asset Into Cash

Front 15

What is the entry to record the right off of bad debt using the allowance method?

Back 15

Debit allowance for doubtful accounts and credit accounts receivable

Front 16

If the customer pays after the account is written off what do you do?

Back 16

Reinstate the account previously written off then record full payment of the account

Front 17

What are two methods to estimate bad debts?

Back 17

1. Percent of sales method / income statement method

2. Accounts receivable method / balance sheet method

Front 18

For the percent of sales method what account do we pay attention to?

Back 18

Bad debts expense

Front 19

For the accounts receivable method what account to be pay attention to?

Back 19

The allowance for doubtful accounts account

Front 20

For accounts receivable method do we pay attention to the opening balance of the allowance for doubtful accounts?

Back 20

Yes and pay attention to if it has a credit balance or debit balance

Front 21

What does the Aging of accounts receivable method use?

Back 21

Both past and current receivables information to estimate the allowance amount

Front 22

What is a promissory note?

Back 22

A written promise to pay a specified amount of money usually with interest, either on demand or at a definite future date

Front 23

Who is the maker of the Note versus the pay of the note?

Back 23

The maker of the note is the person who needs the money but the pay of the note is the person who is lending the money

Front 24

What is the maturity date of a note?

Back 24

The day the note (principal and interest) must be repaid

Front 25

What is the formula to calculate the interest of a note?

Back 25

Principal of note X annual interest rate X (days past ÷ by 360)

Front 26

The entry to record the payment of note receivable

Back 26

Debit cash, credit note receivable, and credit interest Revenue

Front 27

What are two ways to convert receivables?

Back 27

1. Selling them

2. Using them as security for a loan

Front 28

Entry to record the selling of receivable taking into account the factoring fee expense

Back 28

Debit cash , debit Factory expense , and credit accounts receivable

Front 29

Entry to record the pledging of a receivable

Back 29

Debit cash and credit notes payable

Front 30

What is the accounts receivable turnover?

Back 30

Net sales ÷ average accounts receivable, net

Front 31

How do you find the average accounts receivable?

Back 31

(Beginning balance + ending balance) ÷ 2