Question 1

The Allowance for Doubtful Accounts is shown on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

A) Bad Debts Expense 
B) Accounts Receivable 
C) Accounts Payable 
D) Bad Debts Recovered 
A) Bad Debts Expense 
B) Accounts Receivable 
C) Accounts Payable 
D) Bad Debts Recovered

Question 3

A company uses the allowance method and expects not to collect $21,000 of sales.The journal entry to record the estimated bad debt is:

Accepted Answer

A) 
$$\begin{array} { | r | l | } 
\hline\text { Allowance for Doubtful Accounts } & \$ 21,000 \
\hline \text { Bad Debt Expense } & \$ 21,000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | r | l l | } 
\hline\text { Allowance for Doubtful Accounts } & \$ 21,000 & \
\hline \text { Accounts Receivable } & \$ 21,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | c | l l | } 
\hline\text { Bad Debt Expense } & \$ 21,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 21,000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | l l | } 
\hline\text { Accounts Receivable } & \$ 21,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 21,000 \
\hline
\end{array}$$ 
A) 
$$\begin{array} { | r | l | } 
\hline\text { Allowance for Doubtful Accounts } & \$ 21,000 \
\hline \text { Bad Debt Expense } & \$ 21,000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | r | l l | } 
\hline\text { Allowance for Doubtful Accounts } & \$ 21,000 & \
\hline \text { Accounts Receivable } & \$ 21,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | c | l l | } 
\hline\text { Bad Debt Expense } & \$ 21,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 21,000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | l l | } 
\hline\text { Accounts Receivable } & \$ 21,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 21,000 \
\hline
\end{array}$$

Question 4

On December 31,2015,Landscape Pros had a balance in Accounts Receivable of $25,000.Net credit sales for the year were $400,000.The Allowance for Doubtful Accounts has a credit balance of $500.Journalize the recording of the bad debt expense under the income statement approach if 3% of net credit sales is deemed uncollectible.

Accepted Answer

The answer of On December 31,2015,Landscape Pros had a balance...

Question 5

To record receipt of money after an account has been written off using the direct method in the previous year,you would need to:

Accepted Answer

A) credit cash. 
B) debit the allowance account. 
C) credit Bad Debts Recovered. 
D) All of the above. 
A) credit cash. 
B) debit the allowance account. 
C) credit Bad Debts Recovered. 
D) All of the above.

Question 6

A debit balance in Allowance for Doubtful Accounts indicates the estimate for Bad Debts was too low.

Accepted Answer

A) True 
 B)False

Question 7

The two methods of accounting for uncollectible receivables are the allowance method and the:

Accepted Answer

A) cost method. 
B) direct write-off method. 
C) interest method. 
D) equity method. 
A) cost method. 
B) direct write-off method. 
C) interest method. 
D) equity method.

Question 8

What would be the basis for the following entry on a firm's records?
$$\begin{array} { | r | l | } 
\hline \text { Bad Debt Expense } & 150 \
\hline \text { Allowance for Doubtful } \
\text { Accounts } & 150\
\hline
\end{array}$$

Accepted Answer

A) The firm is using the direct write-off method. 
B) The firm is writing off an uncollectible account. 
C) The firm is using the allowance method for estimating bad debt. 
D) All of these answers are correct. 
A) The firm is using the direct write-off method. 
B) The firm is writing off an uncollectible account. 
C) The firm is using the allowance method for estimating bad debt. 
D) All of these answers are correct.

Question 9

The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:

Accepted Answer

A) owner's equity. 
B) current liabilities. 
C) current assets. 
D) fixed assets. 
A) owner's equity. 
B) current liabilities. 
C) current assets. 
D) fixed assets.

Question 10

Town and Country Saddle learns the account receivable for a customer is uncollectible.The journal entry under the allowance method to write-off an account is to:

Accepted Answer

A) debit Allowance for Doubtful Accounts;credit Bad Debts Expense 
B) debit Sales;credit Allowance for Doubtful Accounts. 
C) debit Bad Debts Expense;credit Accounts Receivable. 
D) debit Allowance for Doubtful Accounts;credit Accounts Receivable. 
A) debit Allowance for Doubtful Accounts;credit Bad Debts Expense 
B) debit Sales;credit Allowance for Doubtful Accounts. 
C) debit Bad Debts Expense;credit Accounts Receivable. 
D) debit Allowance for Doubtful Accounts;credit Accounts Receivable.

Question 11

Sonny's Service Bureau is able to collect an amount previously written off last year under the direct write-off method.The journal entry will:

Accepted Answer

A) decrease Bad Debts Expense. 
B) increase Bad Debts Recovered. 
C) decrease Accounts Receivable. 
D) decrease Cash. 
A) decrease Bad Debts Expense. 
B) increase Bad Debts Recovered. 
C) decrease Accounts Receivable. 
D) decrease Cash.

Question 12

Under the accrual method of accounting,the allowance method is generally required for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 13

Before the accounts are adjusted and closed at the end of the year,Accounts Receivable has a normal balance of $210,000 and Allowance for Doubtful Accounts has a credit balance $3,000.What is the net realizable value of the accounts receivable?

