Chapter 8: Q8-24RQ (page 465)
What do the days’ sales in receivables indicate, and how is it calculated?
Answer
Days’ sales in receivables indicate how many days it takes to collect the average level of accounts receivable. It is calculated by dividing 365 byaccounts receivable turnover ratio.
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List some common examples of other receivables, besides accounts receivable and notes receivable.
What is the difference between accounts receivable and notes receivable?
When using the allowance method, how are accounts receivable shown on the balance sheet?
Question: On December 1, Kyle Corporation accepted a 60-day, 9%, $12,000 note receivable from J. Michael in exchange for his account receivable.
Requirements
1. Journalize the transaction on December 1.
2. Journalize the adjusting entry needed on December 31 to accrue interest revenue. Round to the nearest dollar.
3. Journalize the collection of the principal and interest at maturity. Specify the date. Round to the nearest dollar.
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.
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