Receivables and Bad Debts
What type of account is Allowance for Doubtful Accounts(also called Allowance for Bad Debts)?
Contra Current Asset
A Notes Receivable was provided to a supplier for $50,000 for 2 years at a rate of 3% per year. How much interest is accrued quarterly?
What is the Journal Entry for establishing the Notes Receivable?
Dr. Cash $50,000 Cr. Notes Receivable $50,000
Dr. Notes Payable $50,000 Cr. Notes Receivable $50,000
Dr. Notes Receivable $50,000 Cr. Cash $50,000
Dr. Interest Expense $50,000 Cr. Notes Receivable $50,000
What is the Journal Entry to record the interest accrued at the end of the first year? Simply Dr. and Cr. No numbers required.
Dr. Interest Receivable Cr. Interest Revenue
Dr. Interest Revenue Cr. Interest Expense
Dr. Interest Revenue Cr. Notes Receivable
Dr. Interest Receivable Cr. Cash
Keltech uses the Aging of AR method and determines that the Allowance for Bad Debts account must be adjusted. Opening credit balance is $20,000. A desired balance for this month-end is $25,000. What will the adjusting entry be?
Dr. Bad Debt Expense $5,000 Cr. Accounts Receivable $5,000
Dr. Bad Debt Expense $5,000 Cr. Allowance for Doubtful Accounts $5,000
Dr. Bad Debt Expense $25,000 Cr. Allowance for Bad Debts $25,000
Dr. Bad Debt Expense $20,000 Cr. Allowance for Doubtful Accounts $5,000
True or False: Notes Receivable incur interest as soon as the note is issued.
True or False: Notes can be issued to a customer.
Interest of $6,000 that had been accrued was received on an existing note that is still outstanding. What is the Journal Entry?
Dr. Interest Expense $6,000 Cr. Notes Receivable $6,000
Dr. Cash $6,000 Cr. Interest Revenue $6,000
Dr. Cash $6,000 Cr. Interest Receivable $6,000
Dr. Interest Revenue $6,000 Cr. Cash $6,000
Which financial statement did the above entry impact?
Balance Sheet and Income Statement
Balance Sheet only
Income Statement only
No impact to any statements
Using the information in the following image, which company has a better Receivables Turnover Ratio and fewer days to collect?
Covfefe Coffee Lovers
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