When a note receivable is dishonored, and the payee expects eventual collection, the note is transferred to:
Explanation
This question tests the proper accounting treatment for a dishonored note where collection is still anticipated.
Other questions
According to Chapter 8, which of the following are claims that are expected to be collected in cash?
Which of the following are often called trade receivables?
Jordache Co. sells merchandise on account to Polo Company for $1,000, terms 2/10, n/30. What is the journal entry Jordache Co. makes to record this sale, omitting the cost of goods sold entry?
When a company determines that a particular account is uncollectible, what is the effect of using the direct write-off method?
What is the primary shortcoming of the direct write-off method for uncollectible accounts?
What is the name of the contra account used to reduce accounts receivable to its cash (net) realizable value under the allowance method?
Hampson Furniture has credit sales of $1,200,000 in 2019. The credit manager estimates that $12,000 of these sales will be uncollectible. What is the adjusting entry to record the estimated uncollectibles on Dec. 31?
On March 1, 2020, Hampson Furniture writes off the $500 balance owed by R. A. Ware as uncollectible. What is the correct journal entry to record this write-off under the allowance method?
What is the effect of writing off a specific uncollectible account under the allowance method on total current assets and net income?
On July 1, Hampson Furniture receives a $500 payment from R. A. Ware on an account that had been previously written off. What are the two journal entries required to record this recovery?
An aging schedule for Dart Company's accounts receivable indicates that total estimated uncollectible accounts are $2,228. The Allowance for Doubtful Accounts account has a credit balance of $528 before adjustment. What is the amount of the adjusting entry for bad debt expense?
If the Allowance for Doubtful Accounts has a debit balance of $500 before adjustment, and the required balance based on an aging schedule is a credit of $2,228, what is the amount of bad debt expense to be recorded?
When a company sells its receivables to a finance company or bank, this is known as:
Hendredon Furniture factors $600,000 of receivables to Federal Factors. Federal Factors assesses a service charge of 2 percent of the amount of receivables sold. What is the journal entry for Hendredon to record this sale?
What is the primary reason a retailer would consider sales from national credit cards like Visa and MasterCard as cash sales?
Karen Kerr Music Co. records a $1,000 sale on a Visa First Bank Card. First Bank charges a 3 percent service fee. What entry does Karen Kerr Music Co. make?
What is the maturity date of a 60-day note dated July 17?
What is the interest on a $2,000, 6 percent, 1-year note?
When a company accepts a note receivable from a customer to settle an open account, what is the initial journal entry?
Wolder Co. prepares financial statements as of September 30. It holds a $10,000, 9 percent, five-month note from Higley Co. dated June 1. What is the adjusting entry Wolder must make on September 30?
Cisco Systems had net credit sales of $37,750 million and average net accounts receivable of $5,250.5 million [($5,157 + $5,344)/2]. What is its accounts receivable turnover?
If a company's accounts receivable turnover is 7.2 times, what is its average collection period in days?
Which of the following is NOT one of the three essential features of the allowance method for uncollectible accounts?
Brule Corporation's unadjusted trial balance shows Accounts Receivable of $30,000 and an Allowance for Doubtful Accounts with a debit balance of $2,000. If Brule estimates bad debts to be 10 percent of accounts receivable, what is the amount of Bad Debt Expense to be recorded?
In the balance sheet, how are short-term notes receivable typically presented?
What is the formula for computing interest on an interest-bearing note?
If a three-month note is dated May 1, what is its maturity date?
Why might a company accept a note receivable instead of an account receivable?
What does a concentration of credit risk refer to?
On July 5, Polo Company returns merchandise with a sales price of $100 to Jordache Co. The original sale was on account. What is the journal entry for Jordache to record the return?
Jordache Co. receives payment from Polo for a $1,000 sale, less a $100 return. The payment is within the 2/10, n/30 discount period. What is the correct entry for Jordache to record the collection?
Which of the following is NOT a reason that a company might sell its receivables?
A note is dishonored but the payee expects eventual collection. Why is the amount due transferred from Notes Receivable to Accounts Receivable?
If a company has an accounts receivable turnover of 10, and its competitor has a turnover of 8, what does this suggest?
A promissory note is considered:
In a promissory note, the party making the promise to pay is called the:
What does cash (net) realizable value represent for receivables?
A company recovers an account that was previously written off under the allowance method. What is the effect of the two required entries on the balance sheet?
What is the general rule for how the average collection period should compare to the credit term period?
What is the maturity value of a $10,000, 9 percent, 5-month note?
The formula 'Days in Year / Accounts Receivable Turnover' is used to calculate:
In the DEERE & COMPANY balance sheet presented in Illustration 8-18, what is the largest category of receivables?
When a retailer accepts a national credit card for a sale, the fee paid to the credit card issuer is recorded as:
If a company's sales are all on credit and its accounts receivable turnover increases, what is the most likely impact on its average collection period?
Valuing receivables at their cash (net) realizable value is consistent with which accounting quality?
Gambit Stores accepts a $3,400, 90-day, 6 percent note from Leonard Co. What is the total interest Gambit will receive at the maturity date?
If a company's net sales are $500,000, beginning net receivables are $40,000, and ending net receivables are $60,000, what is the accounts receivable turnover?
The 'Ethics Insight' box on page 376, 'Cookie Jar Allowances,' discusses how companies might manipulate earnings by:
According to the 'Anatomy of a Fraud' box on page 370, how did the accounts receivable clerk at the nonprofit foundation conceal the theft of cash?