Test bank accounting 25th chapter 9 receivables

Chapter Receivables Student: _ Notes Receivable and Accounts Receivable can also be called trade receivables True False Receivables not currently collectible are reported in the investments section of the balance sheet True False Trade receivables occur when two companies trade or exchange notes receivables True False Other receivables include non trade receivables such as loans to company officers True False Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash True False When companies sell their receivables to other companies, the transaction is called factoring True False Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables True False Generally accepted accounting principles not normally allow the use of the direct write-off method of accounting for uncollectible accounts True False The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible True False 10 When using the direct write-off method off accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible True False 11 When an account receivable that has been written off is subsequently collected, the account receivable is said to be reinstated True False 12 Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period True False 13 Allowance for Doubtful Accounts is a liability account True False 14 When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account True False 15 The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value True False 16 When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off True False 17 At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250 The net credit sales for the period total $500,000 If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750 True False 18 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500 Net credit sales for the period totaled $800,000 If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500 True False 19 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000 The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $15,000 The amount to be recorded in the adjusting entry for the bad debt expense is $15,000 True False 20 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000 The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000 The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000 True False 21 When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry True False 22 The balance in the Allowance for Doubtful Accounts account at the end of the year includes the total of all accounts written-off since the beginning year True False 23 When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated True False 24 A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales True False 25 The due date of a 60-day note dated July 10 is September 10 True False 26 The maturity value of a 12%, 60-day note for $5,000 is $5,600 True False 27 The maturity value of a note receivable is always the same as its face value True False 28 The interest on a 6%, 60-day note for $5,000 is $300 True False 29 The party promising to pay a note at maturity is the maker True False 30 In computing the maturity date of a note, the date the note is issued is included but the due date is omitted True False 31 If a promissory note is dishonored, the payee should still record interest revenue True False 32 The equation for computing interest on an interest-bearing note is as follows: interest equals maturity value times interest rate times time True False 33 If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored True False 34 When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable True False 35 When a note is written to settle an open account, no entry is necessary True False 36 The balance of the Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet True False 37 Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet True False 38 The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year True False 39 The accounts receivable turnover measures the length of time in days it takes to collect a receivable True False 40 The number of days’ sales in receivables is an estimate of the length of time the accounts receivables have been outstanding True False 41 A note receivable due in 18 months is listed on the balance sheet under the caption A long-term liabilities B fixed assets C current assets D investments 42 The receivable that is usually evidenced by a formal instrument of credit is a(n) A trade receivable B note receivable C accounts receivable D income tax receivable 43 Which of the following receivables would not be classified as an "other receivable”? A Advance to an employee B Interest receivable C Refundable income tax D Notes receivable 44 Notes or accounts receivables that result from sales transactions are often called A non-trade