Chapter 8: Q5RQ (page 465)
What type of account must the sum of all subsidiary accounts be equal to?
There must be a match between each subsidiary receivable and the overall balance in the control account, Accounts Receivable.
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What do the days’ sales in receivables indicate, and how is it calculated?
Defining common receivables terms
Match the terms with their correct definition.
Terms Definitions
1. Accounts receivable | a. The party to a credit transaction who takes on an obligation/payable. |
2. Other receivables | b. The party who receives a receivable and will collect cash in the future. |
3. Debtor | c. A written promise to pay a specified amount of money at a particular future date. |
4. Notes receivable | d. The date when the note receivable is due. |
5. Maturity date | e. A miscellaneous category that includes any other type of receivable where there is a right to receive cash in the future |
6. Creditor | f. The right to receive cash in the future from customers for goods sold or for services performed. |
Johnson Company uses the allowance method to account for uncollectible receivables. On September 2, Johnson wrote off a
\(14,000 account receivable from customer J. Mraz. On December 12, Johnson unexpectedly received full payment from Mraz on
the previously written off account. Johnson records an adjusting entry for bad debts expense of \)800 on December 31.
9. Journalize Johnson’s write-off of the uncollectible receivable.
10. Journalize Johnson’s collection of the previously written off receivable.
11. Journalize Johnson’s adjustment for bad debts expense.
What is the difference between accounts receivable and notes receivable?
Accounting for notes receivable and accruing interestLogan Realty loaned money and received the following notes during 2018.Note Date Principal Amount Interest Rate Term
(1) Oct. 1 $ 16,000 7% 1 year
(2) Jun. 30 18,000 18% 9 months
(3) Sep. 19 12,000 8% 90 days
Requirements
1. Determine the maturity date and maturity value of each note.
2. Journalize the entries to establish each Note Receivable and to record collection ofprincipal and interest at maturity. Include a single adjusting entry on December 31,2018, the fiscal year-end, to record accrued interest revenue on any applicable note.Explanations are not required. Round to the nearest dollar.
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