Question 1

Jill's Wholesale House uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form.

Accepted Answer

The answer of Jill's Wholesale House uses the direct write-off...

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Two basic methods are used for estimating the amount of uncollectibles at the end of the accounting period-the percentage of sales method and the percentage of receivables method.

Accepted Answer

A) True 
 B)False

Question 4

When making the current period's adjusting entry under the percentage of sales method, the balance in Allowance for Bad Debts is

Accepted Answer

A)  doubled. 
B)  ignored. 
C)  divided in half and this amount is used for the adjustment. 
D)  30% of the amount to be used for the adjustment. 
A)  doubled. 
B)  ignored. 
C)  divided in half and this amount is used for the adjustment. 
D)  30% of the amount to be used for the adjustment.

Question 5

The expense of extending credit to make a sale should be recognized in the same period as the revenue from the sale.

Accepted Answer

A) True 
 B)False

Question 6

Under the direct write-off method, when a previously written-off account is recovered in the same accounting period, which of the following entries is required to reinstate the account?

Accepted Answer

A)  debit Accounts Receivable and credit Bad Debt Expense 
B)  debit Accounts Receivable and credit Cash 
C)  debit Cash and credit Bad Debt Expense 
D)  debit Cash and credit Accounts Receivable 
A)  debit Accounts Receivable and credit Bad Debt Expense 
B)  debit Accounts Receivable and credit Cash 
C)  debit Cash and credit Bad Debt Expense 
D)  debit Cash and credit Accounts Receivable

Question 7

After aging the accounts receivable, it is estimated that $700 will not be collected and the allowance account has an existing credit balance of $100. The adjusting entry under the aging approach would be for the amount of

Accepted Answer

A)  $100. 
B)  $600. 
C)  $700. 
D)  $800. 
A)  $100. 
B)  $600. 
C)  $700. 
D)  $800.

Question 8

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry is

Accepted Answer

A)  debit Bad Debt Expense and credit Accounts Receivable. 
B)  debit Accounts Receivable and credit Bad Debt Expense. 
C)  debit Cash and credit Accounts Receivable. 
D)  dependent on the period in which the cash was collected. 
A)  debit Bad Debt Expense and credit Accounts Receivable. 
B)  debit Accounts Receivable and credit Bad Debt Expense. 
C)  debit Cash and credit Accounts Receivable. 
D)  dependent on the period in which the cash was collected.

Question 9

The adjusting entry to record an increase in Allowance for Bad Debts involves

Accepted Answer

A)  debiting Allowance for Bad Debts and crediting Bad Debt Expense. 
B)  debiting Accounts Receivable and crediting Bad Debt Expense. 
C)  debiting Allowance for Bad Debts and crediting Accounts Receivable. 
D)  debiting Bad Debt Expense and crediting Allowance for Bad Debts. 
A)  debiting Allowance for Bad Debts and crediting Bad Debt Expense. 
B)  debiting Accounts Receivable and crediting Bad Debt Expense. 
C)  debiting Allowance for Bad Debts and crediting Accounts Receivable. 
D)  debiting Bad Debt Expense and crediting Allowance for Bad Debts.

Question 10

The accounting concept that states expenses should be recognized in the same period with the revenues they helped to produce is the

Accepted Answer

A)  contra-account principle. 
B)  allowance method. 
C)  matching principle. 
D)  uncollectible accounts technique. 
A)  contra-account principle. 
B)  allowance method. 
C)  matching principle. 
D)  uncollectible accounts technique.

Question 11

The amounts that cannot be collected from charge customers are called

Accepted Answer

A)  Collection Deficiency Expense. 
B)  Bad Debt Expense. 
C)  Loss from Uncollectible Accounts. 
D)  Uncollectible Charges Expense. 
A)  Collection Deficiency Expense. 
B)  Bad Debt Expense. 
C)  Loss from Uncollectible Accounts. 
D)  Uncollectible Charges Expense.