receivables B trade receivables C merchandise receivables D sales receivables 45 The term "receivables" includes all A money claims against other entities B merchandise to be collected from individuals or companies C cash to be paid to creditors D cash to be paid to debtors 46 When does an account become uncollectible? A when accounts receivable is converted into notes receivable B when discount is availed on notes receivable C there is no general rule for when an account becomes uncollectible D at the end of the fiscal year 47 The two methods of accounting for uncollectible receivables are the allowance method and the A equity method B direct write-off method C interest method D cost method 48 The direct write-off method of accounting for uncollectible accounts A emphasizes balance sheet relationships B is often used by small companies and companies with few receivables C emphasizes cash realizable value D emphasizes the matching of expenses with revenues 49 Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited A at the end of each accounting period B when a credit sale is past due C whenever a pre-determined amount of credit sales have been made D when an account is determined to be worthless 50 An alternative name for Bad Debt Expense is A Collection Expense B Credit Loss Expense C Uncollectible Accounts Expense D Deadbeat Expense 51 Two methods of accounting for uncollectible accounts are the A direct write-off method and the allowance method B allowance method and the accrual method C allowance method and the net realizable method D direct write-off method and the accrual method 52 If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? A Uncollectible Accounts Expense B Accounts Receivable C Allowance for Doubtful Accounts D Interest Expense 53 One of the weaknesses of the direct write-off method is that it A understates accounts receivable on the balance sheet B violates the matching principle C is too difficult to use for many companies D is based on estimates 54 The Lowery Co uses the direct write-off method of accounting for uncollectible accounts receivable Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible The entry to write off this account would be which of the following?: A debit Allowance for Doubtful Accounts; credit Accounts Receivable B debit Sales Returns and Allowance, credit Accounts Receivable C debit Bad Debt Expense; credit Allowance for Doubtful Accounts D debit Bad Debt Expense; credit Accounts Receivable 55 If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? A Uncollectible Accounts Receivable B Accounts Receivable C Allowance for Doubtful Accounts D Bad Debts Expense 56 If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? A Uncollectible Accounts Expense B Allowance for Doubtful Accounts C Accounts Receivable D Interest Expense 57 After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000 What is the net realizable value of the accounts receivable? A $51,000 B $289,000 C $340,000 D $391,000 58 If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? A Uncollectible Accounts Expense B Accounts Receivable C Allowance for Doubtful Accounts D Interest Expense 59 On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the A Uncollectible accounts expense for the year B total of the accounts receivables written-off during the year C total estimated uncollectible accounts as of the end of the year D sum of all accounts that are past due 60 What is the type of account and normal balance of Allowance for Doubtful Accounts? A Contra asset, credit B Asset, debit C Asset, credit D Contra asset, debit 61 When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when A a customer's account becomes past due B an account becomes bad and is written off C a sale is made D management estimates the amount of uncollectibles 62 A debit balance in the Allowance for Doubtful Accounts A is the normal balance for that account B indicates that actual bad debt write-offs have been less than what was estimated C cannot occur if the percentage of receivables method of estimating bad debts is used D indicates that actual bad debt write-offs have exceeded previous provisions for bad debts 63 To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a A debit to Bad Debs Expense and a credit to Allowance for Doubtful Accounts B debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts C debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable D debit to Loss on Credit Sales and a credit to Accounts Receivable 64 Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts A Liabilities decrease B Net Income is unchanged C Total Assets are unchanged D Total Assets decrease 65 Tanning Company analyzes its receivables to estimate bad debt expense The accounts receivable balance is $390,000 and credit sales