Cambridge Business Publishers Chapter 8 Accounting for Receivables @ Cambridge Business P 8. Fiber Company sold a $675 refrigerator to a customer who charged the sale using a VISA credit card. Fiber...

Question #12

(1) An explanation of why the company had an allowance account (2) what the balance sheet presentation of accounts receivable  is supposed to show and (3) how the basic principles of accounting relate to the analysis and presentation of accounts receivable.

Extracted text: Cambridge Business Publishers Chapter 8 Accounting for Receivables @ Cambridge Business P 8. Fiber Company sold a $675 refrigerator to a customer who charged the sale using a VISA credit card. Fiber at the same time. Fiber Company's bank charges a credit card fee of four percent of sales revenue. What 9. Volt Inc. received a 60 day, nine percent note for $15,000 on March 5 from a customer. What is the matu- 10. Stafford Company received a 150 day, eight percent note for $15,000 on December 1. What adjusting entry 11. Define accounts receivable turnover and explain its use. How is the average collection period determined? Company deposits credit card sales slips daily; cash is deposited in Fiber Company's checking account Recording D cepted a $50 ceivable bala SE8-5. journal entry should Fiber Company make to record the sale? Company dis Debit D а. rity date of the note? Debit A b. С. Debit A is needed to accrue the interest due on December 31? None c d. 12. At a recent board of directors meeting of Ascot, Inc., one of the directors expressed concern over the SE8-6. Accountin credit sales on the company's balance sheet. "I don't nderstand this ac- Allowance for Doubtful Accounts appearing count," he said. "Why don't we just show accounts receivable at the amount we would eive if we sold sales for th the receipt them to a financial institution and get rid of that allowance account?" Prepare a written response to the director. Include in your response (1) an explanation of why the com pany has an allowance account, (2) what the balance sheet presentation of accounts receivable is supposed to show, and (3) how the basic principles of accounting relate to the analysis and presentation of accounts а. Debit b. Debi с. Debi receivable. d. Deb 13. What generally accepted accounting principle is being implemented when a company estimates its poten- tial credit losses from its outstanding accounts receivable? 14. Why is the direct write-off method of accounting for credit losses not generally accepted? SE8-7. Calculat a 90 day be accru 15. When a previously written-off account receivable is collected, it must first be reinstated by debiting ie $1C b. $20 а. Accounts Receivable account and crediting the Allowance for Doubtful Accounts. Explain the credit por- tion of the reinstatement journal entry. c. $3 $4 d. SHORT EXERCISES SE8-8. Calcul