Question 12

Match the terms with the definitions.
-The process of estimating the uncollectible amount by analyzing account balances according to the length of time the accounts have been outstanding.

Accepted Answer

A) aging the receivables 
B) allowance method 
C) bad debt expense 
D) direct write-off method 
E) matching principle
F)net receivables
G)percentage of receivables method
H)percentage of sales method 
A) aging the receivables 
B) allowance method 
C) bad debt expense 
D) direct write-off method 
E) matching principle
F)net receivables
G)percentage of receivables method
H)percentage of sales method

Question 13

Under the allowance method, to write off an account that has been determined to be uncollectible, the entry would include

Accepted Answer

A)  debiting Accounts Receivable and crediting Allowance for Bad Debts. 
B)  debiting Bad Debt Expense and crediting Allowance for Bad Debts. 
C)  debiting Allowance for Bad Debts and crediting Bad Debt Expense. 
D)  debiting Allowance for Bad Debts and crediting Accounts Receivable. 
A)  debiting Accounts Receivable and crediting Allowance for Bad Debts. 
B)  debiting Bad Debt Expense and crediting Allowance for Bad Debts. 
C)  debiting Allowance for Bad Debts and crediting Bad Debt Expense. 
D)  debiting Allowance for Bad Debts and crediting Accounts Receivable.

Question 14

In aging the receivables, the estimate of uncollectible accounts is based on past experience and increases as the number of days past due increases.

Accepted Answer

A) True 
 B)False

Question 15

The allowance for bad debts account may have a debit balance prior to adjustment.

Accepted Answer

A) True 
 B)False

Question 16

Match the terms with the definitions.
-A method in which the current year's uncollectible accounts are estimated based on the relationship between the amount of credit sales and the amount of uncollectible accounts in prior years.

Accepted Answer

A) aging the receivables 
B) allowance method 
C) bad debt expense 
D) direct write-off method 
E) matching principle
F)net receivables
G)percentage of receivables method
H)percentage of sales method 
A) aging the receivables 
B) allowance method 
C) bad debt expense 
D) direct write-off method 
E) matching principle
F)net receivables
G)percentage of receivables method
H)percentage of sales method

Question 17

Under the allowance method, the expense associated with an uncollectible account is recognized when it has been determined that a customer will not pay the amount owed.

Accepted Answer

A) True 
 B)False

Exam 16: Accounting for Accounts Receivable

Jill's Wholesale House uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form.

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

Two basic methods are used for estimating the amount of uncollectibles at the end of the accounting period-the percentage of sales method and the percentage of receivables method.

When making the current period's adjusting entry under the percentage of sales method, the balance in Allowance for Bad Debts is

The expense of extending credit to make a sale should be recognized in the same period as the revenue from the sale.

Under the direct write-off method, when a previously written-off account is recovered in the same accounting period, which of the following entries is required to reinstate the account?

After aging the accounts receivable, it is estimated that $700 will not be collected and the allowance account has an existing credit balance of $100. The adjusting entry under the aging approach would be for the amount of

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry is

The adjusting entry to record an increase in Allowance for Bad Debts involves

The accounting concept that states expenses should be recognized in the same period with the revenues they helped to produce is the

The amounts that cannot be collected from charge customers are called

Match the terms with the definitions. -The process of estimating the uncollectible amount by analyzing account balances according to the length of time the accounts have been outstanding.

Under the allowance method, to write off an account that has been determined to be uncollectible, the entry would include

In aging the receivables, the estimate of uncollectible accounts is based on past experience and increases as the number of days past due increases.

The allowance for bad debts account may have a debit balance prior to adjustment.

Match the terms with the definitions. -A method in which the current year's uncollectible accounts are estimated based on the relationship between the amount of credit sales and the amount of uncollectible accounts in prior years.

Under the allowance method, the expense associated with an uncollectible account is recognized when it has been determined that a customer will not pay the amount owed.

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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