are $1,300,000 An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? A Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 B Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 C Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22,000 D Bad Debt Expense 65,000 Allowance for Doubtful Accounts 65,000 66 You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments Assuming you use the allowance method, the entry you make is to A debit Bad Debt Expense and credit Allowance for Doubtful Accounts B debit Bad Debt Expense and credit Accounts Receivable C debit Allowance for Doubtful Accounts and credit Accounts Receivable D debit Allowance for Doubtful Accounts and credit Bad Debt Expense 67 The balance in Allowance for Doubtful Accounts will directly impact the end of period adjustment for the bad debt expense when using which of the following methods? A Allowance method B Direct write-off method C Accrual method D declining value method 68 An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900 If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a A debit to Bad Debt Expense for $8,600 B debit to Bad Debt Expense for $7,900 C debit to Bad Debt Expense for $7,200 D credit to Allowance for Doubtful Accounts for $700 141 Journalize the following transactions in the accounts of Simmons Company: Mar Received a $60,000, 60-day, 6% note dated March from Bynum Company on account Mar 18 Received a $25,000, 60-day, 9% note dated March 18 from Solo Company on account Apr 30 The note dated March from Bynum Company is dishonored, and the customer’s account is charged for the note, including interest May 17 The note dated March 18 from Solo Company is dishonored, and the customer’s account is charged for the note, including interest July 29 Cash is received for the amount due on the dishonored note dated March plus interest for 90 days at 8% on the total amount debited to Bynum Company on April 30 Aug 23 Wrote off against the allowance account the amount charged to Solo Company on May 17 for the dishonored note dated March 18 Mar 18 Apr May July Aug 30 17 29 23 Notes 60,000 Recei vable Accounts Receivable—Bynum Co 60,000 Notes 25,000 Recei vable Accounts Receivable—Solo Co 25,000 Acco 60,600 unts Recei vable — Bynu m Co Notes Receivable Interest Revenue *($60 ,000 ´ 6% ´ 60/36 0) Acco 25,375 unts Recei vable — Solo Co Notes Receivable Interest Revenue *($25 ,000 ´ 9% ´ 60/36 0) Cash 61,812 Accounts Receivable—Bynum Co Interest Revenue *60,6 00 ´ 0.08 ´ 90/36 0= $1,21 Allo 25,375 wanc e for Doubt ful Acco unts Accounts Receivable—Solo Co 60,000 600* 25,000 375* 60,600 1,212* 25,375 142 Financial Statement data for the years ended December 31 for Parker Corporation is as follows: 2012 2011 Net Sales $2,595,600 $2,409,500 Accounts Receivable Beginning of the year $ 390,000 $400,000 End of the year 434,000 390,000 a) Determine the accounts receivable turnover for 2012 and 2011 b) Determine the number of days’ sales in receivables for 2012 and 2011 c) Does the change in accounts receivable turnover and number of days’ sales in receivables from 2011 to 2012 indicate a favorable or unfavorable trend.? a) Accounts receivable turnover: 2012 2011 Average Accounts Receivable (390,000 + 434,000) /2 $412,000 (400,000 + 390,000) /2 $395,000 Accounts Receivable Turnover 2,595,600 / 412,000 6.3 2,409,500 / 395,000 6.1 b) Number of days’ sales in receivables: 2012 2011 Average daily sales: (2,595,600 / 365 days) (2,409,500 / 365 days) $ 7,111 $ 6,601 Number of days’ sales in receivables: (412,000 / 7,111) 58 days (395,000 / 6,601) 60 days c) The increase in the accounts receivable turnover from 6.1 to 6.3 times and the decrease in number of days’ sales in receivables from 60 days to 58 days indicates a favorable trend in the efficiency of collection of accounts receivables 143 Journalize the following transactions for Solley Company that occurred during 2011 and 2012 November 14, 2011 Received a $4,800.00, 90-day, 9% note from Alan Hibbetts in payment of his account December 31, 2011 Accrued interest on the Hibbetts note February 12, 2012 Received the amount due from Hibbetts on his note Date Description Nov 14 Notes Receivable Accounts Receivable Post Ref Debit Credit 4,800.00 4,800.00 Dec 31 Interest Receivable 56.40 Interest Revenue 56.40 Feb 12 Cash 4,908.00 Interest Receivable 56.40 Interest Revenue 51.60 Notes Receivable 4,800.00 144 For each of the following notes receivables held by Rogers Company determine the interest revenue to be reported on the income statements for 2011 and 2012 Round answers to nearest whole dollar Date Aug 8, 2011 Oct 7, 2011 Jan 6, 2012 Nov 12, 2011 Face $15,000 $22,000 $30,000 $28,000 Rate 7% 8% 8% 9% Time 180 days 60 days 90 days 60 days 2011 Interest Revenue 2012 Interest Revenue Date Aug 8, 2011 Oct 7, 