Accepted Answer

A) $213,000 
B) $207,000 
C) $210,000 
D) $200,000 
A) $213,000 
B) $207,000 
C) $210,000 
D) $200,000

Question 14

Fit City estimates it will collect $3,300 of the $3,525 owed by customers.The difference of $225 represents the:

Accepted Answer

A) Gross Accounts Receivable. 
B) the Net Realizable Value. 
C) Allowance for Doubtful Accounts. 
D) Value of the Current Unpaid Receivables. 
A) Gross Accounts Receivable. 
B) the Net Realizable Value. 
C) Allowance for Doubtful Accounts. 
D) Value of the Current Unpaid Receivables.

Question 15

What type of account is a Bad Debts Expense?

Accepted Answer

A) Asset 
B) Expense 
C) Contra Asset 
D) Liability 
A) Asset 
B) Expense 
C) Contra Asset 
D) Liability

Question 16

Empire has a credit balance of $450 in its Allowance for Doubtful Accounts.The balance in the Accounts Receivable account is $92,500,with $2,015 estimated to be uncollectible after aging the accounts.Under the balance sheet approach,the debit to Bad Debt Expense will be:

Accepted Answer

A) $450. 
B) $2,465. 
C) $2,015. 
D) $1,565. 
A) $450. 
B) $2,465. 
C) $2,015. 
D) $1,565.

Question 17

Sylvia's,Inc. ,decreases Allowance for Doubtful Accounts $700 at year-end.As a result:

Accepted Answer

A) net assets decrease. 
B) net income is unchanged. 
C) net assets increase. 
D) net realizable value of assets decreases. 
A) net assets decrease. 
B) net income is unchanged. 
C) net assets increase. 
D) net realizable value of assets decreases.

Question 18

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature.
-$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column 4 } \
\hline \text { Cash } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following, identify in...

Question 19

Colleen's account was written off for $800.She received an inheritance from her uncle and wants to clear her account.The entry to record this is to:

Accepted Answer

A) debit Cash and credit Accounts Receivable/Colleen. 
B) debit Allowances for Doubtful Accounts,credit Accounts Receivable/Maggie,debit Cash,and credit Accounts Receivable/Colleen. 
C) debit Accounts Receivable/Colleen,credit Allowance for Doubtful Accounts,debit Cash,and credit Accounts Receivable/Colleen. 
D) debit Accounts Receivable/Colleen,credit Allowance for Doubtful Accounts,debit Accounts Receivable/Colleen,and credit Cash. 
A) debit Cash and credit Accounts Receivable/Colleen. 
B) debit Allowances for Doubtful Accounts,credit Accounts Receivable/Maggie,debit Cash,and credit Accounts Receivable/Colleen. 
C) debit Accounts Receivable/Colleen,credit Allowance for Doubtful Accounts,debit Cash,and credit Accounts Receivable/Colleen. 
D) debit Accounts Receivable/Colleen,credit Allowance for Doubtful Accounts,debit Accounts Receivable/Colleen,and credit Cash.

Question 20

Harry's Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible.Harry calculates Bad Debts Expense using the:

Accepted Answer

A) aging the Accounts Receivable approach. 
B) direct write-off method. 
C) balance sheet approach. 
D) income statement approach. 
A) aging the Accounts Receivable approach. 
B) direct write-off method. 
C) balance sheet approach. 
D) income statement approach.

Exam 13: Accounting for Bad Debts

The Allowance for Doubtful Accounts is shown on the balance sheet.

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 company uses the allowance method and expects not to collect $21,000 of sales.The journal entry to record the estimated bad debt is:

To record receipt of money after an account has been written off using the direct method in the previous year,you would need to:

A debit balance in Allowance for Doubtful Accounts indicates the estimate for Bad Debts was too low.

The two methods of accounting for uncollectible receivables are the allowance method and the:

What would be the basis for the following entry on a firm's records? Bad Debt Expense 150 Allowance for Doubtful Accounts 150

The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:

Town and Country Saddle learns the account receivable for a customer is uncollectible.The journal entry under the allowance method to write-off an account is to:

Sonny's Service Bureau is able to collect an amount previously written off last year under the direct write-off method.The journal entry will:

Under the accrual method of accounting,the allowance method is generally required for financial reporting purposes.

Before the accounts are adjusted and closed at the end of the year,Accounts Receivable has a normal balance of $210,000 and Allowance for Doubtful Accounts has a credit balance $3,000.What is the net realizable value of the accounts receivable?

Fit City estimates it will collect $3,300 of the $3,525 owed by customers.The difference of $225 represents the:

What type of account is a Bad Debts Expense?

Empire has a credit balance of $450 in its Allowance for Doubtful Accounts.The balance in the Accounts Receivable account is $92,500,with $2,015 estimated to be uncollectible after aging the accounts.Under the balance sheet approach,the debit to Bad Debt Expense will be:

Sylvia's,Inc. ,decreases Allowance for Doubtful Accounts $700 at year-end.As a result:

Colleen's account was written off for $800.She received an inheritance from her uncle and wants to clear her account.The entry to record this is to:

Harry's Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible.Harry calculates Bad Debts Expense using the:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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