2011 Jan 6, 2012 Nov 12, 2011 Face $15,000 $22,000 $30,000 $28,000 Rate 7% 8% 8% 9% Time 180 days 60 days 90 days 60 days 2011 Interest Revenue $423* 293 343 2012 Interest Revenue 102** 600 77 *15,000 X 07 X 145/360 = 423 (rounded) ** 15,000 X 07 X 180/360 = 525 - 423 = 102 145 a) The aging of Torme Designs shown below Calculate the amount of each periodicity range that is deemed to be uncollectible Age Interval: Not past due 1~30 days past due: 31~60 days past due: 61~90 days past due: 91~180 days past due: 181~365 days past due: Over 365 days past due: Total: Est Uncollectible Accts Balance: Percentage: 850,000 3.50% 47,500 5.00% 21,750 10.00% 11,250 20.00% 5,065 30.00% 2,500 50.00% 1,145 95.00% 939,210 Amount: b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year Age Interval: Not past due 1~30 days past due: 31~60 days past due: 61~90 days past due: 91~180 days past due: 181~365 days past due: Over 365 days past due: Total: Dec 31 Balance: 850,000 47,500 21,750 11,250 5,065 2,500 1,145 939,210 Uncollectible Accounts Expense Allowance for Doubtful Accounts Calculation of expense: Amount of calculated uncollectible accounts Less credit balance of account Bad debt expense $40,407.25 1,135.00 $39,272.25 Est Uncollectible Accts Percentage: 3.50% 5.00% 10.00% 20.00% 30.00% 50.00% 95.00% 39,272.25 39,272.25 Amount: 29,750.00 2,375.00 2,175.00 2,250.00 1,519.50 1,250.00 1,087.75 40,407.25 146 For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded in 2014, the balance in Allowance for Doubtful Accounts after adjustment at December 31, 2014, and the net realizable value of Accounts Receivable at December 31, 2014: a) Based on an analysis of Simmon’s Company’s $380,000 balance in Accounts Receivable at December 31, 2014, is was estimated that $15,500 will be uncollectible There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment b) Blake Company had net credit sales of $900,000 during 2014, and has an Accounts Receivable balance of $425,000 at December 31, 2014, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment Blake estimates Bad Debt Expense as 3/4 of 1% of net credit sales c) Hidgon Inc has a balance of $812,000 in Accounts Receivable at December 31, 2014 An analysis of those receivables shows $24,000 will probably not be collected Before adjusting entries are prepared, the Allowance for Doubtful Accounts has a debit balance of $750 a) Bad Debt Expense for 2014 $14,300 Allowance for Doubtful Accounts at Dec 31, 2014 15,500 Net Realizable Value of A/R at Dec 31, 2014 364,500 b) Bad Debt Expense for 2014 $6,750 Allowance for Doubtful Accounts at Dec 31, 2014 17,750 Net Realizable Value of A/R at Dec 31, 2014 407,250 c) Bad Debt Expense for 2014 $24,750 Allowance for Doubtful Accounts at Dec 31, 2014 24,000 Net Realizable Value of A/R at Dec 31, 2014 788,000 147 Mr Potts issued a 90-day, 7% note for $200,000, dated February 3rd to Valley Co on account (Assume a 360-day year when calculating interest.) a Determine the due date of the note b Determine the interest c Determine the maturity value of the note d Journalize the entry to record the issuance of the note by Potts on Feb e Journalize the entry to record the receipt of payment of the note at maturity by Valley Co a May Feb - Feb 28 March April May b 25 days 31 days 30 days days 90 days Interest = Face Amount (or principal) ´ Rate ´ Time Interest = $200,000 ´ 07 ´ 90/360 Interest = $3,500 c Maturity Value = Face Amount + Interest Maturity Value = $200,000 + 3,500 Maturity Value = $203,500 d Cash e Cash 200,000 Notes Payable 200,000 203,500 Notes Receivable Interest Revenue 200,000 3,500 148 Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account (Assume a 360-day year when calculating interest.) a b c a b c June 10 Determine the due date of the note Determine the maturity value of the note Journalize the entry to record the receipt of the payment of the note at maturity June 10 determined as follows: March April May June Total 19 days (31-12) 30 days 31 days 10 days 90 days $81,200 [$80,000 + ($80,000 x 6% x (90/360)] Cash Note Receivable Interest Revenue 81,200 80,000 1,200 149 Watson Company issued a 60-day, 8% note for $18,000, dated April 5, to Laker Company on account (Assume a 360-day year when calculating interest.) (a) (b) (c) Determine the due date of the note Determine the maturity value of the note Journalize the entries to record the following: (1) receipt of the note by the payee, and (2) receipt by the payee of the amount due on the note at maturity Round answers to the nearest $1 (a) June (b) $18,240 (c) Note Receivable-Watson Co Account Receivable-Watson Co 18,000 Cash Note Receivable-Watson Co Interest Revenue 18,240 18,000 18,000 240 150 On the basis of the following data related to assets due within one year for Webb Co., prepare a partial balance sheet in good form at December 31, 2014 Show total current assets Cash Notes receivable Accounts receivable Allowance for doubtful accounts Interest receivable $96,000 50,000 275,000 40,000 1,000 Webb Co Balance Sheet December 31, 2014 Assets Current assets: Cash Notes receivable Accounts receivable Less allowance for doubtful accounts Interest receivable Total current assets $96,000 50,000 $275,000 40,000 235,000 1,000 $382,000 151 Journalize the following transactions (Assume a 360-day year when calculating interest.): Mar May 30 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co on account The note of March was dishonored Mar May 30 Notes Receivable Accounts Receivable-Batson Co 24,000 Accounts Receivable-Batson Co Notes Receivable Interest Revenue 24,600 24,000 24,000 600 152 The following are the current assets from Hanes Co as of December 31, 2014: Accounts Receivable Allowance for Doubtful Accounts Cash Interest Receivable Merchandise Inventory Notes Receivable 38,000 5,000 45,000 5,500 88,000 100,000 Prepare the current asset section of the balance sheet Hanes Co Balance Sheet December 31, 2014 Assets Current Assets: Cash Notes Receivable Accounts Receivable Less allowance for doubtful accounts Interest Receivable Merchandise Inventory Total Current Assets $ 45,000 100,000 38,000 5,000 33,000 5,500 88,000 $ 271,500 153 For a business that uses the allowance method of accounting for uncollectible receivables: (a) Journalize the entries to record the following: (1) (2) (3) (4) (b) Record the adjusting entry at December 31, 2010, the end of the fiscal year, to record the bad debt expense The accounts receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of $600 Analysis of the receivables indicates uncollectible receivables of $18,000 In March, 2011, the $350 owed by Fronk Co on account is written off as uncollectible In November, 2011, $200 of the Fronk Co account is reinstated and payment of that amount is received In December, 2011, $400 is received on the $600 owed by Dodger Co and the remainder is written off as uncollectible Redo the entries in steps (2), (3) and (4) assuming the company uses the direct write-off method (a) (1) (2) (3) (4) Uncollectible Accounts Expense Allowance for Doubtful Accounts 18,600 Allowance for Doubtful Accounts Accounts Receivable-Fronk Co 350 Accounts Receivable-Fronk Co Allowance for Doubtful Accounts 200 Cash Accounts Receivable-Fronk Co 200 Cash Allowance for Doubtful Accounts Accounts Receivable-Dodger Co 400 200 Uncollectible Accounts Expense Accounts Receivable-Fronk Co 350 Accounts Receivable-Fronk Co Uncollectible Accounts Expense 200 Cash Accounts Receivable-Fronk Co 200 Cash Uncollectible Accounts Expense Accounts Receivable-Dodger Co 400 200 18,600 350 200 200 600 (b) (2) (3) (4) 154 For the fiscal years 2009 and 2010, Apple Co reported the following: Net Sales Accounts Receivable Year Ended December 31, 2009 2010 $44,123,486 $34,124,961 749,321 719,365 350 200 200 600 a Compute the accounts receivable turnover for 2010 b Compute the number of days’ sales in receivable at the end of 2010 a Accounts receivable turnover = Net Sales / Average accounts receivable Accounts receivable turnover = 34,124,961 / ((749,321+719,365)/2) Accounts receivable turnover = 46.47 b Number of days’ sales in receivables = Accounts receivable, end of year/Ave daily sales Number of days’ sales in receivables = [($749,321 + $719,365)/2]/(34,124,961/365 days) Number of days’ sales in receivables = 7.85 155 Journalize the following transactions of Upton Drugs: July Received a $180,000, 90-day 8% note dated July from Miracle Chemical on account Oct The note is dishonored by Miracle Chemical Nov Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Miracle Chemical on Oct July Notes Recei vable 0, 0 A c c o u nt s R e c ei v a bl e — M ir a cl e C h e m ic al C 180,000 o m p a n y Oct Acco unts Recei vable — Mirac le Chem ical Comp any 3, 0 N 180,000 ot e s R e c ei v a bl e I 3,600 nt er e st R e v e n u e Nov Cash 5, A c c o u nt s R e c ei v a bl e — M ir a cl e C h e m ic al C 183,600 o m p a n y I 1,530* nt er e st R e v e n u e *$183 ,600 ´ 0.10 ´ 30/36 0= $1,53 ... methods of accounting for uncollectible receivables Identify each (a) Bad Debt Expense Accounts Receivable-Billings (b) Allowance for Doubtful Accounts Accounts Receivable-Grover 90 0 90 0 90 0 90 0 123... with many receivables C is used primarily by small companies with few receivables D uses an allowance account 90 When a company uses the allowance method of accounting for uncollectible receivables, ... Receivable 6, 090 Accounts Receivable—Dame Company 6, 090 C Notes Receivable 6, 090 Accounts Receivable—Dame Company 6,000 Interest Revenue 90 D Notes Receivable 6,000 Interest Revenue 90 Accounts